Choosing an enterprise resource planning (ERP) system is one of the most important decisions a business might make. There is plenty to consider — not only the ERP systems’ features, cost and deployment model, but also the vendors behind them, with whom you will be working with for many years. A thorough assessment takes time but will prove well worth the investment in terms of quickly realized operational and cost efficiencies, advanced data integration and analysis that informs real-time decision-making and support for future growth.
10 Key ERP Selection Criteria
- Business requirements: What do you need your ERP system to do? The answer to this question requires a great deal of forethought. That’s where a designated internal team of stakeholders from the different areas of the business can be extremely helpful. Each member must first gather feedback from their own teams about how they want to use a new system, including desired features. From there, the internal team can craft a business requirements analysis document that coordinates the feedback, articulates an overall vision for how the system will bring value — aka, ROI — to each applicable part of the business and defines what metrics will be used to measure that anticipated ROI. This document can be used as a guide and/or checklist when evaluating different systems and, ultimately, for measuring the ERP system’s ROI.
- ERP features: Different companies and their departments will require ERP features that support their specific processes. But they’ll all likely have a common need for an intuitive interface and dashboard that enhances cross-department management and collaboration with easy-to-read key performance indicators (KPIs) and report creation. Other common requirements include advanced business intelligence, data-mining capabilities and data security. An ERP system should also be able to integrate data from existing systems and be customizable.
- Total cost of ownership and ROI: This depends on the chosen deployment model. When ERP is installed on-premises, the business is responsible for all upfront hardware and software costs, as well as costs associated with implementation, customization, upgrades as the business grows, and security. Additional costs include employee training and ongoing maintenance and support. Some costs are one-time charges, others are ongoing; and the number of users may also have an impact. Total cost of ownership (TCO) is typically steep, so realizing the ROI of ERP generally takes longer than for less business-critical systems.
Cloud-based ERP, which is set up, hosted and managed by a cloud vendor, reduces, eliminates, or amortizes many of those costs, potentially lowering TCO and almost certainly speeding up ROI — a main reason why cloud deployment models are popular among growing companies. The ERP system is accessed through the internet, with security managed by the cloud vendor and the software delivered as a service. The vendor also handles software updates, upgrades and maintenance.
- System integration: Not only should an ERP integrate disparate business processes, but leading solutions will also integrate with any existing systems and applications a company wants to continue using. And if they do, the new vendor should have connectors available that do exactly what the name implies, preferably enabling real-time synchronization so data among systems is always up to date.
- Support and training: The ERP system will require support for initial implementation, ongoing daily operations and employee training. Determine whether the vendor provides all those types of implementation support, its particular skill in your business segment, what escalating levels of support are available to match your business’s needs and what response time is guaranteed. Managed support may be an option for a monthly fee.
- Implementation:ERP implementation can take anywhere from one month to more than a year depending on whether the system is deployed on-premises, in the cloud or in a hybrid combination. Generally speaking, a business will be up and running the fastest with a cloud-based ERP system since the vendor handles implementation rather than tying up internal resources. A new ERP is typically implemented in phases and will involve the migration of data, which requires data cleansing to ensure data quality. Rigorous testing is essential before going live.
- Vendor industry expertise: Along with evaluating the ERP software, it’s a good idea to evaluate ERP vendors for their expertise in your industry. The ideal vendor will have a successful history of prior ERP installations for companies in your industry and at roughly the same company size. It also pays to get and check references of satisfied (and perhaps unsatisfied) customers. Financial viability is also important to ensure future support.
- Technology: Advanced technologies continue to emerge and elevate many of the benefits an ERP system can provide. The cloud, artificial intelligence (AI) and, more specifically, machine learning can all improve business processes; provide deeper, more predictive analysis and insights; and enable a personalized experience, among other benefits. Some systems may also support Internet of Things (IoT) devices, such as sensors and cameras that feed information back to the ERP; blockchain, for conducting transactions and the transparent flow of data; and augmented reality.
- Vendor product road map: As a business grows, it’s likely to need more from the ERP system than what’s included in its initial requirements. As a result, it is important to find out how the vendor will improve, add to and support its product — new versions, features and functions — down the road, as well as how those features will be integrated into the existing software. Another item to consider is the frequency of updates and patches.
- Customization: The need to customize will depend on the complexities of your business processes — and even if you don’t need it at the time of ERP selection, it may become important as the business grows. It may also guide the type of cloud deployment selected: single tenant vs. multitenant. The former allows for more customization because the ERP is dedicated to just one company, rather than shared as in the latter model.
Choosing the Right ERP Vendor
Growing businesses are increasingly turning to ERPs based in the cloud, such as NetSuite ERP, which automates and integrates many core processes without the upfront costs required when deployed on-premises. From a single NetSuite ERP application, businesses can manage accounting, inventory, orders, manufacturing, supply chain, and warehouse operations with companywide visibility of operations and data. NetSuite ERP also integrates with other NetSuite business applications, such as ecommerce and CRM.
Choosing the Right ERP solution provider
Vantis is your right solution partner! With our expertise and industry best practice experience, we helps customers define their key problems and solve difficult technical challenges. From planning, operation processes and workflows, system integration, implementation, support and training. We will help you make the right decision for your company.