Choosing the Right ERP System for Your Business
If you’ve done any research regarding ERP systems, you know you have many, many options. In fact, you have so many options, you’re probably overwhelmed. To reduce overwhelm, it helps to break the process down into manageable steps.
1. Determine your software needs.
The benefit of any ERP system is that it gives you a 360 degree view of your business — from marketing and accounting to warehouse logistics and sales. The first thing to do therefore, before considering any software vendor, is to determine which functions you need to automate. ERP systems can handle any number of functions, including accounting, marketing, order inventory management, warehouse management, manufacturing, supply chain logistics, and customer relationship management (CRM), to name a few things.
If you’re a multichannel merchant, for example, you’ll want to look at ERP systems that automate all functions of your sales process across your various points of sale — Internet, in-store, catalog, etc. You’ll also want to consider a system that shows inventory levels in real-time to people in your warehouse and customers placing orders online.
Add to your list any other functions you need or want. If you’re currently using an ERP system and are thinking of upgrading, start mapping out the processes that are working well. Then consider those that aren’t and ask why. Finally, search to identify current system limitations that are restricting your growth.
Look for ways automation can save you money. By choosing the right ERP system, you can lower costs through better inventory control, more accurate forecasting, and efficient marketing.
One view of information — Does the thought of a single database, where all of your information is in one place, appeal to you, along with real-time inventory and order tracking? Think of how much easier reporting will be with all of your information neatly stored in one location.
Technical support — How important is a responsive, US-based technical support team with one number to call where an actual person on the other end of the phone can provide assistance? When assistance is needed, the last thing you’ll want to deal with is being placed on hold and transferred to various departments. Be sure you will receive the immediate attention you deserve.
Modular vs. one size fits all — Does a modular system appeal to you? Why pay for features you do not need? The ability to customize not only the system’s features, but also your users’ screens and reports is a feature to consider.
Customization — Are there customizations you would like to add to the software? Can the vendor offer a configuration that enables a competitive edge in your market, or one that offers a superior customer experience? Be sure the vendor is flexible to accommodate your special needs, using your business guidance.
2. Look to third-party consultants for help.
Once you’ve determined which functions you need, do research using third-party software consultants. Software consultants are experts in a specific niche, they know all the players in their industry, and they’re usually unbiased. Some, such as Ernie Schell, issue reports or scorecards each year that detail the vendors and their offerings. Schell, for example, authored the 2012 Order Management Software Roundup.
As you do your research, create a list of possible vendors and visit the website of each one. Download any relevant white papers, case studies, and other collateral. From this information, create a short list of vendors — generally three to five.
(You can also read our case study about how IPD, a Volvo parts distributer, used a third-party consulting firm to help them find the right ERP software for their business.)
3. Schedule demos.
Revisit the vendor websites on your shortlist and schedule demos. These usually take place online, and the sales person will walk you through the software and answer any questions you may have. This is also a good time to research the company:
- Search Twitter and LinkedIn to see how the company manages any customer support-related issues.
- Ask your own networks if anyone has done business with the vendors on your short list.
- Ask the vendors on your short list for references, and follow up on those references.
- Call the Better Business Bureau to see if the company has any complaints lodged against it.
4. Make a Decision.
Once you’ve completed your demos, you’ll be able to narrow your choice down to two or three vendors and, at some point, vendor reps will meet with you to learn more about your company in order to prepare a proposal.
Even with your shorter list, you should still be asking lots of questions. Don’t settle for software that’s less than ideal in order to get a “special deal” or for promises that a major upgrade is in the queue six to nine months hence. The last thing you want is to be the topic of an ERP horror story (you can read a few in this Forbes article).
It is important that you continue to evaluate the vendors with more in-depth questions and feel comfortable and confident in their responses.
This will be quite a large investment for your company and huge change for your staff. It is important that you can see yourself building a long and lasting relationship with your new vendor and that you carry that enthusiasm along to your staff.
If you don’t “click” with a vendor, its representatives or the offering, end negotiations and restart the process. An ERP system is a major purchase, and one you and your employees will be using for many years. Take your time, research your options, get to know the people, and ask lots of questions!