Introduction
Selecting and implementing an Enterprise Resource Planning (ERP) system is one of the most important business decisions an organization can make. The right ERP system can provide a competitive advantage and enable growth, while the wrong system can hinder productivity and ROI. With the wide range of ERP solutions on the market, choosing the best system for your unique business needs requires careful analysis of key factors such as capabilities, costs, vendor reputation, ease of use, and implementation methodology.
Understand Your Business Requirements
The first step in selecting an ERP system is gaining a detailed understanding of your organization’s current processes, pain points, and requirements. This provides the foundation for identifying the must-have features and functionalities in a new system.
Begin by mapping out all of your key business processes across departments such as finance, manufacturing, supply chain, project management, human resources, sales, and customer service. Document the workflows, stakeholders involved, data and integrations needed, reporting requirements, and desired outcomes. Also identify current challenges such as data silos, manual processes, and bottlenecks that are creating inefficiencies.
With your business mapped out, define both your immediate needs and longer-term strategic objectives. For example, do you aim to reduce cycle times in manufacturing? Improve supply chain agility? Gain real-time enterprise-wide reporting and dashboards? Does your growth plan involve expanding to new markets or geographies?
Be sure to involve stakeholders from all impacted departments in the needs analysis process. This cross-functional participation helps build buy-in and also uncovers requirements from different perspectives. Bringing IT leaders together with department leads provides the full picture.
Documenting detailed functional and technical requirements in areas like financials, inventory, workflows, analytics, and integrations will guide your software evaluation. Distinguishing between “must have” and “nice to have” features is also important, as every ERP system will have tradeoffs. Keeping requirements focused on business needs rather than any predefined solution is key.
Research Your ERP Options
Armed with a clear understanding of your business and technical requirements, you can start researching ERP solutions and vendors in more depth.
First, decide whether a cloud or on-premises deployment better aligns to your IT strategy and business needs. Cloud ERP reduces upfront costs and technical burden on your IT team, while on-premises may provide more control and customization. If you have security concerns around cloud, start by evaluating hybrid deployment options as well.
Some of the leading ERP solutions to evaluate include:
- SAP S/4HANA
- Oracle E-Business Suite
- Microsoft Dynamics 365
- Infor CloudSuite
- Sage Intacct
- NetSuite ERP
- Odoo
- Acumatica
Consider both broad market solutions as well as industry-specific systems tailored to your unique workflows. Manufacturing, distribution, retail, professional services, and other verticals often have specialized needs that niche industry solutions can better address.
Also assess any requirements around open source vs proprietary code and ease of customization. Some vendors allow code access for better integrations and customizations, while others don’t.
Scalability is another big factor if significant growth is projected. Cloud systems tend to scale better as server capacity can be added quickly. On-premises systems require more upfront capacity planning.
Evaluating the integration and development capabilities is also important. Having open APIs and standard interfaces provides more flexibility to connect other applications in your ecosystem.
Evaluate Costs and Licenses
While comparing features is crucial, you also need to understand the total cost of ownership and licensing models for each ERP option being considered.
Upfront costs range widely depending on software, necessary hardware, implementation services, data migration, and training. Ongoing costs include annual support fees, subscriptions, maintenance, and new releases or upgrades.
Most ERP vendors offer different license types based on number of users, revenue generated in the system, specific modules or applications activated, and other metrics. Get detailed pricing for each scenario relevant to your business.
Using a third party implementation partner often increases costs but can also increase success rates. Some level of internal IT involvement will still be required. The level of customization and integration work needed also impacts overall cost.
For cloud-based ERP solutions, compare monthly or annual subscription fees rather than large upfront perpetual license purchases. However, you still need to budget for configuring the system to meet your needs.
Carefully model total cost of ownership over a multi-year period to make the best financial decision, rather than simply going with the cheapest system. An inexpensive software that lacks critical functionality or scalability will cost you more down the road.
Assess ERP Vendor Capabilities
The software vendor you choose becomes a long-term technology partner in managing arguably the most critical system for your business. So assessing software, services, support capabilities, and overall vendor strength is just as important as product features.
For larger ERP vendors, evaluate their experience across diverse industry verticals and geographies. Look for decades of expertise across a huge customer base. For smaller or newer niche vendors, look for deeper expertise in your specific market and vertical.
Examine their methodology and resources for implementing their ERP solution. Do they have proven best practices for deployment? What training options do they offer? How are customers supported during and after rollout?
