Choosing an ERP has always been a complex task. Entrepreneurs perceive ERP as a complex and difficult solution to implement, but they are aware of its usefulness in a company. Let’s see how to choose your ERP correctly and avoid the pitfalls.
Evolution of ERPs
The Management Planning System (or ERP) has not always been what it is today. Managing a company’s key areas (accounting, invoicing, sales, purchasing and costs) from modules has become essential, but not so long ago, these modules were not integrated.
Facilitating communication between business sectors was possible because the developers integrated the components. While this change has been accompanied by an increase in ERP functionality, it has also made it more robust but also too often costly to implement. At first, this made it exclusively accessible to large companies.
Importance of the right choice of ERP
According to a study conducted by Harvard Business Review, companies that choose an ERP and acquire it have a 10% reduction in their expenses, but those that have chosen it correctly have a reduction of up to 35% on average.
In this sense, since decision-makers are aware of this fact, it is natural that they should choose an ERP and implement it in a more controlled and efficient way to increase the success rate. The first step in a successful implementation is to choose an ERP carefully.
Doubts about the ERP software, the implementer and the company
Any selection process implicitly involves doubts about choosing the right ERP software. It is obvious that there may be multiple factors that can cause gaps and/or errors in the implementation of the ERP. In terms of liability, this can be due to: the implementer, the software itself and the customer itself. Although sometimes it is not just one of them, but a combination of several factors.
Doubts about the ERP software itself
Sometimes, the decision about the convenience of one software or another in an organization is made based on strictly economic issues, fashion, references from other organizations, and so on. However, the choice of ERP software must be based on less objective parameters and contrary to what may seem, more subjective.
Software is a key factor for the success of the process. Sometimes, we tend to opt for generalist and low-skilled software, which may mean that it is not sufficiently adapted to the client’s needs:
- or because its organization operates in a specialized sector,
- or because its needs are not aligned with the product,
- or because the innovative nature of the organization requires modules that give it a competitive advantage over the rest of the sector.
No horizontal, vertical or customized ERP software is error-free, although it is more likely to be error-free because it requires testing of a single client organization, while the former has a much larger scope and is therefore subject to more testing.
Doubts about the implementer
All companies that implement ERP software have more or less interesting and attractive “demos”, which generally impact us and allow us to make the decision for the most beautiful or spectacular presentation.
However, the decision must be made in terms of adapting to the needs of the organization, for which they must be studied and analyzed from the outset, and the presentation must be raised and adapted to solve this problem.
That the implementer knows that ERP software is generally not the problem, but rather if the implementer has knowledge related to the sector to which the organization belongs to implement, similar problems and the size of companies, common cases, etc.
It is important for the organization to know in advance the profile of the implementers and their level of experience, as sometimes an implementation starts with experienced consultants and the third visit is assigned to young staff with much less experience and professional training.
Doubts about the company itself
In many companies, the implementation and choice of ERP software is imposed by management, but users are reluctant from the very first minute.
It is very important in this regard that the whole organization is involved in the process, and if user resistance to change is minimal, that it is communicated and addressed to mitigate or minimize it.
Sometimes it is not about resistance to change, but simply availability and resources. It is believed that the implementation of ERP software is a matter of weeks or months, and is not considered a continuous and iterative process of process improvement, which can take several months or even a year.
The allocation of resources for the project must be specified by staff with sufficient availability and knowledge, some to lead and others to support the process. This is not always the case. The trained staff is too busy and the one who knows the company’s processes the least is the one who ends up performing the tasks of interacting with the executor, although the latter does not have the ability to make decisions and then has to go through the filter of his hierarchy.
Without a doubt, there are many factors that, isolated or combined, can lead, but not to failure, to a traumatic process of ERP implementation, so all of them should be considered from the first moment of the ERP software selection process.
The steps in choosing the ERP
Involving your employees
If the need for an ERP has been agreed, the ideal is to involve the people who will be directly affected by the decision, such as :
- End Users
- Personnel responsible for system administration
- Managers and executives
Define what you want to achieve through an ERP
What is the purpose of the implementation and choice of an ERP, which is what can be facilitated, look for the benefits that come with it. According to this idea, you must define the implementation plan, priorities, business impact and likely benefits, as well as the areas that will be affected by the decision. From automation, the key business processes that will benefit will be:
- Sales
- Shopping
- Inventory
- Finance and accounting
- Payroll
- Production
ERP scalability
Choosing an ERP that can meet the company’s current needs and at the same time has the ability to evolve with the company in the future is vital. Therefore, before making a decision, it is very important to consider the scalability of the solution on two levels:
- Horizontal: with modules or functionalities to be implemented as the business model evolves.
- Vertical: which supports transactional growth if the company grows.
Let’s not forget that choosing an ERP means living with the five to ten years of the organization’s daily life, so it is recommended to choose a scalable and scalable solution.
Choose a supplier, not a brand
The choice of supplier of business management software is the most important thing. You should choose who markets quality software with the necessary scalability and who has the degree of flexibility required by changes in the business model as it grows. You must also take into account:
- The quantity and quality of customers and implementations performed.
- If the company updates frequently, it speaks well of the supplier, because it means that it is making improvements to its products and is aware of its customers.
- Availability of trained resources for implementation and subsequent technical support.
- Local presence.
Plan implementation deadlines
Finally, it is important to keep in mind that each project takes time. For an ERP to be properly and successfully implemented, it must be taken into account in planning:
- The use of internal resources, their availability, experience and knowledge, as the duration and success of the implementation project depend on it.
- The respect of the standard processes of the solution because it depends on the level of adjustments and/or developments to be carried out.
- The quality of existing data and business processes.
- The company’s technology culture and its adoption.
- The implementation time can vary from 2 months to 2 years depending on the factors mentioned above.