When small-to-medium businesses (SMBs) decide to purchase a new enterprise resource management (ERP) system, they are doing so for one of two reasons. One, they are updating from a decades-old legacy system (or a cobbled-together, decades-old legacy system) or they are finally moving off retrofitted desktop systems or spreadsheets.
Either way, you are probably going to be impressed with all the bells and whistles offered by new ERP systems. Think driving your 1984 Gremlin onto a car lot filled with state-of-the-art Teslas.
Dashboards and graphical data presentations will be impressive (again, much like a Tesla). Reporting will be thorough and mobile-enabled. It might be very, very tempting to open that PO, hire an implementation partner, and migrate to the first ERP system you test drive.
Uhm, but don’t. There is more to ERP than reports sent to your mobile phone and flashy dashboards. Again, the same could be said for a Tesla. Have you seen the news about power steering failure, bad tires, expensive repairs, and insurance?
Demos are designed to dazzle. But dazzle does not spur growth. Getting the right ERP solution for your business will. The features you find most impressive may be common among most systems and may not be critical for your business. Productivity is more about automation, access to information, and ease of use.
Choosing an ERP system cannot be done in the bubble of IT. To achieve scale, IT can lead the project, but every other line of business should also have a seat at the table. No one knows the processes and job functions that the new system will have to manage and support better than the people who work with that system. Therefore, they need to be heavily involved.
There are six areas of focus when it comes to making an ERP software purchase decision. They are:
Ask yourself these questions. Does the ERP software meet not only today’s needs but the future needs of the business? Will your employees find the software intuitive and (therefore) easy-to-use? Does the software support specific functionality unique to your industry?
No matter the choice, your ERP vendor will become a key business partner. Therefore, you will need to mesh. Find out answers to the following questions. Does the vendor understand the specifics of your business and industry? Is the vendor aligned with the specific requirements of your company?
If we agree on point #1—that you need an ERP solution that fits today’s business needs and tomorrow’s, then you need to make sure that the ERP vendor will be around tomorrow. Ask yourself if the company that is running the demo is invested in this product? Are they at risk of being subsumed by another larger company and their product offering still being supported but not enhanced? Will the software be a part of its service offering for the long-term?
Most companies have processes and systems in place already. They may not be the best; otherwise, you would not be looking to select an ERP product. Therefore, unless you are doing a “rip and replace” you need to figure out if the ERP product will integrate with your other systems (and remain stable). Does it fit within your planned technology roadmap? Find out what the vendor’s integration strategies are between not only solutions sets within ERP (financials, project management, expenses) but across other departments’ software packages (customer service, inventory, logistics, and even human resources).
Do you know what it will cost you to migrate to an ERP solution? If it is on-premises, do you know what licenses costs and what the support fees cover? If you want a cloud ERP solution, do you understand the subscription costs, and service and support fees (and possible integration costs)? Are they included in the subscription pricing?
Buying your new ERP solution is only half the job. Now you must install or implement and push it live. There are so many things to remember to do. Will a phased approach work best? Rip and replace? Or will you be transitioning from manual to automated and have to put workflows and hierarchies into place? And what about change management issues? Make sure that your vendor’s implementation methodology is flexible enough to align with your employee’s and your business needs. Review the project plan. Is it comprehensive with adequate detail? Issues will pop up. They always do. How will they be managed, and who will manage them?