ERP Selection for Your Business: 10 Essential Criterias To Consider
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ERP Selection for Your Business: 10 Essential Criterias To Consider

Dhruvil Pandya - May 19, 2022 - 0 comments

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ERP is a software tool that is used by most businesses around the world and it enables them to achieve their organizational goals. Choosing the right ERP for your business is one of the most crucial decisions you will ever make. The choice has to be right, but it can be overwhelming at times if you are not aware about your business goals. 

Oracle Cloud ERP system offers you the right business model that helps you run seamless processes to reduce costs and enhance the overall productivity. At times, you may end up being confused when choosing from the available product modules. It is important that the solution you choose must complement your business requirements. In this blog, we will try to cover the top selection criteria to consider for your business ERP implementation.

Understanding Business Requirements

Prepare a concise list of your ERP requirements. It is best to make use of every available resource to enhance this list. As a rule of thumb, you can discuss it with your employees and your purchasing manager along with executive management, suppliers and your customers. Once you have everything ready, try to prioritise the list. It is absolutely necessary to identify which of the requirements are critical for your business. The second priority includes requirements that may not be critical but there is an understanding that adding those requirements will help your business in the long run. Then comes the last category, or can have requirements but are not critical and mostly related to enhancements. 

Once the priorities are sorted, share the list with the people who helped you gather these points. Are they absolutely happy with the priorities listed? Or does it need to be updated? There might be possibilities that some things can be moved from first category to second and vice-versa. 

For the above exercise, you can use an ERP Requirements template which can help you categorise the requirements based on their priorities. By including every minute detail, you get a better chance at understanding the scale of a system’s functionality, and how their ERP can meet your business requirements including any customisations or 3rd party integrations. 

The Role of Management

More often than not the role of upper management is understated but it is an extremely important criteria. You might be able to choose the best ERP for your organisation, though without the support of Upper Management, the project will be impacted. The role of management is crucial and it goes above and beyond a budget approval. It is important to get the complete support of the management and they have to believe in the system. So, at any point in time, if there is a choice to be made between the existing system and the new ERP, the management is able to look past the short-term cost.

Getting the management on your side for ERP purchase may be overwhelming, but it is important for your organisation’s success. Apart from identifying the cost, it is best to focus your business case on organisational goals and how ERP can enable your organisation to achieve them sustainably. 

The Role of Users

Employees in every functional area will be users of the new ERP system. Hence, it makes sense to get their trust and support by making sure their requirements and feedback is taken into consideration when deciding the initial requirement list. These users, irrespective of their department, will have a lot to achieve through the success of your ERP implementation. It is important to let them know that they will receive the required training and equipment they need to use the ERP and receive value for themselves as well as the business.

By doing so, you empower the employees and they will support your thoughts and vision to implement the new ERP. An important thing to note is that the documentation for users is available as and when required.

Integration with your Existing System

Most businesses planning to shift to ERP have existing systems that are efficient for their operations and more often than not they are not willing to change multiple systems with their ERP. But, how will these existing systems seamlessly integrate with ERP? Well, there are always common data elements. For instance, can ERP read and utilise data from the existing system? Would you want the same data to exist and how will you manage data elements compatibility? Or is it better served by updating the existing system to use that data from ERP? 

What type of integration tools are included in this ERP? It must have basic integration tools including .csv files for frequent data updates. You must be aware that it is not an efficient way to update for daily use. Web services and XML files that enable multiple systems to seamlessly transfer data are the best way to work.

Many clients and suppliers use EDI (electronic data interface) to share data between organisations. If this is one of your requirements, then you must ensure your ERP supports this requirement. 

Managing Functional Requirements

There are certain business functional requirements that need to be fulfilled before you switch/update your requirements. Does the ERP system support all your sales related requirements? If your business operates in different countries around the world, it has to be taken into account. Does the accounting module come with various currencies and the ability to work with the variety of tax systems in those specific countries?

