Choosing the perfect Enterprise Resource Planning (ERP) system can make or break your business operations. With an overwhelming number of options, each with its unique features, cost structures, and scalability options, the decision is far from simple. Use these 7 criteria to evaluate your ERP selection and avoid a failed implementation.
The first criteria for evaluating an ERP is to look at your own business needs. Start by assessing current work processes and pain points to identify specific goals the new ERP can address. From there, create a detailed list of requirements and features the software will need to meet those objectives.
Some questions you can ask include:
With these answers in mind, you can start your search by knowing what you want the ERP to do. The more functionality you expect, the higher the costs will be. Knowing that makes it possible to determine an acceptable budget for your ERP. Remember to go beyond the cost of the software itself. Consider the need for additional resources, such as new hardware, IT personnel, and user training. By setting realistic cost expectations, you can avoid going drastically over budget during implementation.
The next step is to identify potential ERP vendors based on your desired functionality and the determined budget. Check out our list of the best ERP software vendors to find which matches your needs. We tested and reviewed the software ourselves to help businesses get to know what each vendor has to offer. We also have a list of 6 critical questions to ask ERP vendors.
Be sure to consider the vendor’s location during your search. Although there are more and more entirely cloud-based ERP systems out there, having someone local to handle training and implementation can make a big difference at some businesses.
Once you’ve narrowed down the list of appropriate vendors, request a trial of the ERP. Try to get as many users onto the trial as possible to get accurate feedback on how different features work for different departments. Guided product demonstrations can also give you insight into how the software works. In fact, some vendors will tailor the demonstration to your business and functionality requirements.
The next step is evaluating ERP software compatibility with legacy systems at your business. The last thing you want is to spend all the time and effort implementing a new ERP only to have to switch software because it doesn’t integrate with your legacy accounting system. You’ll want seamless integration with any existing tools. However, there are circumstances where it might be better to drop the old software and move everything to the new ERP.
You should also consider scalability for future growth. Ask the vendor what other integrations are available as your business expands. Or see if custom integrations are possible as new products come onto the market. If the ERP on its own can’t scale with your business, it might be better to find a different solution.
During your initial software research, compare which products have the functionality you need out-of-the-box and which would need customization to work best. This personalization can range from cosmetic changes to the UI all the way up to brand new coding. All of these changes can drive up the price. And customization can add time to the implementation process.
While customization comes at a cost, it increases your software’s adaptability to meet evolving business needs. That flexibility makes it possible to stay competitive even as the market changes.
Next on the list is examining data security measures and encryption protocols of the ERP. Be sure to evaluate the disaster recovery and backup capabilities the developer offers. You need a clear understanding of how your business will be impacted in a worst case scenario.
Depending on your industry, this is also the time to ensure compliance with industry regulations and standards. This may be a time to consider industry-specific ERP solutions for:
These solutions are best when the majority of your software requirements are unique to your industry, and requires an industry expert.
Once you’ve narrowed down your list of potential ERP systems, it’s time to calculate the TCO of each option. The lifespan costs involved with a software purchase can include:
Every vendor will charge differently for each element. For instance, one vendor may have a one-time implementation fee but charge separately for support. Another might offer free support within the first year of purchase.
Try to project out at least 5 years for accuracy. Then compare TCO across different ERP options. Based on your already determined budget, this should be an important factor in realizing which ERP is the best fit for your organization.
Finally, it’s time to get your users onboard, as your employees’ ability to interact with the system will largely determine your path to ERP satisfaction. Reviewing available training resources and materials, such as guides or video tutorials from the developer. See what each vendor has to offer for onboarding. For instance, do they handle training whenever you hire a new employee? Or will that training need to be done by your own team?
If you have the chance to demo the software independently, bring up any user feedback to the vendor to see if there are any workarounds. If someone has difficulty with the preset processes, pre-implementation is the time to explore options.
At the end of the day, the right ERP for your business usually comes down to preference, cost, and convenience. Following this evaluation checklist can help you find the software which matches all your criteria.