Selecting an ERP is a decision that will affect your organization for years to come: the platform will sit at the heart of your processes, and the financial and human investment can be significant. This article aims to help you understand the implications and stakes of such a project, and to compare existing solutions effectively so you can adopt the platform best suited to your organization.
Before you start selecting an ERP, it's wise to understand what the project involves. Acquiring this type of solution is about much more than defining your needs and installing software. Among other things, it means migrating one or more databases (CRM, inventory, accounting…) to a new system that will need to be installed, customized and maintained. It also means training the various users, shutting down existing systems (and absorbing the cost of terminating those contracts), changing certain interactions with partners outside the company, and so on.
ERP implementation can be summarized in 9 phases:
Because the ERP will be used by several departments in your organization, you'll need to gather the expectations and needs of its future users. Setting up a dedicated team is key, both for collecting this information and for keeping the project on track. The team is usually led by a Project Manager, supported by Business Sponsors representing the company's various departments. Depending on the chosen methodology, other profiles will round out the group.
If your company lacks the necessary in-house knowledge or resources, you can hire the required profiles (on a temporary basis) or work with one or more specialized firms. You can also limit their involvement to specific phases of the project. For example, your company could delegate drafting the requirements specification to a specialized consultant.
Before defining your needs, you should map out your company's structure and the processes you want in place once the ERP is installed. If the way your organization will evolve seems uncertain, it may make sense to postpone the ERP implementation and first carry out a reorganization to optimize the company's future structure. If, for example, your company is considering reorganizing certain teams, changing purchase order approval processes or even opening a subsidiary in a country with a different currency, all of these changes should be identified as early as possible. This exercise, carried out with outside help if needed, will allow you to optimize your processes and also implement a platform that requires less customization.
Once you've built the project management team and anticipated the evolution of your organization as well as possible, you can draw up a comprehensive list of the needs your departments expect to have in the years ahead. Then weight them according to their importance and group them into categories: department (sales, accounting, etc.), technical (on-site vs online, etc.) and administration (number of users, access rights management, etc.).
Implementing any ERP software involves buying licenses and the many services needed to deploy it (needs analysis, user training, data import, etc.). In some cases, the project can be rolled out gradually. A phased implementation has the advantage of spreading costs over time and keeping the project under control (even if that means stopping the implementation in time if it doesn't go as planned).
The integrator is usually chosen after the solution has been selected. In that case, it's a good idea to put several firms capable of implementing the chosen ERP in competition. Compare not only their prices but also their methodologies and references.
Some companies already work closely with an integrator and opt for the solution that integrator knows well, without comparing it (much) to others. This approach isn't unreasonable, since the success of an ERP project depends in part on how well this partner understands your business.
Below, we've listed the main characteristics of ERPs so that your comparison is as thorough as possible.
Features differ from one solution to the next, and you won't need all of them. A thorough analysis of your needs will help you distinguish the features that are essential from those that aren't.
In most cases, the chosen solution won't cover all of your needs and modifications will be required. Keep in mind that modified software is often more complex to maintain and generates extra costs: additional development, testing sessions, updates, changes to training materials, etc..
The main strength of an ERP is that it brings the features used by different departments together in a single platform, so information flows faster and isn't duplicated across several independent systems. That said, it's very likely the chosen solution won't (immediately) replace every tool in your organization. Its ability to integrate with other systems is therefore an important point to assess. Note that these integrations require configuration work or additional development.
"Online" software (in the Cloud, or SaaS) is accessed through your web browser. The information is stored by the vendor on its own servers. The benefits of a Cloud solution include automatic updates, no infrastructure costs, data security and easy access to information.
"On-premise" ERPs run on servers managed by your company or your integrator. The on-premise model is still very common for ERPs because it offers more options for customizing the solution.
If the ERP you implement is to cover accounting, it's crucial to analyze the legal and functional requirements specific to your country (e.g. the FEC (Fichier des écritures comptables, the French standard audit file)). Don't hesitate to check how many companies use the solution you're evaluating, where they're located and which features they use.
Some ERPs come in several versions tailored to the needs of specific industries. This can be an important differentiator, since it can significantly reduce later customization needs.
ERP software isn't always well received by employees, often because the solution isn't user-friendly. For some departments, such as accounting, ease of use is even an essential criterion, since small details can make a real difference in efficiency and time savings.
Pricing models can vary from one solution to another, and hidden costs can come up. To better estimate the total cost, we recommend analyzing prices from several angles:
ERP pricing is usually based on the number of users. It's tempting to compare the options on this cost alone and perhaps choose the one with the lowest price per seat. Keep in mind, however, that this cost may represent only part of the total cost.
ERP vendors often break their pricing down into functional modules: CRM, sales, purchasing, logistics… This additional cost may be added to the unit price per user or charged for all users. The first model has a bigger impact on the total cost, and you should negotiate the terms with the vendor (or the integrator, if it resells you the license).
How will the data from your legacy systems be transferred to your ERP? How much training will users need? What support will you get once the platform is up and running? These points may require buying additional services from the vendor or integrator, and the costs can be high.
Minimum and maximum contract terms can vary from one solution to another: some will let you choose a monthly subscription, while others may require an annual commitment. Keep in mind, though, that contract terms only partly define your commitment. Take into account the technical and operational difficulties of switching from one solution to another. In other words, since adopting an ERP and moving data between software is complex, you'll almost certainly be tied to your platform for several years.
Selecting ERP software depends on a clear understanding of your needs and an in-depth comparative analysis. Keep in mind that your software choice will only pay off if it's integrated professionally, with high-quality partners. So make sure you surround yourself with the right people, both internally and externally. And don't hesitate to reach out to your network to benefit from their experience.