Have you decided that implementing an ERP (Enterprise Resource Planning) or switching to a new one in the New Year could benefit your business and is that the reason you have landed here? Well, congratulations on your decision, and the happy news is that you have crossed the first milestone in your journey to implementing an ERP. An ERP system can effectively simplify your business processes by integrating information and automating processes across functional areas of the business. In this blog, we gear you up to cross the second milestone of your journey, choosing the right ERP for your business.
Read on to know about how to choose the right ERP software for your company
Being one of the critical and biggest IT investments, choosing the right ERP for your business becomes a strategic decision where there can be no missteps. An ERP system is quite huge and complex, having an impact on every single part of your business and can make or break your organization. Hence, it is important you get it right from the beginning, as a wrong choice can wreak havoc to your business. According to Panorama Consulting’s 2019 ERP Report, only around 66% of the organizations were satisfied with their ERP vendors. A major reason for vendor dissatisfaction was driven by poor requirements definition and a lack of organizational alignment before the implementation process.
With a plethora of ERP vendors currently available in the market, making the right decision becomes even more challenging. The thought of sorting through the tons of available options to pick the right one for your business can be overwhelming and is often easier said than done. But, with a thoughtful checklist, it can be much easier. To help you in the process, we have come up with a comprehensive checklist for choosing the right ERP system for your Business.
8 Step Checklist for Choosing the Best Fit ERP System for your Business.
1. Define your business requirements
The very first step in selecting the appropriate ERP system for your business is evaluating your business processes and set your expectations from implementing an ERP system. Identify bottlenecks and pain points in your existing system and determine how ERP software can fit into your process to transform your operations and improve business performance.
2.Establish an ERP vendor selection criteria
Now that you have identified your business needs, you should identify features and functions in an ERP system that can help you sort them out. Visualize what features the ideal ERP for your business should offer and list them out.
Here is a list of factors to be considered for your ERP selection criteria:
Whether you want a cloud or on-premise ERP Cloud ERP seems to be the industry trend in recent years due to benefits like cost savings, easy deployment, more mobility, reduced risks, and scalability.
Look for any industry-specific functionalities that you want in your ERP system. For example, if you are into discrete manufacturing, you may have to consider your needs like Material Requirements Planning, Bill of Material requirements, features supporting your manufacturing methodology like lean manufacturing features, etc. There are many industry-specific ERP systems in the market today and choosing an ERP system with industry-specific functionalities that you are looking for can minimize the need for customizations to your ERP.
An ideal ERP system should be able to grow with your business and can adapt to your growing business needs. It should just not be meeting your current needs, the system should scale to support your future needs as well when you expand – that may mean more users or more capabilities.
The ERP solution that you select should easily integrate with your current software that you would like to use alongside your ERP or what you may have to use in the future. Only if the ERP system integrates well with your other systems, you can enjoy a fully automated end to end software solution, which in fact, is the real purpose of implementing an ERP system.
Flexibility and customizations
In spite of having comprehensive functionalities, the ERP you choose should also be flexible enough to allow customizations to meet your specific needs.
Your investment in the ERP get diluted if it cannot be used to its full extent. It’s vital that the users of the ERP, your employees can use it effectively as their ability to interact with the system will impact the ROI of the system. It should support quicker user adoption with a clean interface that is easy to navigate. Training tools and learning materials should also be easily available.
Support for the latest technology trends
The ideal ERP should embrace or at least support integration with the latest technologies like Internet of Things (IoT), Artificial Intelligence, etc. to help you keep pace with emerging trends and stay competitive.
Reporting and analytics
Modern businesses demand reports that help boost your decision-making capabilities. Hence, you should look for ERP systems including the latest reporting and analytics features like Business Intelligence, real-time tracking, and predictive analytics that help transform the data into actionable insights to improve your business strategies.
3.Outline a budget and timescale
Have a clear idea on how much you can spend on the ERP system and have an outline of when you would like your ERP solution to go live. Time for ERP implementations can range anywhere from a few months to even years, based on the size of the business, number of locations, and customization required. When working on the budget, you have to consider the potential hidden costs outside of purchasing the software as well including costs for maintenance, resources required, training cost, hardware in case of an on-premise deployment, and other utilities that may be required.
4.Create a list of ERPs fulfilling your selection criteria
So, now that you have your selection criteria and budget set, you can shortlist the ERPs that meet your requirement criteria. Check out our blog on Top 7 ERP software in 2021 to know about the leading ERPs in the Market.
5.Evaluate and shortlist your ERP vendor options
There may be many vendors meeting your criteria. To select the best, you have to do a thorough evaluation of the vendor options. Take into account things like vendor reputation, the vendor’s past experience in your industry, vendor’s technology direction and viability, customer satisfaction, support, and training offered, the total cost of ownership etc.
You can contact each of the vendors you have shortlisted and have a conversation with them to understand their potential.
6.Schedule ERP vendor demos
When you have identified potential vendors, seek out more information and schedule product demos. Many of the vendors may send a representative to give you a demo in house and some vendors may even have online product demos and free trials. Take full advantage of these demos and free trials to clarify your uncertainties and experience the product in action to get a real feel of it.
7.Conduct a comparison and use a scoring system to quantify your research results
With all the evaluation and insights from the demos, you would have come to 3 or 4 of the best fits. Compare them using a scoring system for various features you need so that you can quantify how well each system meets your needs and measure up against each other. This is a great way to find the best fit from the lot.
8.Make your decision and agree on the final terms with the ERP vendor
Make sure that you have a clear Statement of Work (SOW) with the vendor before you initiate the actual project. The SOW should identify scope, timelines, milestones and costs to avoid any ambiguity at a later date.
Wrap-up on Guide for selecting the right ERP
Selecting an ERP is a critical and huge step for a business. It is a great investment that can bring significant ROI if implemented and used correctly. ERP implementation is definitely a critical process. A wrong selection can cause considerable wastage of time and resources while the right selection will bring significant business benefits. The reasons for ERP implementation projects that fail to meet business expectations can be often traced back to a poor ERP selection process. Hence, take your time in making the choice and follow the above steps. Investing some time for research and properly outlining your expectations and goals can make a lot of difference in generating a greater ROI. The time and efforts you spend on making the choice can help you avoid having to deal with a messy or failed implementation.
If the ERP selection process still sounds quite complex to you and you intend to save some time on the selection process, an ERP consultant like RheinBrücke can be of great help to effectively evaluate the best fit ERP solution for your organization. We strive to make the entire process efficient and transparent with deliverables that eventually provide confidence to you about your investment in the right ERP solution.