Enterprise resource planning (ERP) systems are a valuable tool for any organization, and they can have an impact on every single part of your business. These highly sought after enterprise applications help manage activities including planning, research & development, purchasing, supply chain management, sales and marketing. There are countless ERP systems available, so it’s crucial that you make the right ERP choice that fits your organization.
If you’ve seen our ultimate cheat sheet for enterprise resource planning (ERP) requirements, you’ll know that there are many factors that can go into the decision-making process when choosing an ERP vendor. Since deploying an ERP system can be an expensive and time-consuming process, you need to make the right choice by deciding which factors are the most important for you and your organization.
Start with this ERP selection criteria, asking yourself the following questions:
What is the vendor’s situation and reputation?
Consider the following factors when comparing ERP systems, and the vendors that provide them, to see if they are a good partner for your business:
- How the vendor has changed organizationally in recent years.
- What the vendor’s most recent products are, and what new products it plans to issue in the coming years.
- How long the company has been in this industry, and how well it understands it.
- Whether the vendor has specialized experience in providing ERP solutions to organizations of a similar size and type as yours.
- The future direction of the vendor’s business, and whether it is likely to continue in its current form during the lifetime of the ERP platform.
What technologies does the ERP solution offer?
Consider the following factors when you’re ready to compare ERP or are actively performing your software selection process:
- Whether the ERP solution is turnkey or will be customized to your organization and unique business processes.
- Whether the solution can meet the technical needs of your organization.
- If the solution is scalable, able to adapt in response to growing users or increases in data.
- The speed of the product and its impact on the end users.
- Possible support for multisite or multi-company environments if you need to work with multiple operations.
What are the system’s functionalities and ease of use?
- Consider the current challenges that your organization faces that would be solved or reduced with the ERP system. Evaluate which of the ERP system’s functionalities would accomplish this, and which you plan on actually using.
- If possible, arrange for a demonstration to see if the potential end users find the platform easy to use, and whether the platform allows them to carry out their daily tasks.
- Ask if there are extensive documentation or help files available to assist users with issues they encounter.
- How does customer relationship management interface with ERP?
What will the true cost of the ERP solution be?
- Evaluate the cost of the ERP platform and whether it is appropriate for the functionalities that it offers.
- Determine if the charges will be one-time or recurring. If the latter, decide whether your organization can truly afford to use this system on a continuous basis. Find out the charges for annual maintenance, as well as any upgrades.
- Consider any hidden costs that might not be immediately apparent. Calculate the long-term total cost of ownership for all aspects of the system, including hardware, software, and support.
- Once you have finished with these evaluations, estimate whether the projected return on investment will be significantly more than the costs.
What kind of support and training will be provided?
Consider the following factors when evaluating the support and training offered by the vendor:
- How the vendor will ensure a successful ERP implementation
- What is the process for organizations to smoothly transition to the use of the new system.
- Any training that will be available to the members of your organization during and after the installation process.
- The availability of the system’s source code once the platform is in place, so that you can develop the software and fix bugs in-house. If the source code will not be available, what is the vendor’s standard practice for fixing bugs and releasing new versions of the platform?
- Whether the vendor offers in-house support, or outsources to another company.
ERP Software Selection Process and Quick Start Guide
Now that you’ve had a chance to think about some of the key ERP selection criteria you should consider when buying an ERP, what is the next step?
Chances are that you are very methodical when it comes to the software selection process for your company. When choosing an enterprise resource planning (ERP) solution, being meticulous is the only way to go. Making the right choice for your ERP system will improve your business’s operations, automate most data-driven processes, and integrate your entire infrastructure. While a failed ERP implementation can be very damaging to your business.
Fortunately, you can reduce some of the workload, and much of your risk, with this simple quick-start ERP software selection process. This easy to follow five-stage approach helps you determine your business needs, research solutions, evaluate solutions, select a good vendor and negotiate a great contract.
If you want to select ERP software correctly, you should not just consider features that will let you manage the company’s finances, long-term projects, inventory and databases, but go through the formal selection process as follows:
Requirements and Research
During this stage, you determine what your business needs from an ERP system. This will help you decide whether ERP is the right fit for your business.
When evaluating business requirements, keep in mind that ERP’s greatest advantages lie in comprehensive data analysis, thorough and accurate reporting functions, and multiple process automation capabilities. We’ve outlined some excellent questions to ask above as well as in this ERP requirements list. Here are some additional ideas:
- Evaluate your current business operations and how ERP software can fit into them. For example, do you need a responsive solution to accommodate your employees using mobile devices? What are the reporting and metrics that will be most useful to you when running your business?
- Consult with staff, in particular senior-level executives who can engage and encourage employees in the process of implementation. If possible, appoint a team to oversee the process of selection and installation, including an executive and a project manager.
