How to compare and choose ERP providers
If you’ve decided that implementing an ERP could benefit your business, congratulations — you’re over the first challenge.
When you’re suddenly faced with hundreds of ERP solutions currently on the market to find the right one for you, however, that second challenge can seem significantly higher.
By operating all of your core business processes from one solution, an ERP can make life easier, but it also declares the importance of choosing the right one. When you’re putting all your operations in one place, you need to make sure that its up to it.
Luckily, you can make the ERP provider selection process a little simpler with a practical, five-step guide. including a free, customizable checklist for ERP provider evaluation criteria to help you find the right match, and an infographic which summarizes the main posts of this blog.
Determine your requirements
Before you can start the ERP provider selection process, you need to evaluate the way you currently work. mapping your current business processes will help you define exactly where your new ERP system will fit in and, in turn, what functionality you need to Manage your day-to-day operations.
A typical ERP functions includes:
- Financial management
- Customer relationship management
- Human resources management
- Purchasing management
- Inventory management
- Supply Chain Management
- Business intelligence and reporting
You may not need all of these features, individual requirements will depend on your business type, and while many ERPs feature facilities for the manufacturing or distribution industries, there are ERPs for just about any business type. Due to high variety level of specialist ERPs on the market, it’s important not just to define exactly what you’ll need to run your business today, but also what you may need in the future.
An ERP will be used by many different departments — from accounting and HR, to sales and shipping — so you should be speaking to each wing of your business and find out their evaluation of your current processes. Ask your teams how they think they could work more effectively, if there are any issues with your current workflow that need to be resolved, and which features they know they could get the most out of in the future. After all, they will be the ones using the ERP system every day.
It might also help to map out a typical workflow within your company by tracking a product or service through its lifecycle.
If you need an ERP that can handle your Human Capital Management, draw a similar journey through your business for an employee. Look at every stage of an employee’s journey within your company, and think about what you need from an ERP to enhance and facilitate that process.
How about once they’re part of your team? Do you want an ERP to automate certain functions, like time management and scheduling? Do you need extensive self-services to help employees manage their own personal administration?
Financial management is another key factor to be considered when assessing your ERP needs. Accounting, closing, budgeting, auditing, billing, cash flow management, and reporting are all crucial process of ensuring a business remains profitable, so a careful financial tool used by your organization is must.
Establish your provider selection criteria
Now you’ve defined what you need from an ERP, and determined the problems you want to overcome, you can create standards to which all potential ERPs can be measured.
Going back to the departmental goals you established earlier; what features will you need to achieve these goals?
Some features are naturally going to be more important to the growth of your business than others. Which will have the biggest impact, and which are essentials. Creating a measurable system to assign weight to each function will help you prioritize what’s important when it comes to comparing ERP providers later on.
It’s unlikely that you’ll find an ERP system that meets all requirements out of the box, but it’s good to set a bar so that you know where you are looking.
Once you have an outline of what you’ need your ERP system to do, you also need to consider how the product is going to be delivered, how it’s accessed, how it can be enhanced when you need more from it.
Take into account factors such as:
Deployment: do you require a solution that’s based in the cloud or on your own in-house servers?
Scalability: do you need to expand your use of the solution in the future? Will that mean the need for users, or more capabilities?
Implementation: did you sit a timeframe for the solution to go live?
Integrations: have you got any current software that you ’need to continue using alongside your ERP?
Accessibility: does your new ERP need to have for example a mobile app?
Customization: will you add customization to the system? Do you plan to develop your own apps for your ERP?
Support and recovery: How would you prefer to access support from your provider? Are you happy to engage with them remotely, or would you prefer a provider who is local to you?
Training: will you need a provider who provides training for the new system’s users, or are you happy to train them in-house?
sit a budget and timescale
You know the qualifications, now it’s time to work out how much you’re planning and able to spend to get it.
With so many ERPs in the market, you’re almost certain to find out within your price range, but it’s also important not to get too caught up in up-front costs. An ERP system is an investment, so it should provide significant return if implemented and used correctly.
When sitting a budget for your ERP system, keep in mind potential costs outside of purchasing the software itself.
If you’re considering an ERP that’s based on-premise, you’ll need hardware outlay, and ongoing maintenance to be able run your system in-house. These include:
Hardware: will you need to purchase additional servers or networking equipment to host your ERP system?
Utilities: will this hardware have to consume more power to run the system?
Staff: will you need professionals in-house for the implementation?
Maintenance: if you don’t have the skills to operate your hardware and software internally, will you need to use outside services to help keeping things ticking over?
If you’re opting for a cloud-based system you will need to review whether you have a reliable-enough internet connection to accommodate multiple users working in the cloud.
Tasks such as data migration, training, and customization will need to be considered. In addition, rolling out a new system can take up a lot of your team’s time, so keep in mind the fact that productivity might be affected at first.
Speaking of the time consumed in implementation, it’s also a good idea to have an outline for when you’d like the ERP system to go live. keeping in mind, it’s not unusual for implementations to take years, depending on the size of your business, how much data you want to transfer over, and if you have any customizations to complete. you need to know that implementations is a marathon, not a sprint, and it’s vital that everything is put in place and tested before going live.
When you’re relying on a system to run all your daily operations, you need to make sure that everything is working as it should be before you go live, or you could face serious consequences.
Evaluate your ERP provider options
With your ERP selection criteria ready, it’s time to start looking for providers that may be able to fulfil your requirements.
Many ERPs are industry-oriented, so don’t waste time researching a solution that’s not made to fit the needs of your business type. If you’re part of an industry association, look for recommendations.
When you’ve found some providers that have potential, add them to a shortlist and look for more information. Many providers will offer to send a representative to give you a demo in-house. Some will also have online product demos and free trials, so take full advantage of those so you can see the product in action and evaluate it.
Obviously, the steps of reviewing an ERP provider will entail stacking up their features against your hypothetical spec, but you should also assess the provider in a broader sense, keeping in mind factors like experience, customer satisfaction, and service levels.
Questions to ask during ERP provider evaluation:
- How long has the provider company been in business?
- What experience do they have in my industry?
- Are they the developers of the system, or resellers?
- How does their pricing and billing model work?
- What deployment and hosting options do they provide?
- What kind of support do they offer?
- Do they provide training for new users?
- Are they easy to contact, and has their service and communication been good so far?
- What plans they have for the future of the system?
- How often is the system updated?
- Is the system scalable?
- How long do they estimate the implementation process?
- Can they give references?
- What sets them apart from other providers?
- Will this ERP system stay ahead of the latest developments in technology, and most importantly, with the growth of your business?
No one wants to use a great new business system only to find that a few years down the line it’s struggling to keep up. Don’t be drawn in by a slick interface and a few jazzy features — remember to look deeper.
