ERP Software Buying Guide
Certain investments have the power to transform a business. A key piece of equipment, an outstanding advertising campaign or a new location can all lead to periods of revolutionary growth. When selected carefully, enterprise resource planning (ERP) software has the potential to be one of those investments.
ERP software is designed to offer a single unified platform that brings together every key function of a business. From management accounting to inventory control to customer relations to human resources, ERP integrates many of the most important business functions into a single package and allows management and employees alike to view critical data and perform crucial functions through a single platform.
An ERP suite is a substantial investment for any business, and best practices demand that the ERP software selection process be rigorous and thorough. However, there are so many factors in play when choosing an ERP system that it can be daunting to choose the right one. The history of business is full of cautionary tales of businesses that suffered severe damage from poorly-implemented ERP software—the kind of self-inflicted wound from which it can be difficult to recover.
With all that in mind, there’s help available for businesses that need to make a smart choice for ERP software. Whether a business is beginning the decision process on their first ERP software solution, or they’ve decided it’s time to move on from a previous ERP suite and are searching for a new solution, this guide will help outline the relevant factors and provide a framework for making a sound choice.
How ERP Software Benefits Businesses
Many businesses find that ERP software offers a large range of benefits, including:
• Automation: One of the major benefits of ERP software is its capacity to automate some of the most time- and labor-consuming business functions. Day-to-day tasks such as data entry and the filing and flagging of routine documentation (such as quality control records) can all increasingly be automated by powerful ERP software.
• Data: ERP software allows the consolidation of many different types of business data onto a single platform. Everything from invoices to customer data to quality control testing data can be integrated, stored and analyzed using an ERP platform.
• Analytics: ERP software packages are also capable of developing insights from the data that a business captures during its day-to-day operations.
• Compliance: Compliance with federal, state and local laws is essential for any business, and ERP software gives businesses the tools to build compliance into their everyday processes through automation, documentation and quality assurance.
• Variety: Numerous different types of manufacturing and distribution ERP software are available to today’s buyer, and many are designed with the needs of specific businesses in mind.
• Compatibility: Because they consolidate many different important functions onto a single platform, ERP software suites can help reduce compatibility issues and eliminate the need to purchase many different software apps to perform new tasks.
To capture these benefits, businesses must be able to select the right ERP software solution. First, a business should determine which ERP options are recommended for its size.
How Business Size Affects ERP Choice
Buyers evaluating ERP systems will find that the size of their business is a key factor in determining which ERP software will be a good fit. Although the boundaries of these definitions are somewhat malleable, they help businesses establish the general outline of what they want to look for in an ERP solution:
• Small Business: Businesses with one to 100 employees. Small businesses often don’t have a dedicated IT department.
• Medium Business: Businesses with 100 to 500 employees. Medium businesses may or may not have a dedicated IT department, although they almost always have IT specialists.
• Large Business: Businesses with over 500 employees. Large enterprises almost always have dedicated IT departments.
Determining the size of a business is important because certain ERP products are better for SMBs, while others are designed for the larger end of the spectrum. SAP Business One, for example, is a widely-used option for SMBs, while other options such as ERP by Oracle offers high-level scalability that allows them to accommodate networks of hundreds or thousands of unique users. Small business ERP solutions are often designed so that they don’t require an IT department to be implemented effectively, while enterprise-scale ERP may require more IT manpower from the client’s end.
How Business Industry Sector Affects ERP Choice
It’s also critical to note that some ERP suites are more suited to specific businesses in certain sectors. Businesses should be aware of which products are more industry-specific and which ones are suitable for many different types of businesses.
In the manufacturing sector, with all its diversity of business models, its extreme technical complexity, and its capital-intensive nature, choosing the right ERP product can be particularly make-or-break. The right ERP software can be a miracle, and the wrong one can bring a whole business to a halt. That’s why it’s important to be aware of the many different models of ERP manufacturing software available for different types of manufacturers.
Global Shop Solutions , for example, is a discrete manufacturing ERP suite that’s designed for a business with a blueprint-based manufacturing process such as a machine shop or assembly line. Its key features include bill of materials management, CNC machining support, CAD integration and other options that significantly simplify shop floor operations.
BatchMaster , by contrast, is a process manufacturing ERP solution that’s designed for formula-based manufacturing such as the food and beverage industry. BatchMaster offers especially robust options for recipe management, ingredient lot tracking and compliance documentation, as well as other key functions of process manufacturing.
