How do I choose an ERP system?

Thursday, August 1, 2019

How do I choose an ERP system?

They say choosing an accountant is difficult because you must bare your financial soul to a third party, which requires a good relationship built on openness and trust.

Choosing an ERP for your business can be doubly so, because that choice will impact on every facet of your business, from sales to production through to financial reporting, for years to come. Clearly the stakes are high and making the right decision is the key to successfully implementing an ERP system.

Choosing the right ERP for your business

So, you’ve made the decision that an ERP system is what your business needs to take it to the next level. How do you choose the right ERP? Well, it’s a good question and something that we are constantly asked. And the first part of the answer lies within the sub-heading above, or rather in the last three words of that sub-heading: for your business.

You see, there are many flavours of ERP, you could choose a red one, or a blue one or a yellow one. The trick is ensuring that the flavour you choose is right for your business.

And you must be mindful that many consultants will be tied to a particular flavour: regardless of whether it’s right for your business, the ERP that they want to sell to you is the blue one, even if the yellow one may well be a better fit. So, you really do need to look around.

ERP selection criteria

So, what should you look for in an ERP system to measure the different systems against one other? There is a lot to consider and if you look around, you’ll see lots of advice about the selection criteria to use, the features to consider, and how you should go about evaluating them all.

We prefer to keep it simple and ask just three important questions, all of which go back to what is best for your business.

  • How mature is your business?
  • What market are you operating within?
  • How sophisticated is your business process?

How mature is your business?

The maturity of your business will have a major influence on the kind of system you should choose. If you are a young business, or perhaps a start-up then you will likely have very few processes already in place. Typically, we find that young businesses have basic financial systems in place whilst other areas of the business are still learning.

A more established SME will likely have more systems in place, after all they have been trading longer and are more mature and have a much better idea of what works for them. In our experience these kinds of enterprise will have systems in place for more of their business processes, but they tend to be disparate and fragmented, whilst some parts of the business won’t be systemised at all.

A larger enterprise operating mid-market will often be much more systemised with established processes in place, but they likely won’t talk to each other.

What market do you operate within?

The kind of market in which your business operates will also affect your choice of ERP. In an established market, that’s well understood, there will be ways of working that have been adopted and utilised by most of the businesses in that sector. For example, if you work within the financial sector, there are established, rigid systems in place.

Now consider a new or emerging market, such as solar power, where the rules of the game have not yet been established. No-one is exactly sure what products are going to be developed in future, the supply chain is not fully established, and the legislative environment may be in a state of flux. Some systems will be in place, but others may not even have been invented, let alone perfected yet.

Some markets will therefore require flexibility in the ERP system, while others utilise rigid, established rules that an ERP must enforce.

How sophisticated is your business process?

The sophistication of your business process is really a function of the age of your business and the maturity of the market in which you operate.

A new or young business tends to have fewer established systems in place whilst a mature business will be highly process driven. Likewise, a new market is more elastic, becoming more structured as it matures, whereas an established, mature market will tend to require a rigid business process.

As an ERP system will be used to manage your entire business process, so you need to find the system that best meets its requirements. If you operate a less defined, simpler business process, then a flexible ERP system is likely to be a better fit. If your business process is on rails, then a rigid ERP system that enforces those rules will likely be a better match.

How can I evaluate and choose the best ERP for my business?

Make sure you have the right partner in place. A good ERP consultant will add a great deal of value at the beginning of the evaluation process. Make sure they speak the same language as you do. You need to ensure that your ERP consultant really understands you, your business and the market you operate in. And if you find that they don’t speak the same language as you, it’s probably time to part company.

The right partner will help you to build a requirements summary: a document that sets out what you do, where you operate, what your requirements are from the ERP system. With the right partner in place – who speaks your language - you’ll have lots of help in deciding on the right criteria to inform the choice of ERP for your business. A really good one will prevent confusion - and you really won’t appreciate the benefit of clarity until you’ve been confused.

Cloud Business Solutions has been preventing confusion since 2005. We are an accredited partner of leading ERP systems including NetSuite, Infor and Microsoft Dynamics. We can support you through the selection and integration of an ERP system for your business. Please contact us to start a conversation.

A good ERP consultant will add a great deal of value at the beginning of the evaluation process.