- Take honest stock of the ways your business could and should change, as well as the ways ERP capabilities can improve business performance.
Armed with your specific business requirements, you can now perform preliminary research to see which ERP system meets your needs. You can do most of this research online, but you can also contact ERP vendors and seek informed opinions from colleagues who use ERP software systems. Also consider ERP consultants as an additional resources to find the right fit for your business.
Vendor Comparison And Sourcing
Use the information you’ve obtained from requirements gathering and research to help you get relevant, informative answers from potential vendors. This makes it very easy to determine whether a vendor fits your needs.
- Make sure that the vendor’s product works with your existing legacy systems.
- Check whether the vendor has experience in your industry, which increases the likelihood of a smooth transition.
- Verify that the vendor completely understands your business needs, and provide the vendor with any project plan that you’ve drawn up.
Top ERP Vendors
If you’re curious who is leading the way in the ERP market, here’s an ERP software comparison leaderboard. Vendors included:
Epicor ERP 10
Epicor’s latest ERP platform offers a more complete and simple interface for both employees and suppliers. The platform also has additional functionality and responsiveness across multiple mobile devices for faster and more comprehensive collaboration. On-premise, cloud or hosted deployments are available.
IFS Full Suite ERP
IFS’s ERP Solution is an innovative player in the ERP market. While some ERP suites are complex and difficult to use, IFS has simplified functionality for enterprise project management (EPM) and enterprise asset management (EAM).
In addition, this ERP suite can be configured for a broad range of intensive manufacturing, aerospace and even engineering settings. IFS handles even the most demanding tasks gracefully.
Infor ERP SyteLine
Infor ERP is best suited for large, industrial enterprises like manufacturers and large-scale distributors. It’s unparalleled scalability allows for efficient expansion or compartmentalization. Its cloud-based deployment offers adaptability and advanced planning capabilities for even the most complicated business processes.
Microsoft Dynamics AX 2012
Microsoft’s ERP solution is ideal for large, global enterprises. Its core functionality provides streamlined business processes and supports both single instance and two-tier deployment methods, even across international corporations. This powerful software is goal-driven and perfect for any thriving business.
Oracle JD Edwards EnterpriseOne
Oracle’s latest ERP platform aims to deliver high-quality technology for managing every aspect of your company’s finances. With EnterpriseOne, financial management is streamlined helping increase financial accuracy. It allows for hands-on project cost management from start to finish. It also integrates features like asset management and real-time operational reporting to ensure organizations maximizes profitability. We found that this version outperformed Oracle E-Business suite across 20 key business and operational requirements.
Sage ERP X3
Sage ERP is ideal for SMBs and SMEs. The platform’s speed and flexibility allows businesses to increase efficiency and accelerate core business processes. Being a cloud-based ERP and available on mobile platforms, Sage X3 allows for easy and more timely collaboration. It’s cloud deployment is easy to implement and quick to change, which is ideal for any business looking to maximize growth and profitability.
SAP Business ByDesign
SAP’s ERP, tailored for mid-sized businesses, is a complete, integrated suite that can run your whole enterprise – financials, human resources, sales, procurement, customer service, and supply chain. A web-based ERP with exceptional mobile deployment allows for increased efficiency as well as 24/7 for increased efficiency as well as 24/7 access to analytics and reporting. SAP’s monitored data centers ensure your high security of your organization’s sensitive information.
SYSPRO 7 is a top ERP solution for any organization with it’s primary benefit being able to capture large amounts of data in a highly-optimized user interface. It works in both network and mobile platforms, offering 24/7/365 access to the entire ERP suite. It has an increased degree of customization throughout each of its applications, allowing your business to design a custom interface for your unique needs.
Once you’ve gathered a list of promising ERP applications, send RFx documents — formal requests for quotes, proposals and other information — to the vendors.
Once you’ve submitted information requests to the vendors and received responses, it’s time to thoroughly evaluate the available ERP systems.
Technical Evaluation Scorecards
Tech evaluation scorecards are an invaluable tool when it comes to selecting ERP software. Comprehensive scorecards accurately and thoroughly evaluate ERP systems, providing a detailed breakdown of every function and capability. You should assess the ERP system along at least four perspectives: cost, supporting user needs, improvement of internal processes and flexibility.
Demos and Proof of Concept
After you’ve narrowed down your list of vendors by using tech eval scorecards and proposal information, request demos from the vendors. It’s very important to see an ERP system in action, and a reputable vendor won’t have any trouble arranging a thorough demonstration. In addition to demos, request documentation that addresses how the ERP system will meet your business needs.
For further help during the demo process, here are some questions to ask during an ERP demo to ensure the software is the right fit for your company:
Can the software be implemented in phases?