Other ERP software solutions, such as those produced by SAP and Oracle, are usable in a wide variety of industries. These ERP solutions are typically designed with utmost flexibility in mind, and businesses can often customize these software packages to their needs by working with the vendor.
Common ERP Features
Every business needs different things from an ERP software package, and so every business will prioritize different features in their evaluation. However, there are a range of common features that are frequently included in ERP software, such as:
• Accounting: ERP systems make it easier for businesses to keep detailed and accurate accounting records. Accounts payable and receivable can often be automatically tracked and synced, and tax bookkeeping can be done automatically, reducing the risk of human error.
• Payroll: Businesses must be able to consistently meet their payroll obligations and make sure that payroll is always properly authorized and disbursed. Manufacturing and distribution ERP software typically offers automated payroll functions that track overtime and ensure timely payment for employees.
• Inventory Management: Inventory management is key for both manufacturers and distributors, and manufacturing ERP and distribution ERP software is designed to facilitate easy inventory management. Many ERP systems make it easy to seamlesslyintegrate inventory tracking technologies such as RFID inventory tracking.
• Asset Management: Manufacturers and distributors must also carefully manage assets such as factory equipment and vehicle fleets. ERP systems use asset management to track the status, location and history of a business’s most important assets.
• Predictive Analytics: Today’s businesses use sophisticated predictive analytics algorithms to anticipate future fluctuations in supply and demand based on past data. ERP systems provide the rich trove of data and flexible analysis tools required for useful predictive analytics.
• Permissions: A flexible and responsive permissions system allows system administrators to give employees access to the data they need, when they need it, while still maintaining security and creating special access privileges for higher level employees.
• Customer Relations: Customer relationship management (CRM) features are another common element of ERP software suites. CRM tools allow manufacturers and distributors to track their relationships with their customers and optimize order fulfillment.
• Supply Chain Management: Mastering the supply chain is key for any 21st century business, so many ERP suites include supply chain management functions. These tools allow procurement, warehousing and logistics functions to be streamlined for greater supply chain efficiency.
• Modular Architecture: Many ERP systems offer the option to modify and expand their systems through the addition of ERP modules. This capacity is particularly key for businesses with plans to expand and startups that may need to pivot as they grow.
• Human Resources: ERP systems now frequently include human resources modules that allow businesses to track and manage their labor allocation, employee benefits and staff training.
• IoT Integration: The Internet of Things (IoT) has given businesses a wide range of new capabilities for quality assurance, security, logistics and more. ERP software solutions offer a powerful and flexible way to integrate a large range of IoT devices and their data into a system using a unified and intuitive IT architecture.
Cloud vs. On-Premises: Which Is Best?
Another major decision for any company choosing ERP software is whether to use cloud ERP software or on-premises ERP software. The major difference is:
• In a cloud ERP model, a business purchases ERP software from the vendor using software-as-a-service (SaaS) architecture. Rather than installing the software on-site, a cloud ERP vendor stores all data and processes all software functions through their cloud servers, and the business pays a monthly subscription fee to the vendor for continued access to the software.
• In an on-premises ERP model, ERP software is installed and maintained on a business’s on-site servers and hardware. On-premises deployment is an older but still widely-used style of ERP software.
Cloud and on-premises ERP both have their advantages. The advantages of cloud ERP software include:
• Updated and patched automatically by the vendor’s team
• Lower upfront costs in most cases
• Typically shorter set-up and deployment times
• Security is addressed in-house by vendors
• Often designed with small business-friendly features
Meanwhile, the advantages of on-premises ERP are:
• Can be an advantageous long-term investment
• Greater flexibility in customizing implementation
• Data stays in-house rather than being stored by a third party
Businesses unsure of whether to choose cloud-based ERP or on-premises ERP will find more information in the Cloud ERP Implementation Survival Guide and Premise-Based ERP Implementation Survival Guide .
Evaluating an ERP Vendor
Because almost all ERP suites are sold through vendors, businesses need to take the time to communicate with potential vendors and ensure that they are a good fit. Some questions many businesses find useful to ask about prospective ERP vendors include:
• For how long has the vendor been in business?
• Which services does the vendor include with the software, and which have additional costs?
• What options does the vendor offer for integrating emerging technologies into their software?
