Although an enterprise resource planning (ERP) system can lead to increased savings and profits, it can be quite an investment. The procurement of business software is not something a person does frequently and because of that, one can be ill-prepared. For most companies, the ERP selection process seems overwhelming. Many organizations find that the time required to research each option is too much and that most buyers are constrained to having to do their ERP research in the midst of their normally busy day.
There is a plethora of different ERP systems out on the market and some are better suited than others to accommodate the demands of varying industries. To help organizations navigate their choices, we’ve put together this short how-to guide on selecting the right ERP system.
Dig Into the Motives Behind Selecting a New ERP System
Did you decide to use an ERP system to better track sales and orders? Or was your decision largely due to a desire to gain insight on data? Whatever your motive was, the ERP solution you select must ultimately satisfy the needs for your organization. Before we dig into the details of important ERP selection factors, here’s a high-level list of things to consider during an ERP evaluation process:
- Are you a server-hugger or do you prefer cloud-hosted technology? (If you do not know the difference, we can help.)
- Do you have internal IT support?
- Do you need integration between solutions or will you manually copy data from one system to the other?
- Do you only need core functionalities or do you have special needs?
- Do you need a highly customizable solution or are you okay with modifying some of your own business processes?
- Can you draft high-level requirements for each business unit?
Key Considerations for ERP Selection
In addition to the bullets listed above, when selecting an ERP system, there are four important areas of consideration to be aware of:
Employee Skill Level
Are your employees tech-savvy? Are they able and willing to adjust to a new system, or do they require a very simple and straight-forward user interface? What level of training will they need? If your employees are used to and enjoy using a previous system or program and do not wish to adapt to too many changes, look for an ERP system that’s structured similarly to what you have.
It goes without saying but you need to take your budget into account. Selecting and implementing a new ERP solution can be quite an investment, however, there are often other expenses in addition to the initial costs. Add-ons and the ability to connect other applications/programs to your ERP can cost money and time. Figure out exactly how much the ERP system you are looking at will cost in total before making a final decision.
The marketplace and society are changing quickly, and your business and its software needs to be able to adapt. Will your ERP solution update with a reasonable amount of frequency, or are you going to be left with an old and outdated system in a few years?
Does your potential ERP vendor offer a guaranteed response time for any issues or any support plans? Making note of the quality of service provided by your vendor and what you can expect will save you quite a bit of frustration down the road.
Why It’s Beneficial to Outsource the ERP Selection Process
Drafting a high-level ERP requirements document can take a significant amount of time. Your resources are likely already overburdened and may have a tendency to “not fail” rather than to succeed. If you want it done right the first time, then it’s recommended you should look for an experienced ERP selection consultant to act as your facilitator.
Top Three Reasons to Outsource ERP Procurement
An ERP selection consultant is able to outline the limitations and capabilities of available ERP solutions and can find the best fit for your organization’s needs and budget. Do not leave key strategic decisions completely in the hands of your overburdened staff. Below are three reasons why outsourcing the ERP selection process will make your employees more successful and your organization more profitable.
1. Consultants provide a fresh perspective
Organizations involved in ERP selection, or any business application, know their own business and processes and recognize they have a need that’s not being met. Outside consultants may not know your business as well, but they do know the specifics of ERP products and the industries they support. The ‘outsider’ has seen alternate ways to do what you do with a more efficient software deployment. This fresh perspective allows consultants to continually ask the ‘why’ question. Why do you do this process? Why do you need this report? Why are you trying to glean insights from this specific data? Not being involved in the internal politics of an organization also makes it easier for an outsider to identify any gaps and /or bottlenecks and unearth inefficient and/or broken processes.
2. Consultants understand how to navigate the cloud-first approach
Most ERP needs can be completely met through cloud technology. In the mid 2000s, many organizations balked at cloud ERP solutions for fear that business continuity was at risk, or that their data was unsecure. As we now know, business continuity is far more secure when your software is hosted by a solid vendor. A ‘solid vendor’ is defined as an organization that makes its financial results public. This is important since you do not want your ERP cloud provider to go out of business without warning. Public reporting gives you fair time to change providers if necessary. The security risk has been demonstrated not only to be a red herring, but the contrary is true. Unless your firm deals with national security or has a ‘secret recipe’ your organization depends on, chances are you cannot compete with the levels of security ERP cloud vendors.
Organizations like NetSuite and Microsoft cannot tolerate any security breaches, as it would immediately drain their customer base. Cloud vendors’ security spending cannot be matched by most individual organizations. At Withum, we take a ‘cloud-first’ approach because it delivers more value for ERP spending: less expensive to procure, quicker to deploy, faster recoup of investment and better ROI. As cloud advocates, we firmly believe that every company should go to the cloud to increase its competitive advantage.
3. Consultants have specific product and industry expertise
I am always amazed at “used cars” salespeople who can determine the value of a car in one swift look. They are experts in their domain. They know the demand and can assess a vehicle in a hurry. Just like car dealers, ERP selection consultants:
- Know how to interpret the nuances in marketing messaging
- Are familiar with the various vendors and their systems architecture and functions
- Know what to ask for during demos
- Understand the role of the Sales Reps
- Have intimate knowledge of vendors’ various strengths and weaknesses per industry
- Understand the software licensing contracts and know-how and when to buy