When choosing the right ERP software, whether it’s for the first time or in an effort to improve upon your current business IT system, there is to plenty consider to ensure you find a solution that best fits your business.
The lengths to which you can assess your choice of software and vendor are almost infinite, but it’s definitely worth the time to take every aspect into consideration. Here, we take a look at 5 things you should always think about when selecting the right ERP software.
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5 things to consider when selecting the right ERP software for your business
1. Determine your return on investment
Chances are you’re adopting a new ERP system to reduce costs, so it’s important to calculate what your total expenditure will be and what business benefits you can expect. This won’t just help you determine which software package/vendor yields the greatest ROI, it also provides the information your executive management will want and will facilitate the approval process once the selection has been made.
If the ROI calculated for a particular vendor does not make sense or does not meet your budget, it’s probably best to discuss with your vendor and explore other options. The ROI calculation may also reveal that due to budget, resources and other factors, the present time may not be the time to start an ERP project. If that is the case, use the ROI to help you put into motion a plan to prepare your company for an ERP project at a later time when budget is available.
When calculating your ROI, be sure to compare it to your current costs. Don’t forget to consider IT hardware costs, servers, downtime, electricity usage, upgrades, security, disaster recovery – as well as the time and efficiency savings that should come as a result of implementing the right ERP software.
2. Translate the ‘needs’ of your business into functionality ‘requirements’
The best way of selecting the right ERP software for your organisation is to simply list the reasons why you want a new system in the first place, which would be the ‘needs’, and then determine what functionality is available to meet those requirements.
If there are too many requirements to implement in one go, then a phased approach is perhaps best suited to your business, allowing you to prioritise critical functions and have them ready to use on day one immediately after implementation. Not only does this reduce the amount of time the implementation process impacts on day-to-day productivity, it also helps you to establish where requirements are most needed and highlights any you may have overlooked.
Good ERP software is flexible, and will allow you to pick and choose specific functionality in order to tailor it to your company. You should avoid trying to shoehorn your business into a particular ERP system and instead focus on finding one that is more suited to your individual business processes and requirements. (It’s worth finding out if your potential vendors offer any industry-specific solutions that have already been optimised for your sector.)
A good solution will also allow you to add more functionality over time if and when it is required.
3. Explore new functionality not previously considered
Understanding how your business processes work step-by-step is essential, as this will help you to ascertain what kind of ERP system will best fit your organisation and meet the needs of your staff. But is there a different way of doing things, an even better way?
The best new system for any business is going to be the one that brings added value, not one that simply replicates what you’re already doing, no matter how well it’s worked for you in the past. Your ERP vendor may be able to highlight areas in which business processes can be improved through some new functionality that you possibly did not know about.
4. Choose the right cost model
Should you opt for a Fixed Bid contract, or should you choose a cost model that’s based on the predicted time and materials (T&M) involved throughout the scope of the entire project? That’s a question many organisations will be asking themselves when the time comes for ERP implementation.
If it’s a Fixed Bid contract, you’ll have a more defined view of the scope of the project in regards to overall timescales and cost. Although this may take some additional effort at the outset from both parties, many businesses prefer to work this way because it helps them to establish a budget in advance and minimises the risk of any “hidden costs” cropping up, such as under-quoted investment of time or the need to implement additional functionality they thought was included.
Having a clear understanding of your requirements beforehand and being strict with the original project scope is definitely important to your ROI.
5. Can your new software keep pace with changes in the industry and marketplace?
You know your business better than most people, which also means you should have a clear understanding of the changing pace within your industry and/or marketplace. If productivity tends to fluctuate throughout the year, or if you plan on adding more users or functionality over time, then it’s important to have a system that’s scalable and provides a framework for future growth.
This is where the option of having a cloud-based ERP system enables you to easily scale up and scale down your business operations accordingly.
You may find our related article helpful: A foolproof formula for choosing the best ERP software for your company
I hope you find this useful when embarking on your own ERP project. Let me know in the comments below if you have any tips to add.