Choosing the right ERP system is not an easy decision. Reviewing the available solutions, we come across dozens of systems and hundreds of companies that propose implementations. Launching or changing ERP system is a huge investment, which is carried out once every few years. That is why it is important to make the best decision, tailored to the company's specifics. Because the right implementation partner is responsible for launching the system and for subsequent support in its use, development and updates remember that the partner you choose will also work with you long after implementation.
Fortunately, you can prepare yourself for choosing the ERP system – and the company responsible for its launch.
Define expectations and functionalities
At the outset, you should ask yourself what you require from the new system. To get the answer, gather a team representing various areas of the company, and invite representatives of suppliers or customers to it. If you are creating a team that is devoted to design requirements for the system, focus on people who know the company and are not afraid to express their own opinion. The team should specify both system and functional requirements.
After creating a list of requirements, divide the functionalities according to their relevance. It is worth basing such a list on the MoSCoW model. The model defines four groups of system requirements:
M – Must have
S – Should have
C – Could have
W – Won’t have
It is important that the list includes functionalities that are really needed for the operation of your company. Such a list should be created together with an implementation partner. This will allow for easier system selection, and for efficient management of the entire implementation process. It will help in making the appropriate implementation decisions.
While creating a list of requirements, remember that the system is not just ‘for now’ After its implementation, it will function in the company for years. In Western Europe, the average time of using one system is about five to six years. Polish companies use the solutions even longer. Therefore, it is important to determine the anticipated trends or growth when choosing the system and setting its functionality.
The MoSCow model will help you to prioritise the requirements when your budget is not covering the implementation of all expected features.
Carry out a systems overview
Before choosing an ERP system, it's a good idea to review the systems your company have been using. It is necessary to determine which systems (or their features) your employees are satisfied with and which ones work well. Should any of the systems should be replaced as part of the ERP implementation? Which ones should be left and integrated with the new tool?
When reviewing systems, consider whether it is possible to improve some of them. You should also make sure that none of the supported processes are defective. If you want to increase efficiency, it is necessary to do this. Handling faulty processes by the new ERP system, however good, will not bring the expected results.
When deciding on the choice of an ERP system, check whether it will be possible to integrate it with the systems owned by the company. The purchase or replacement of an ERP system is intended to simplify processes in the enterprise – you should make sure that if you leave existing systems, you will not need to perform certain operations twice, and the data will be efficiently and automatically transferred between these systems.
Set a budget and check the costs
When setting a budget for implementing and maintaining the ERP system, remember that the cost of ERP is not only the cost of implementation, but also system and user maintenance costs. In the case of on-premises systems, this also includes upgrade costs. The purchase of the system is a long-term investment. When looking for the right system, consider the long-term expenses. It is also good to calculate the return on investment. Because the average time of using one system by companies is five to six years, another indicator to calculate is TCO - Total Cost of Ownership. When calculating the TCO, hidden costs such as IT staff, staff turnover, implementation partner costs, failures, updating costs etc. should also be considered. The calculation of these indicators will create a real picture of the financial situation – the resources needed to get involved and the financial viability of the project.
When talking about costs, consider the necessity and possibilities of customising the system. Cloud systems are usually cheaper to implement, but you have to pay a monthly maintenance fee. Usually, cloud-based systems are less able to adapt the functionalities offered to the company's specifics. On the other hand, on-premises systems require a greater financial outlay at the beginning, but they allow to a large extent to adapt the functionality to the needs of the company.
A relationship for years
The next step is to find the right implementation partner. If the ERP system requires customisation, it is best to find a partner who has experience in preparing adaptations and experience in cooperation with companies from your industry. When looking for a partner, ask about references, experience in the industry, and the approach to adjustments. Many companies also offer dedicated modules that are not included in the system standard. It’s worth asking about them.
Selection of a partner is critical. Cooperation will continue after implementation: during service, upgrades or when adding further modules. Choosing a partner means entering into relationships for many years – it is vital to choose a trustworthy one who will take care of your company and its development, as well as provide advice and experience. Your partner should have extensive knowledge and experience in the field of implementing ERP systems – and have a good understanding of your company's operations.
Take your time…
There is no simple answer to the question of how to select and ERP. Spending plenty of time preparing – learn as much as possible about the company, gather your expectations and explore possibilities. The awareness of our expectations and requirements will be invaluable when choosing a system and its supplier.