You are looking for new Enterprise Resource Planning (ERP) software, but you don’t know where to start. It’s a big investment much like buying a house or car, so you need to get it right. Where do you start? Many manufacturers looking for new ERP software start by researching vendors online. Industry analysts such as Gartner, IDC and Forrester play an outsized role in this research by publishing well known reports that rank vendors in the ERP market. 

Five Best Practices for Reading an Industry Analyst Report

1. What are your business requirements?

Before you start, know what your requirements are for your ERP software from a business point of view. What size is your manufacturing business? Is it a midsize company or large company? Does your business have more than one factory? If so, do you have geographic considerations? What vertical industry are you in? These are just a few of the critical factors that must be considered early on in the process. 

2. What are your technical requirements?

Beyond your business, do you have technical requirements that your company needs to consider such as a lock-in to a certain cloud hyperscaler such as AWS, Azure, or another? Do you want to use AI or other specific capabilities? Do you have legacy requirements and customizations to consider? Do you have the skills and experience in-house or do you need implementation help and services? What is the typical implementation like? Will you be comfortable with their timeline? Finally, you need to be comfortable with the pricing model and terms of their typical subscription agreements.

3. How do you find the right industry analyst report?

Now that you know your requirements, it is time to look at the industry analyst reports. You can find the reports on the analyst firm websites. If you aren’t a subscriber, you may even be able to access them from vendor websites if they purchased reprints to post the reports. 

Industry analyst reports are an analysis at a single point in time. You should read them carefully to understand several things:

Industry analyst reports are like comparing apples and oranges

Each report is different. Each report is based on a set of criteria set by the analysts writing the report using a methodology that is set by the firm. The criteria and analysts may change year to year even at the same firm. Market conditions vary yearly and even the same analyst may determine different criteria than they considered important last year. The criteria may even change during the writing phase.

Determine the audience of the report

When you review the report criteria, it is important to understand the audience of the report. Does the report focus on the broad ERP market for large multinational companies or does it focus on manufacturing ERP? A big indicator is the title of the report, but look deeper to the criteria to understand the report audience and focus.

What does the graphic really do?

Most people have the tendency to go to the big fancy graphic and stop there to put the leaders on their short list. That approach may miss the right vendor for your manufacturing business. Each firm uses a different type of image – from quadrants to waves to other “scapes” – but they all feature a different way to distinguish the vendors in a ranked manner. The vendor that best matches your business and technical requirements could be ranked somewhere else in the report. They may not even be mentioned in the report. 

What do the graphic categories mean?

The analyst reports rank vendors against each other in different categories ranging from Gartner’s leader, visionary, challenge and niche players to IDC’s leader, major player, contender and participants. Here’s a quick run-down of Gartner’s definitions from their published methodology:

• Leaders are defined as vendors that execute comparatively well today and are well positioned for tomorrow. The meaning is fairly straightforward.
• Challengers are defined as those vendors that execute comparatively well today or may dominate a large segment but do not have a roadmap aligned to Gartner’s view of how a market will evolve. 
• Visionaries understand where the market is going or have a vision for changing market rules, but do not yet execute comparatively well or do so inconsistently.
• Niche Players focus comparatively successfully on a small segment, or are unfocused and do not out-innovate or outperform others

Each graphic also features a scale to further measure the vendors. In Gartner’s case it is “ability to execute” on the vertical axis and “completeness of vision” on the horizontal axis. These help you understand the placements as far as execution and vision are concerned.

Keep in mind that your requirements may not align with Gartner’s criteria. You also will need to determine if Gartner’s view of the market aligns with your business’s view of the market and market segment, if any. Finally, some of the descriptions are vague, so you’ll need to make your best judgement whether the report is aligned with your needs. 

Your challenge is to find vendors that best match your requirements. The graphic doesn’t go deep enough into the vendors. Let’s look further into the report.

How do the rankings work?

Industry analysts start with a very large group of vendors to consider during the research process. Most use a methodology to analyze inputs based on a large survey, a briefing with a demo, customer references, and other input from vendor and end-user calls throughout the year. The analysts then rank the vendors against each other based on their set of criteria. Analysts whittle the large group of vendors down to the top twenty (give or take a few) using various weights and place them in the graphic.

Where is the greatest value in the report?

The analysts create vendor profiles based on their analysis of vendor’s inputs and the report criteria. The profiles highlight strengths and weaknesses of each vendor. Most importantly, these profiles may include customer references and commentary on the strengths and weaknesses. Note that Gartner doesn’t consider traditional customer references like Forrester, IDC and others. Gartner draws the customer content from their Gartner Peer Insights review site along with end-user input from calls. 

Take a few minutes to look at the profiles with a critical eye on your requirements. This is the real value that can help you select vendors that not only meet your requirements, but have an element of customer value. The more the vendor profile content matches your requirements, the report’s value grows. 

4. Build your short list

Now that you have read the vendor profiles, research vendors and software review websites if you haven’t already. You’re ready to select the vendors that best match your needs and build your shortlist. You may be surprised to see that your list has a few vendors that aren’t leaders. You may even have a few that aren’t on the reports at all based on other reports, recommendations, and online research. 

5. Speak to industry analysts

If you do have a subscription to an industry analyst firm, you may have an entitlement to speak to an analyst through an inquiry. This is a 20-30 minute call with an industry analyst knowledgeable about your market where you can ask questions about vendors. Don’t forget to use this time.

Remember that despite the big fancy graphics, your best match for an ERP vendor may not be the leader in one of the big reports. 

For more information: Listen to our recent webinar, How to Select ERP for Real-World Success.