For cloud systems, review uptime history and SLAs. Also understand the vendor’s product development roadmap and history of consistent innovation. For on-premises, see how they handle updates, patches, upgrades, and releases.
Request references from current customers in your industry and of similar size. Reach out to them to understand their experience and lessons learned during implementation and ongoing use. Also check sites like Gartner Peer Insights for independent customer reviews.
Geographic reach can be important if you have locations or operations across multiple countries and regions. Assess language support and regulatory compliance as needed.
An experienced implementation partner familiar with the ERP platform can supplement any gaps in the vendor’s capabilities and services.
Prioritize Ease of Use
The most feature-rich ERP system will fail to have positive business impact if employees struggle with daily use. That’s why ensuring an intuitive, role-based user experience is so important.
During software demos and trials, evaluate end user workflows relevant to each of your functional roles. Assess how logical and streamlined key processes like order entry, inventory management, procurement, and reporting appear.
Configurability is key. See how flexible the system is for modeling processes, screens, dashboards, and workflows to match your organization’s terminology and procedures vs. having to change ways of working.
Modern systems should provide embedded analytics, simple report and dashboard building, and easy drill-down to detail from KPIs for each role. Mobile access from anywhere via apps or responsive design is also becoming standard.
User experience factors like these often don’t get enough weight compared to technical capabilities, but have a huge day-to-day impact on adoption success. Investing in change management and training is also required, but the right solution will minimize this burden.
Validate Security and Reliability
For any mission-critical business system, security and reliability are paramount. Trusting your ERP system requires evaluating technical safeguards, disaster recovery precautions, and performance metrics.
Ensure any SaaS ERP vendors have implemented the latest data security protections across networks, servers, and applications. Required access controls, encryption, and cybersecurity protocols should align to industry standards or regulations your business operates under.
For cloud solutions, verify uptime reliability as part of SLAs, look for redundant infrastructure, and confirm locations of data centers. On-premises vendors should provide guidance on backups, failover infrastructure, and redundancy needed for high reliability based on your environment.
Test performance under peak loads and large transaction volumes to identify any bottlenecks early before go-live. Work with vendors to establish infrastructure sizing and bandwidth needs upfront as part of your contract.
Using audit logs, alerts, and reporting, the system should support access controls, change tracking, and workflows to meet your compliance requirements.
Plan the Implementation Approach
Once ERP software selection is complete, turning to a robust implementation plan is the next critical priority. This includes scoping phases, addressing data migration, confirming timelines and resources, and preparing end user training.
Most companies favor a phased rollout by line of business, department, or geography vs. a “big bang” approach all at once. This reduces risk and disruption, while allowing lessons from early phases to improve later ones.
In-house implementation with IT and an internal project team provides budget control but adds resource burden. Hiring experienced third-party implementation consultants often improves speed and outcomes, though at higher cost. Many vendors provide packaged implementation services as well.
A data migration plan is critical for success. Legacy data must be cleansed, mapped, and tested to work in the new system. Interfaces for any remaining disparate systems to feed the ERP also need built. It’s common to run parallel systems for a period during rollout.
The training timeline needs to ensure users are well prepared at launch. Change management is also key to driving adoption and minimizing productivity disruptions during the transition.
Phased rollouts give time to refine training content based on experience. Taking steps to reinforce and communicate the business benefits of the new ERP will keep stakeholders engaged.
Strong project management maintains momentum during the many months it takes to fully finalize configurations, workflows, data conversion, integrations, reports, and tests. Cutover checklists and dress rehearsals for go-live readiness prevent surprises.
celebrate wins and new efficiencies after launch as you continue optimizing use of the system in the months ahead.
Conclusion
Selecting a strategic ERP system aligned to your business needs and navigating a complex implementation takes significant time and effort. However, the long-term rewards are well worth it. With the right solution in place, you are positioned for improved productivity, decision making, growth, and competitive advantage.
This overview provides a starting framework for approaching your ERP selection and implementation journey. Each organization will have unique considerations to factor in based on their industry, size, geographic footprint, corporate culture, and legacy systems.
Defining high-level requirements and then narrowing down to a shortlist of vendors that best fit is an iterative process. Take time to fully evaluate costs, capabilities, ease of use, and implementation approach once you have promising options.
Empowering a skilled internal team and recruiting experienced advisors and partners is another element critical to ERP success. With the right people, software, and implementation plan in place, your next generation ERP system will meet today’s needs while flexing to tomorrow’s. The investment will modernize workflows, provide insights, fuel growth and pay dividends for years to come.