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Proper ERP Selection process can be a difference between despair and contentment

Warning reader about my bias

When an article about an ERP system comes from a reseller of one of the ERP systems, readers may be suspicious of the intent of the author in writing this article. Well, from the first words of my post, I would like to set the record straight. Yes, I am biased, and yes, I do want to paint for my reader a certain picture. That being said, I’ve arrived at my conclusions following years of in-the-field experience, and this is exactly the reason why I became the reseller of a certain ERP system in the first place. So, if there is a bias in my post, it is because it has been developing in me for a great while and it developed organically, dictated by my experiences, by my environment, and not by where my paycheck is coming from.   

Cloud vs On-Prem

This part of the conversation needs to happen first, before anything else is discussed. This is a fundamental fork in the proverbial selection roadmap. The users of the future ERP system need to decide if they are closer met by the “on premise” type of ERP or if the “cloud” type of ERP is a better match. There are benefits to both, don’t let others tell you otherwise. But in this discussion I’d point out one very important point that you will rarely hear from other people in the industry.  If you try to implement an ERP system that was originally designed as “On Premise” into the cloud (private or public), the results are usually subpar at best, and straight-out disastrous at worst. On the other hand, if the ERP system was designed as “Cloud based”, but license allows you to use it on-prem, it will work for such implementation beautifully. This is a tried and true statement, tested and proven over and over. 

How old technology can lead to great limitations

Next part of the conversation should be about the technology driving the ERP system itself. For many clients this discussion is not very interesting or wanted as it might be outside of their area of expertise. And for many people selling some ERP systems, it is a great opportunity for avoiding the topic altogether. This is a shame, though. Understanding technology that is driving your systems is crucial for understanding where your ERP software will end up in 5-10-15 years. Yes, we do have legacy systems that are around for 30-40 years now, but mostly they are still in place because the cost of migration is too great for their current user base. I also don’t believe for a second that the length of time ERP has been around the block means that it will outperform newer ERP platforms in reliability. Mostly this means that you’ll be adopting your ways of doing business to how your ERP does it and not the other way around. When you can reliably do 10% of what modern ERP allows you to do just as well, and settle with a 90% functionality shortfall, that does not spell great success for the ERP selection process.

Functionality & Flexibility

Finally we arrive at the bottom line of the ERP selection process – checking functionality of each ERP and how it will fulfil business needs of your organization. Yes, it is very critical to understand how a certain business process is covered in the ERP system. Will the ERP screens and functions  match the current business processes perfectly, or will there be an adjustment? Do we customize the ERP screens or change our processes? How much re-learning the company staff has to do to adopt the new ERP and/or the new process? And how much all of these things will cost me – in money and time of my staff? All of these questions need to be weighed in carefully and they will probably account for 75% of how a decision on a given ERP system is made. What is missing, in my opinion, but nevertheless very important in making this decision is the factor of ongoing system maintenance and training internal staff to perform that maintenance. If two systems are functionally identical, yet one requires a four-person IT team for ongoing maintenance while another one doesn’t, this should not be overlooked at the time of the original purchase. This is not just an on-prem vs cloud decision or a technology decision, it is much deeper than that. 

Company behind the product

When selecting your next ERP system, it is very important to understand two things about the ERP vendor. Of course I’m talking about solvency and priority. Let’s discuss them one at a time.

First and foremost, it is a question of solvency and future plans. How solvent is the ERP vendor as a company, how successful is its business model? How dedicated is the vendor in pushing forward business? Are they aiming at exit strategy and if they are – what is it? We all remember the example of Everest, and how it was sold out to essentially die a slow and very expensive end-user death. Unless we know for a fact how the vendor is doing and where they are going as a company, we should be careful in investing our time and resources into such an ERP.

Secondly, there is a question of priorities. Most vendors have a line of ERP products that they sell and support. Where does this specific ERP sit in terms of company vision for the future progress? Does ERP vendor consider this platform as a “legacy”, as an “R&D test bed”, or is it a stable platform that will keep developing and progressing well into the future? Does this vendor see this ERP as a place where clients in this segment, industry, type, or size will move in the future? Or is this simply a client pool where future clients for the next shiny ERP will be pulled from? Having those answers should be critical when making your determination for the next ERP purchase.

In conclusion

I was trying to keep this post as non-suggestive and non-prejudiced as possible. At the end I was able to restrain myself from making any specific ERP recommendations.  Instead I outlined the main principles and warned you of some pitfalls of the selection process. As I mentioned in the beginning, I’m not without bias. So, I encourage you to read this article with a critical eye as well as read more posts and publications on the subject of ERP selection. Do this before diving into the “dog and pony” shows that I’m sure await you. Trust me, it will serve you well in your ERP selection journey.