Panorama has reported that 61 percent of ERP executions are more prolonged than expected. Implementing ERP software in stages will help improve operations without disturbing the flow of business. It will also allow training to occur in separate stages, allowing most of the company to function as usual as one area or department is focusing on learning how to use and manage the ERP.
How are technical problems handled?
One virus can wipe out an entire program. Find out how the vendor handles malfunctions and service interruptions. If the vendor provides comprehensive troubleshooting guidance, the company’s IT department can often resolve problems without waiting for support from the vendor.
How is training handled?
Will the company need to create and provide all of its employees with training, or does the vendor offer training? Find out what the cost of training will be. You’ll win out if you minimize the cost of training but maximize its effectiveness. ERP software won’t benefit the company if nobody knows how to use it correctly.
What are the costs of hardware and software replacements and updates?
Part of managing the cost versus benefits of ERP software involves uncovering any hidden costs. During an ERP demo, find out how likely it is that the hardware (if applicable) will need to be replaced and in what time frame. Ask about what is involved in regular maintenance so you can decide whether it can be handled in-house or by the vendor. Inquire about the costs of updating the software as well.
What features does the software have for managing inventory and logistics?
For many companies, reducing the amount of time that employees spend working on inventory and shipping can greatly improve efficiency. Find out if the software can provide alerts when inventory is stocked incorrectly or when a particular product is low. Can the software automatically calculate the most economical shipping method depending on where a shipment is going? If inventory management can be handled automatically, it can free up valuable resources to increase productivity in other areas of the business.
Can the software streamline customer service?
Find out how the software can be used to simplify your customer service needs. Many ERP platforms can analyze client data to help not only the customer service department, but also the marketing and sales departments.
How can the software be used in the human resources department?
An ideal ERP will help you manage an employee from the time he or she is hired. Being able to access policies and procedures, timesheets, payroll and training systems in one place can help those in the human resources department increase their productivity.
What are the mobile capabilities of the software?
If your company operates out of various offices or if your sales team travels regularly, it is essential for the ERP to be accessible from outside the office. Check out the ease of the mobile interface and find out what teams can benefit from this accessibility. Ask about the security of the software when accessed from a mobile device.
How long should the ERP last?
According to e2b teknologies, the average ERP lasts about 7 to 10 years. Find out how long the ERP will work for your company so you can budget for upgrades and better forecast growth.
ERP software can pull everything that’s going on in the different departments of a company together without much additional manpower. During an enterprise resourcing planning software demo, make sure you ask the right questions to ensure that the ERP has the exact capabilities your company needs.
Financial Due Diligence
Business Case Review
Evaluate the capabilities and cost of an ERP system against your business processes and needs, your organization’s budget and the projected savings to ensure that the ERP system will benefit your business financially, and that it is financially viable at this time. Budgeting concerns and expenses ultimately determine the long-term viability of an ERP system.
Consider what the true cost of ownership of implementing an ERP project will be. Will fees be one-time or recurring? If recurring, will they be annual or monthly fees? What are the costs of installing the solution on-premises versus in the cloud? What would the estimated costs be to update the software if your business underwent a restructuring? Also consider whether the vendor will provide support and training during and after the installation, which may affect your costs.
Evaluating Potentially Hidden Expenses
Before choosing an ERP, you should calculate the costs of replacing hardware, updating the software program and performing routine maintenance. Proprietors frequently evaluate expenses that are related to helping inexperienced representatives to use the software and connecting the system to existing equipment.
Vendor Viability and References
Before investing in an ERP system, ensure potential ERP software vendors are responsible and respected within the industry. You may want to perform additional research at this point. If you haven’t already, request information from the vendor’s other clients and seek opinions from people within your professional network.
Contract Negotiation and Close
After you’ve chosen your vendor, received your quote, reviewed your proposal and completed your case review, it’s time to negotiate your contract. Approach negotiations confidently, armed with your business needs, required ERP capabilities and financial constraints.
This strategy allows you to easily find and select your ideal ERP system. While it may be time-consuming and labor-intensive, your meticulous ERP selection process will pay off. Before long, you’ll find the perfect ERP solution for your business. ERP system selection is a complex process – use our technical evaluation scorecards to get started.
ERP Selection Considerations
Enterprise resource planning (ERP) systems are a valuable tool for any organization, and they can have an impact on every single part of your business. These highly sought after enterprise applications help manage activities including planning, research & development, purchasing, supply chain management, sales and marketing. There are countless ERP systems available, so it’s crucial that you make the right ERP choice that fits your organization. Our fast track ERP comparison guide above provides a quick roadmap to get you started.
Determine the answer to the above questions for each of the ERP software vendors you’re considering and then follow the step-by-step process we’ve outlined. Only you can know what the most important ERP selection criteria are for your organization, so carefully reflect and manage your ERP selection project.