• What are the vendor’s strategies for improving their product in the long term?
• Does the vendor’s sales and support staff respect the business’s time and respond to questions promptly?
• Does the vendor have case studies showing the system’s benefit in an industry like yours?
• Are there any hidden costs or fees (for example, added implementation fees, customization costs, or licensing fees)?
Businesses must commit to a thorough evaluation of any prospective ERP vendor. An ERP vendor that’s a good fit can be a valued collaborator for decades to come, while a business may waste years working at cross purposes with an unsuitable vendor.
Common Challenges with ERP
ERP systems are large and complex pieces of software, and that size and complexity can create challenges in deployment for businesses–both large and small. Some common challenges to be aware of include:
• Deployment Period: Historically, many businesses have faced challenges with executing ERP implementation in a timely manner due to the complex nature of ERP software. Although most of today’s ERP systems are much faster and less expensive to deploy than those of yesteryear, implementation can still take months, and each organization should be ready to experience some disruption of its business processes.
• Transition and Migration: Bridging the gap between an older piece of software and a new system is a common trouble spot for businesses. Businesses need to take the time to develop a transition plan with their ERP vendors and ensure that data migration isn’t rushed.
• Security: IT security is a constant need for 21st century businesses, and ERP systems are huge repositories of information that can be attractive targets for cybercriminals. Businesses need to ensure that their ERP systems include key security features such as two-factor authentication, automatic system updates and role-based access control.
• Training: A system that employees don’t understand will inevitably create frustration and lower productivity. It’s critical that any business implementing a new ERP system devises a thorough and user-friendly training program, preferably in collaboration with the ERP vendor and using resources supplied by them.
• Customization: In most cases, there’s no such thing as a turn key ERP system. Almost every system will need modifications by the vendor to fit the business’s specific needs and goals, and these modifications will typically come at an additional cost. On premises ERP solutions typically feature more extensive customization options than cloud ERP solutions.
• Upgrades: Businesses should be sure to learn how upgrades to their ERP software work and how much they cost. Cloud ERP updates are relatively easy; they’re usually performed on the back end by the vendor’s team, requiring minimal downtime and labor from the client. Costs can vary, but as per usual with the cloud model, they’re spread out over time via the cost of upgrading to a new subscription level. On premises updates can require significant labor from a business’s IT staff, and they typically involve a higher up-front cost.
Researching and Comparing ERP Software Choices
Selecting the right ERP suite can be a long and research-intensive task, so businesses should be sure to take advantage of the many ERP research resources available to them.
Direct ERP product comparison is one of the most important tools to help businesses decide on an ERP solution, as it allows businesses to comparepricing, features and specifications of ERP suites. An ERP comparison matrix (like the ones provided throughout this website) allows a business to evaluate the features and specifications of various ERP software products and decide which one offers the best fit.
Our comparison matrices allow businesses to easily compare the approximate pricing ranges of different ERP solutions. However, the easiest way to get accurate price data that’s tailored to your business is to use our Best Pricing tool to get free quotes from the ERP vendors you’re considering. Quotes arrive in just minutes and account for each business’s most critical factors, including number of employees, industry, annual revenue, budget, and timeframe.
ERP buyers should also examine some of the many ERP analysis white papers available. These documents cover a wide range of subjects, including how to effectively implement an ERP system and how to use an ERP system to automate business functions.
In addition, many ERP manufacturers publish case studies that show how their products can be successfully implemented and drive improved outcomes. The Top10erp.org ERP case study library is an excellent resource that allows software buyers to investigate how various ERP systems have been implemented at other businesses and which strategies different businesses use to get the most out of their ERP software. Businesses that don’t find a case study relevant to their business in our archives should make sure to ask a candidate ERP vendor for relevant case studies on their product or current client references. Any reputable vendor will be able to provide either or both.
More options for ERP software are available than ever before. A business that takes the time to carefully evaluate the top ERP software options will find a wide array of options available to suit their needs.
Top 10 ERP offers the leading collection of resources for businesses choosing an ERP solution. Businesses can start evaluating ERP software options today with our industry-specific ERP guides , or dive into our whitepaper library and case study library for in-depth ERP software analysis. Top 10 ERP’s experts compile these resources specifically to help your business choose the right ERP solution, and making use of these key tools is the best way to prevent the costly mistake of choosing the wrong one.
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