Particular sectors and departments will have particular functional needs; your ERP selection criteria should consider each department’s needs and wants. Your ERP should make things easier for all concerned departments. The supply chain needs to understand if your ERP is going to integrate with their suppliers, and if they can track shipments using the new ERP system. The Sales department would want to understand how the ERP system will manage sales across different countries, and if they can manage multi-tiered orders. It is a good practice to include each department from your business in your ERP requirements list.

Planning Your ERP Budget

How much money is allocated for your ERP system? If you only have a limited budget, then you need a strict selection criteria. A report from Software Path states that on an average you can spend around USD 9,000 on each user of your system. It is a considerable investment for any organisation and a reminder that ERP selection is critical if you are looking for a long-term basis. More often than not, ERP systems will be used for a decade or longer so maintenance and support for the ERP along with infrastructure are a cause of concern. Whatever you choose today will be the cost for a long-term.

Who will work on the selection and ERP implementation? You can have dedicated full-time resources for the project but some organisations prefer to use part-time resources. 

Scalability and Future Technology

Some of these issues are for the software used to build your ERP system and the hardware needed to use that ERP. It is expected that there will be ongoing developments and enhancements in both areas. You might not want either to perform on an obsolete technology. Moreover, you would want to purchase ERP from a provider that has a great record of accomplishment of managing the technology developments and can promise to maintain that strategy going forward. 

Total Cost and expected ROI

Calculate all the incremental costs you will entail due to this ERP. In the beginning, there will be an initial purchase cost along with a consultation charge. You also might need some updates to your servers and networks right away. You will spend money on training and temporary labour when your teams are implementing ERP. You will also need to factor in the maintenance costs every year while you use the ERP.

By spending on ERP, you will see a lot of advantages from enhancements in the cost. There will be a rise in revenue as now you can offer services and products that were not possible before this ERP. It is best to spread those costs and advantages over time and calculate your ROI effectively. 

Evaluate Wisely

The conventional ERP system running on an on-premise server supported by an in-house IT team is not the default choice for organisations today. Many organisations select an ERP that runs in the cloud with the help of a SaaS framework. The initial investment is significantly reduced by replacing it with monthly subscription plans that include the software and support/maintenance costs.

You can go with a hybrid option where your organisation owns the ERP but operates it in the cloud running on shared servers. Most ERP systems today are built on open source software. The most important advantage of this is free or low cost to acquire the software. There is source code available for open-source and hence you have the freedom of customisations. These enhancements are available to users instantly without any revision from the provider. 

Custom Requirements

The ideal ERP will not need any customisation. As no system is perfect, a need for customisation will be a crucial criteria for ERP selection. Identify within your team what customisation is necessary and understand why it is so important for your business. The ERP systems today use knowledge obtained from thousands of customers. Do you have a business component that is unique among other businesses around the globe? It is highly unlikely. If your preferred customisation can be easily figured out using an current ERP, that customisation is not necessarily an important selection criteria. 

On the other hand, if your preferred customisation is needed, check out ERP systems that offer the simplicity of customisation. Moreover, do you have the development team to handle the task? Or, can you build an in-house development team for the desired task? 

How will your ERP handle the customisation efficiently? Some ERPs in the market will provide satisfactory answers to all your ERP questions and will help you shortlist a few ERP systems to meet your business requirements.

Final Thoughts

Choosing a new ERP software is not easy, considering the cost and risks associated with it. It takes time and efforts of all stakeholders to make the right choice. From the above selection criterias, we hope your business can choose the right ERP system to achieve the maximum ROI. Are you worried about ERP implementation or have any doubts about how to choose the best ERP system for your business? Get in touch with us at Conneqtion Group, and we can walk you through the process of making an informed decision after understanding your business requirements. 

Author avatar

Dhruvil Pandya

Dhruvil is a Marketing and Strategy Manager at Conneqtion Group, a Oracle iPaaS and Process Automation company. He comes with a vast experience of working in the Marketing, Branding and Content Marketing in various industries including IT service, SaaS, Natural Gases & Equipments, Food and United Nations. He has completed his MBA in Marketing from Western Sydney University and has worked for more than 7 years with Indian and Australian startups. He has a good acumen of business and marketing in the Indian startup ecosystem and has worked with BOC Gases, a leading Gas company handling their APAC Marketing.

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