Enterprise Resource Planning (ERP) is one of the essential business systems for any business, regardless of size and industry. According to Statistics in 2018, the revenue in the ERP market was around $39.4 billion.
Summary1) Functional Capabilities2) ERP Vendor Strengths3) Business Model4) Organizational Factors5) Industry Specific Factors6) Financial ConsiderationsHowever, choosing a world-leading ERP system can be a daunting task with all the options available today.
To ease your struggle in deciding which system is best for your organization, here are six factors to consider when evaluating ERP software:
Look at the functional capabilities of the software to see if it will make your job easier. For example, accounting and finance departments implement ERP systems for accurate recording of financial transactions, while marketing teams need solutions that provide real-time customer data.
Some essential characteristics of functional abilities are:
a) Flexibility
The software must be flexible to adapt to organizational changes. For example, if your department is planning the launch of a new product, the system should integrate it without any problems.
b) System Interoperability
The ERP system should integrate with other related software for better reporting. For example, if you are using an e-commerce platform, the software should sync with it for better inventory tracking.
c) Scalability
Make sure the system is scalable and can handle a sudden increase in user base without compromising performance. Scalability also prevents IT infrastructure from becoming obsolete.
A scalable system lets you use the same software for small and large businesses, helping you reduce costs.
When you talk to different vendors, they emphasize their unique selling points. You need to study these strengths and how they will benefit your business.
Some of the most critical factors are:
a) Agility
Agility is key for businesses to gain a market advantage. The system should be flexible enough to make changes quickly.
b) Ease of use
The system should be easy to understand and implement. You don't want to take too much time and resources to train employees.
c) Cloud Factors
The system must have adequate cloud support so that you can access real-time reports anywhere, anytime. Plus, it will save you money on heavy infrastructure.
d) Personalization
ERP software should be customizable to meet the unique needs of your business. This can help you achieve efficiency and accuracy. Customization is essential if you have different units in your company with specific requirements.
e) Technology
System technology should be progressive and state-of-the-art to give your business a competitive edge. If you are looking for an off-the-shelf solution, the vendor should have the latest technology.
f) Pricing
The provider's pricing model should be transparent to avoid surprises at the end of the contract period. You can negotiate when the supplier offers discounts.
Analyze your business model to determine if you need a leading ERP system onsite or offsite.
On-premises software is installed on your company's local servers, while off-site ERP solutions are web-based.
On-premises solutions offer more security and control, but they require expensive infrastructure. Additionally, you need to allocate resources to maintain and upgrade the system.
On the other hand, offsite solutions are more accessible to implement without significant business process changes. However, you cannot access real-time data because your data is stored remotely. In addition, the supplier must have a fast internet connection to ensure that the system is operational at all times.
The business model, structure and skills of the company's employees are crucial factors to consider.
If you are part of a large organization, the system should support multiple users. Large companies also need powerful financial reports to store sensitive data securely.
Industries have unique business requirements. The ERP system should integrate seamlessly with other software, such as the accounting package.
It should also have specific features tailored to your industry, such as storage requirements.
The vendor should have a good track record of delivering solutions that meet customer demands. Additionally, you need to meaningfully consider the profitability of the solution if your business model changes over time.
You must remember that an ERP system is an investment for future growth. You should check with the vendor for future support, upgrade, and maintenance costs.
