Selecting the Best ERP System for Your Business: 9 Considerations for ERP Selection – Part 1
It’s time. Your organizations ERP system is outdated, too slow, unable to provide you with the information you need on a timely basis. Customer service levels are not on par with current customer expectations as your systems is not able to pull up customer data efficiently to answer their inquiries quickly. To top it off, your ERP system is difficult to support and it may very well be that your software vendor is no longer providing software updates.
How does that look from the outside?
- Inefficient? Customer satisfaction levels are at risk.
- Reactive? Your competitive edge could be at risk.
- Costly? Your bottom line is affected and your shareholders like to see the best return on their investment.
Sounds like it is time to consider a new ERP system.
Selecting the best ERP system for your business is a project that takes time and must be well thought out as your ERP system is not only a costly investment, but also at the center of your business operations. If you are the one leading the software selection process for your organization, there’s a lot to be considered from costs to deployment options to short and long term goals. If adequate time is allowed for from the start of your ERP project, then you will be on your way to ERP success.
ERP success is interpreted differently for each organization as it can mean many things. Some consider ERP success when ERP is helping them meet their current and future business goals and objectives. For others, success evolves around improved efficiencies, cost savings, insights to help them expand into new products or markets, or being able to meet the needs of today’s customers from both a product and services perspective.
To help you select the best ERP system for your business, we’ve put together a 3 part blog series that takes a look at 9 important considerations to evaluate during the software selection process.. The series of 3 blog posts will discuss the following:
- How Much of an ERP System Do You Need?
- Business Goals and Objectives
- ERP Cloud or On-Premises or Hybrid Deployment
- ERP Budget
- ERP Annual Cost
- ERP Technology Platforms
- ERP Customizations
- ERP Support and Training
- ERP Ease of Upgrades
1. How Much of an ERP System Do You Need?
Departmental business requirements and ‘wish lists’ that include a GAP Analysis should be defined prior to engaging a consultant or vendor to help you with the ERP selection process. The best ERP system for your business may not be the same ‘best ERP system’ for your friends business because your requirements are unique to your business. Therefore, what type and how much of an ERP system you need depends on your business requirements and a combination of your business size, number of transactions and number of users.
2. Business Goals and Objectives
Identifying business goals and objectives is one of the first steps to ERP success. With so many solutions to choose from, taking the time upfront to start identifying your requirements will help you narrow down your choices, even amongst those offered by a single software vendor. Both short term and long term goals should be considered as both can impact your ROI and therefore choice. Here are some examples of scenarios that can influence which ERP system is chosen as the best ERP system:
- Company A has very few users but a large transaction volume. Because of the large transaction volume, they need to find a solution that can handle their larger transaction volume efficiently without reaching other limitations such as the maximum company data file size.
- Company B has fewer transactions, but very specific functionality requirements that are unique to their business. They need to make sure that these requirements are discussed and will most likely want to engage a vendor in a Proof of Concept (POC) demonstration before making their final decision.
- Company C has simple requirements today, but plans to grow by acquiring additional companies and will therefore need a scalable solution that can meet their future requirements for multiple locations and complex reporting.
- Company D is not ready to hire their own IT staff to manage their ERP solution today, but in the long run, they would prefer to have their ERP solution in house instead of in the cloud. A good option would be a hybrid solution, like Epicor ERP, which does not require a data conversion if they do decide to switch from cloud to on-premises in the future.
Each of the above scenarios represents how businesses must consider current and future needs, including unique business processes. To gain the biggest long term ROI from your ERP software, you want a system that offers the flexibility and scalability to leave room for change and growth. MIS understands that ERP is not a one size fits all, or about fitting it all in today, but rather about a phased approach that takes into account your uniqueness.
3. ERP Cloud or On-Premises or Hybrid ERP Deployment
In 2013 Gartner found that half of organizations were looking to move their ERP to the cloud, with small and mid-sized as well as service organizations embracing the cloud.
Aberdeen found 47% of decision makers are willing to consider the cloud for their ERP, thus a similar finding to that of Gartner. This is a change from 2009 where only 23% were open minded about the cloud as an option for their mission critical business system as many were not at ease with the idea of data being stored and accessed outside of their physical location. In 2016, according to Aberdeen, that number more than doubled to a 59% acceptance rate.
As a result of the greater acceptance of the cloud in recent years, there’s been an onslaught of new cloud ERP solution offerings, and there are a lot of them! If you are comfortable with the idea of a cloud deployment, then you must carefully evaluate the features offered by cloud vendors as they won’t be able to offer the robustness of many of the traditional on-premises ERP solutions that took decades to develop. It’s just not possible as software development is a process and features take time to incorporate and test before customers can deploy them with confidence.
If your management team is comfortable with a cloud-based solution, then Cloud ERP is definitely worth considering. Cloud ERP solutions don’t always offer the robustness of an on-premises solution, or the customization capabilities, so be sure to ask to see a demonstration of the features or functionality most critical to your business.
Cloud are typically a good fit for companies looking to lower their IT and software maintenance costs, or those that do not have IT expertise in house. With Cloud ERP solutions, or Software as a Service (SaaS), the software vendor is responsible for hosting and maintaining the ERP solution on their servers in exchange for a monthly service fee.
Larger corporations might consider a hybrid solution. Hybrid solutions combine on-premises with the cloud by allowing companies to choose how they want to deploy the software at each location. For example, the ERP solution can be deployed on-premises at the corporate headquarters and as a SaaS solution at the subsidiaries. By doing this, the enterprise saves money on hardware and maintenance costs as well as IT expenses at the subsidiary level.
Stay tuned for Part 2 of this blog series.
Additional MIS Blogs Related to the ERP Software Selection Process:
Contact MIS to learn more about what to expect from the software selection process and how to stay in control, or take a look at:
Survey Analysis: Adoption of Cloud ERP, 2013 Through 2023