The market is full of ERP systems of various shapes and sizes. Each of them boasts unique features that can help companies increase efficiency and touch new heights. Therefore, it isn’t hard to believe that the global ERP software market will hit $78 billion+ by 2026. Although ERP software offers myriad benefits, not all of them serve every business.
There is a
widespread belief that companies should first purchase the ERP software and then adapt themselves
to the software’s functionality. But lack of attention can prove to be a very
ERP software can completely transform how businesses function. So companies have to lay down a well-thought-out strategy before making the final purchase. They must weigh the pros and cons and check whether the ERP software provides them a competitive advantage over other industry players.
Let’s see 5
critical factors that companies must keep in mind while selecting the right ERP
software for themselves.
1. Get a 360-degree perspective of your business
businesses have different needs. If you are a manufacturer, then your primary
need is to process raw materials into finished products. If you are a supplier
or distributor, your principal need is to maintain a good logistics network. If
you provide customer support, your primary need is to have a quick and robust
communication network. Thus, it’s necessary to prepare a list of your
challenges before you start looking for vendors.
2. Involvement of senior management is a must.
Does your company
follow a top-down hierarchy where the senior management takes all decisions?
Does the end-user have a little/no say in decision-making?
Well, you cannot do
much to change how your company functions, but you can give positive inputs in
the following ways:
- Critical features that an ERP software must have as per your industry.
- The extra benefits that the ERP software will provide.
- A detailed cost-to-efficiency analysis of different ERP systems in the market.
- A list of the best vendors in the industry.
- Which ERP software are your competitors using?
- What benefits your competitors have gained after installing the ERP software?
3. Get a clear understanding of all the costs
involved in implementing the ERP software.
Once you begin your
search for the ideal ERP software, you will talk to many vendors. Here is an
advice that you should always keep in mind. ERP vendors, like other vendors,
will try to downplay the costs and risks related to the ERP. Some of them will
also try hiding associated costs — hardware upgrades, software updates,
employee training programs, implementation costs, etc.
Before making the
final purchase, you should browse through multiple vendors and check what
features they provide and the associated costs. The famous idiom
“Precaution is better than cure” applies perfectly over here because
you cannot backtrack once you purchase the ERP software. So it’s better to base
your decisions on data and customer reviews rather than false advertisements
and gut feeling.
4. Develop a realistic ERP implementation plan.
Once you have
selected the vendor and have purchased the ERP software, it’s time to build a
full-fledged implementation plan. The plan should consist of the following:
- The implementation cost of the entire project
- The time required for the full implementation
- Functional and business commitments
- Time and cost required for data migration
- Significant organizational changes associated with the implementation
Apart from the points mentioned above, companies should also conduct end-user analysis to know whether the new ERP software has brought a significant change in their work. You should also periodically check whether the ERP software is performing well as per the set metrics. If it doesn’t fulfill your business objectives, you should call the vendor for assistance and bring the necessary changes.
5. The search for the ideal ERP software never ends.
landscape is like a flowing river that keeps changing. Yesterday’s
“wants” become tomorrow’s “needs.” What appeared like a
revolutionary feature a few years back becomes the norm today.
Improving over the
past is what the future is, right? But the problem lies somewhere else.
breakthroughs happen globally, but not all ERP vendors embrace them.
Traditional vendors play safe and don’t change with time, making it all the more
important to search for new vendors that welcome technology with open arms.
Most companies keep
only a handful of attributes while searching for vendors such as:
- Name and popularity of the vendor in the industry
- Which vendors are their competitors working with?
- Market share of the vendor
- The price the vendor charges
features are non-essential. Companies should consider them after including the
following essential elements:
- Relative strengths and weaknesses of the ERP vendor
- Which vendor provides an ERP software that fulfills all your business requirements?
- Which vendor offers up-to-date ERP software?
business-critical attributes change with time. So don’t have the wrong
impression that once you have purchased the ERP software, the search is
complete. It is an indefinite search that only becomes challenging with time.
ERP software will enable your company to become blazingly fast and
efficient. It’s the surest way to increase your production multiple times,
perform transactions at a lightning-fast speed, and provide immense value to
What are the Key Steps for
Selecting the Right ERP Software?
Choosing the Right ERP Software is the most crucial step in the entire
process as it actually decides what you can expect as an outcome towards the
end. Some of the most important steps you would want to focus on at are
1. Doing extensive market research about some vendors that have a proven track record
2. Understand the ownership cost
3. Create a goal aligned implementation plan
4. Set a product demo and ask for a trial
5. Be clear on the pros and cons of On-cloud and On-premise setup