Choosing the right ERP (Enterprise Resource Planning) system for your business can be a daunting task. Should you go for a top vendor or trust a budding company? Should you buy it or build it?
I answer these questions and more below. Let’s start with the basics.
What Is an ERP and Why Do You Need it?
An ERP is a type of software that your company can use to manage day-to-day business operations like accounting, human resources, project management, supply chain operations, risk management, compliance, and others.
Briefly put, the ERP system can be the backbone of your entire business. That’s why it’s so important to choose the right platform.
In the beginning, ERPs were created for large corporations, often custom built and managed by large in-house development teams. The exponential growth of SaaS and cloud-based solutions, however, has made it possible for businesses of all shapes and sizes to deploy and use an ERP.
So what types of businesses need ERPs and why?
These are just a few areas where the right ERP can make a world of difference:
- Better business integration: All your operations are centralized under one digital roof.
- Better communication between departments: Everyone has access to the same data at the same time. No more files lost between emails.
- Improved customer service: Different departments rely on different types of customer data. The accounting department needs an invoicing address, while the shipping department needs a delivery one. An ERP helps you avoid confusion and offer your customers a seamless experience. Master data management (MDM) mastered.
- Avoid human errors: Manual data entry is time-consuming and prone to errors. The right ERP takes data silos and the need to input the same data multiple times off your plate. You can have confidence in the fidelity of your data.
- Decision-making data: Having access to all your data in a single dashboard offers you unparalleled insights into both customer needs and business operations. You can use these insights to offer better experiences to your customers and improve your business operations.
If any of the above sounds like something your business could benefit from, an ERP system may be what you need. Let’s find out how you can be sure you don’t just get an ERP but the right ERP.
How to Choose the Ideal ERP
Let’s start with the bad news: The title of this blog post is misleading. There’s no such thing as a perfect ERP, no matter what one vendor or another tells you. As with any software system, ERPs have their pros and cons.
The key here is finding one that suits your needs as much as possible and then continually iterating to improve outcomes.
Start the process by answering these questions:
1. What Are Your Company Goals?
An eCommerce business has different needs than a medical clinic. A manufacturer has different needs than a SaaS company. You get the idea.
Think about your short-term needs (for instance, improving business operations or increasing margins) and your long-term goals (like expanding to new markets). Your ERP should be capable of supporting both—or at least capable of scaling along with you.
2. What Are Your Requirements?
Keep in mind that your new ERP will likely be used by most, if not all, the departments in your company. Ideally, the ERP selection process should strive to learn and account for each stakeholder group’s specific needs.
For instance, the accounting department might want to integrate financial data with human resources data, while your marketing department needs a powerful CRM. Make sure that no department is left behind when choosing your ERP.
3. How Does the New ERP Fit In with Your Other Software?
System integration is a big requirement for ERPs, no matter the size of your business. More and more companies rely on their solutions “talking” to each other to obtain valuable insights that allow them to make data-driven decisions.
Because ERPs are often company-wide, a new ERP implementation may make other software systems obsolete. It’s important to identify which systems will be replaced by the new ERP and which will remain in use. Make sure each system can be integrated with the ERP or, at the very least, that data migration from deprecated systems is accounted for.
Implementing an ERP Solution: Buy or Build?
There are seemingly infinite off-the-shelf ERP solutions. Buying an out-of-the-box solution has the benefit that it’s already tried, tested, and vetted by thousands or even millions of other users. And implementation can usually move fairly quickly. Buying a ready-made ERP system is a great option for small businesses and organizations just getting started with ERPs.
However, there are many scenarios when building a custom ERP is the better route.
- You are looking for more flexibility than off-the-shelf solutions offer. You can customize the solution to the needs of your company, which is ideal for businesses that have unique processes and need a solution that has customized workflows.
- You have the time to develop an ERP because you don’t need it implemented in the next three months. Custom software takes time and continuous maintenance.
- You have the budget to fund the development of your own ERP. Building a solution from scratch is not a minor expense. Balancing the benefits against the costs is crucial.
The Middle Ground: Buy AND Build Your ERP
Typically, none of the existing solutions will fit your needs perfectly. But luckily, buying an inflexible SaaS solution or starting from scratch aren’t your only options. You can opt for a hybrid solution.
You can choose an extensible ERP from a proven vendor and then build your own add-ons or customized features. This middle ground helps you get up and running more quickly while allowing you to customize it in iterations after the initial launch.
You have the advantage of building on a proven software infrastructure. And yet you have the flexibility to adjust and extend functionality to meet your needs.
Want to talk more about ERPs, building, or buying them? Reach out!