What is the Best Enterprise Resource Planning System?
Given the expense and turmoil involved implementing a new ERP system, it’s only reasonable to want the “best” system. However, asking which ERP system is best, is like asking “which is the best car”. The answer is “well, it depends”.
Just as the way you intend to use a car, not to mention your financial resources, influences which might be better for you, there are many factors which make each system better or worse for your business. There are literally hundreds of ERP software packages. A subset of these which are which are known to produce successful outcomes should be considered as the universe of packages to be considered. Once this has been accomplished, with the assistance of an outside independent consultant, you’ll begin the process of selecting “the one”. Be sure the consultant has absolutely no financial interest in one package over another.
Let’s look at the way you intend to “use the car”.
Whether the company a manufacturer or a wholesale distributor
Manufacturing businesses require ERP software intended for that purpose. Wholesale distribution software usually has some manufacturing capabilities, but will prove insufficient for manufacturers.
Type of manufacturing
Implementations for “process manufacturing” companies like food and pharmaceutical manufacturers often require different “manufacturing software” than “discrete manufacturing” companies like toy or medical equipment manufacturers. Your outside consultant will be able to determine the correct ones to consider.
On premises or “cloud” implementation
Software in the cloud, i.e. Software-as-a-Service (SaaS), implementation accelerators, pre-configured software, and out-of-the-box implementations will require much less implementation time, but many packages will not accommodate as much customization as on premises solutions. On average, SaaS implementations reached their first go-live milestone 19 percent faster than those with on-premises solutions.
We’ll need to look at the total cost of ownership for a new ERP system. When the TCO of the current system is considered, it may be possible that the cost of purchasing a new ERP system can be justified, especially if we consider the potential cost savings. Most ERP solutions pay for themselves within 2 to 3 yr. Most companies lease the entire project if capital funds are not available. There is a vast difference in the upfront cost of ERP systems, especially between “the different “Tiers”.
Number of users
The fewer users there are the more possible it is to employ a more complex system in a shorter amount of time. Some ERP vendors are more experienced implementing systems with hundreds of user located in many locations. Others deal primarily with fewer than a hundred users in one or two locations. All things being equal, it makes sense to match the vendor’s abilities to the situation at hand.
Amount of support required
We must insure that the amount and type of support the vendor commonly provides is squarely in the center of the vendor’s support ecosystem. The amount required will vary with the computer skills of the users, types of documentation and training available, number of locations to be supported, ability of IT department (if any), level of customization, etc.
Another support consideration is the availability of after-hours support. If your business needs it, the vendor must handle it as part of their normal services.
The time available for implementation
There may be an impending event which will limit the time available for implementation. Events such as mergers or acquisitions, key employee’s plans to leave the company, new requirements from customers or vendors, such as EDI, which can’t be accommodated on the legacy system, or the inadequacy of the existing system, may force a transition to new software on an accelerated schedule. The vendor and type of solution may be partially dictated by these events.
The amount of customization required for each package
To one degree or another, each vendor will encourage or discourage programming customization. I combination with the ability, or lack thereof, of your programming staff, if any, will determine which ERP vendors can be considered. An implementation requiring extensive modifications from a vendor that is not staffed to provide such programming effort is doomed to not meet expectations. The same holds true if the plan is to do the customization in-house, and the ability of your IT department (if any) is not at the required level.
Vendor’s presence and strength in your industry
You and your consultant will want to ask if the vendor has special expertise in your industry.
Multi-Site Operations Support
If your business must collaborate with multiple operations, your ERP vendor must be able to support all of them.
Scalability of system
If you expect your company to grow, or if the size fluctuates due to seasonality, acquisitions, etc., the scalability of a new system becomes even more important.
Other requirements (EDI, Shipping, etc.) – What third-party add-on solutions are necessary to fulfill your functional requirements?
These are some of the considerations when selecting an Enterprise Resource Planning system. Your independent consultant will be invaluable navigating these waters. Best wishes as you proceed.
By Vince Gismondi, President of Enterprise Resource Consulting at http://www.EnterpriseResourceConsulting.com