How to navigate the ERP purchase decision-making process
When purchasing a strategic software solution such as a new enterprise resource planning (ERP) solution, making the right decision is vital. Many organisations wrongly assume that when it comes to ERP, the old adage of ‘one-size-fits-all’ holds true. This couldn’t be further from the truth, particularly for enterprises operating in the manufacturing and services sectors, where an ERP system that is customised to meet the organisation’s specific business requirements is vital to operational efficiency and, ultimately, growth.
Below are six critical success factors to help ensure that you choose the ERP solution that is right for your business requirements.
Assess functionality needs. Start by evaluating the business challenges and individual pain points that you need to address and determine the business value your organisation needs to extract from the software. What problems should it solve, or what opportunities should it create for your business? For a CEO, you might be focusing on growing revenue from existing customers, attracting new customers, or supporting your move to a new market. For a COO or factory floor manager, you might be challenged with improving throughput on the factory floor, reducing inventory levels, or coordinating supply and demand to prevent stock shortages. At a very early stage of your decision-making process, you will want to compile a list of cross-functional requirements to use to reach out to software vendors that have solutions that match these requirements.
If replacing legacy software, keep in mind future business goals, rather than simply writing a list of the shortcomings of your old software. Where do you want to be in three to five years? What does your ERP solution need to support in the future? These questions are vital. In the past few years, manufacturers have undergone a significant transformation to address market challenges. For many, this has meant moving from a very standard ‘make-to-order’, ‘make-to-stock’, or ‘engineer-to-order’ manufacturing model, to a ‘mixed mode’ model, which can put added pressure on ERP solutions. Another key question to ask is: how do you want to deploy the solution? Legacy systems are traditionally on-premises solutions. Today, however, you have a choice in deployment, including traditional on-premises, hosted, ‘true cloud’, or hybrid options.
Have an open dialogue with software vendors. The opening stages of making any software decision should involve an open and honest discussion with the software vendor about your organisation’s business ambitions. This is where vendors show their strengths as a true partner, suggesting the options that will best accommodate the company’s overall business strategy.
Understand the end game, not just cost of ownership. New software requires a considerable business investment; however, it’s important to measure ROI, not just cost. Consider the up-front purchase budget alongside other key considerations such as the benefits the organisation can expect to gain from that software, as well as the long-term maintenance costs.
Today’s next-generation enterprise software solutions, for example, have the ability to save businesses valuable time by reducing the amount of administrative tasks that employees have to complete, automating processes and streamlining workflows. This results in a more agile business that is more responsive and competitive.
Assess ability to support the new software. Be sure to understand the capabilities of your company’s IT department. Will the team need help throughout the entire implementation process and beyond, or will they just need a training session before managing the deployment themselves?
Many software vendors include support and upgrades in their sales package, but make sure the vendor is prepared to provide the level of service needed. Having this information and working with a vendor that understands the needs of the organisation will help when deciding what software/support bundle is best suited for your company.
Research the software vendor. It is vital that companies check credentials and do the necessary research to make sure they work with a software vendor that cares about the business requirements, not just about where the next sale is coming from.
Reputable software vendors will consult with the company on different options available and offer honest opinions on how to use technology to improve the business. This is especially important when purchasing an ERP solution, which is a whole package, not just one small element of a business’s technology.
Also, you can’t predict the direction your future growth will take, so having a partner that is agile and committed to innovation is invaluable.
ERP solution features. An ERP solution should solve problems, not create them, so it is critical to ensure that the solution you choose has the following features:
- Industry-specific: An ERP solution that works well for a manufacturer of plastics might not necessarily be right for a retail outlet. Make sure that the solution you choose has been built to cater to the needs of your specific industry and has the track record to prove it
- Scalability: An ERP system built on scalable architecture will help you manage growth, and the fewer customisations a system requires to meet your specific needs, the better
- Functionality: An ERP system must have the capabilities to do everything that your business strategy demands of it. It should be fast, reliable and easy to integrate with your other systems
- Deployment options: On-premises, private-cloud, public-cloud or hybrid deployment options, combined with mobile access for your employees, ensures that your organisation will remain flexible and responsive
- Ease of implementation: If you have problems at this stage, it can have a lasting impact on your ERP system’s performance and your profit. Look for a solution that is easy to implement with all the customisations you need
- Ease of use: Nobody wants to go through a difficult and unfriendly learning process. An ERP system with an intuitive user interface will increase employee satisfaction and productivity.
Choosing any new software, but particularly an ERP solution, is a complex task and can also be a confusing experience. That being said, selected carefully, an ERP system can serve as the backbone of your business: it can improve visibility and transparency across departments, streamline operations, speed up time to market, support change management initiatives and aid decision making, and it gives your enterprise the competitive advantage it needs to grow.
Monzer Tohme, Regional Vice President, Sales, MEA, Epicor Software, elaborates on the critical success factors for choosing an enterprise resource planning (ERP) solution.