Do you know one of the most critical decisions you can ever make for your business? It is choosing an enterprise resource planning (ERP) as it is not a simple task.
In this article, you’ll learn effective ways on how to choose ERP for your business.
Reasons for ERP Software Implementation
Before we dive into the tips for choosing an ERP, let’s discuss first the benefits of getting an ERP software.
An effective ERP provides all the business processes together through improved collaboration. It helps an organization to make data-driven decisions while enhancing long term business productivity.
If you plan to expand your business on a global scale or your business continuously grows, ERP will help you keep visibility and standardize all the business procedures. This software allows you to work with other suppliers, implementation partners, and operations in partnership or collaboration on your value chain more quickly.
ERP also supports new geographies, locations, and industries with fewer efforts. It’s possible for you to standardize and innovate a single ERP solution by current investment capitalization.
Common Mistakes When Choosing an ERP Software
Choosing an ERP system gives you many benefits when it comes to manufacturing business, like efficient business processes for better profitability and accuracy. On the other hand, many businesses have gone wrong in choosing an enterprise resource planning system.
As you choose an ERP solution, consider checking out the following common mistakes during the selection process.
- Use of Uncustomized RFP
A Request for Proposal (RFP) offers effective tools to understand better ERP vendors’ offerings and your own business needs. If the RFP is not customized to your business, it will result to unrealistic expectations and confusion.
- Lack of In-Depth Vendor Comparison
Before you settle on a specific software, ensure to consider all the options. You can do this by taking a look at each vendor’s product details and support services. To narrow down the choices, you can compare and contrast the RFP documents, ask for the same questions of each vendor, and participate in conference calls or demonstrations. In the early selection process, do not focus on one or two options.
- Underestimate of Selection Time
Expect that the ERP project’s vendor selection process takes a longer time than other processes. So, make sure to take time to explore the sales documents and analyzing each ERP vendor. It would help if you also interacted with your project management and support team personally.
Make sure to wait at least six months before you sign a contract with a chosen vendor. Your relationship with the provider may last up to 10 or more years. Meaning, you need to take time to get things right.
- Focus on Flashy Functionality and Features
Many businesses are distracted by over-the-top and flashy ERP features during the selection process. As a result, they are not aware that they are being diverted from the high cost or necessary functionality are hidden.
Learn everything about the vendor’s offerings, including the capability to customize, costs of add-on features, software price, and ability to add further modules.
Step-by-Step ERP Software Selection Process
You can find tons of ERP software options on the market, making the selection process even overwhelming.
Functionality is not enough to ensure that you are using the right ERP system. The system should also be transformational, aligned with your vision and goals, and matches your business needs.
To remove all your frustration in choosing the right ERP software for your business processes, take a look at the steps below:
Step 1: Conducting a process review and analysis
First, define and document the current business processes, strengths, and weaknesses. The analysis should include the corresponding business requirements and expectations. Mind that these requirements and processes are used for the potential software vendors to showcase the products’ capabilities within your business needs context.
Step 2: Evaluating the Technical Fit
You need to understand how the potential software solution aligns with your existing infrastructure. It would help if you also considered the technological initiative.
Step 3: Understanding the Total Ownership Cost
It’s a better idea to accept the potential costs earlier in the process than after signing contracts with a chosen vendor. It would help if you revealed any hidden costs such as software maintenance, project team resources backfilling, hardware upgrades, and implementation costs.
Step 4: Developing a Realistic ERP Implementation Plan
During the sales cycle, make sure to take the vendor implementation duration estimates. It is essential to develop a realistic and comprehensive project plan that involves all the software installation activities. You also need to ensure that the solution is thoroughly tested, functional, and accepted by the end-users.
The implementation plan is developed according to the final software decision. As a result, you can completely understand the resource commitment and cost necessary for making the project successful. S
Step 5: Tracking the Potential Benefits of the New System to Your Business
If you want to reap the full potential of ERP, you need to estimate and measure the benefits against different metrics. These include a scale for growth, increase of revenue, and reduce costs.
Step 6: Keeping Your ERP Options Open
While two or three ERP software vendors represent most of the market share, you can still find more solutions on the market. They vary in strengths and functionality. Do not choose a solution based on the competitor’s choice or brand name. Instead, determine what can best meet your unique business requirements and bring a competitive advantage.
Step 7: Asking for Independent and Objective Advice
You can ask your employees, colleagues, and other contacts what they can recommend or what they use. You can hire an ERP expert or perform online research, if necessary. To validate the offerings of the software sales reps, look for other independent advice sources.
If you want to increase your wholesale distribution business’s growth, getting the right ERP system is a great decision. It is a software platform that helps companies manage various business functions, including warehousing, payroll, invoicing, and other customizable options.