How to Select the Right ERP Solution for Your Business
Horror stories abound about companies who have selected the wrong ERP solutions or aren’t using all of the solution’s functionality, even though they paid for it. This is usually caused by companies not having a clear picture of their operations and goals, or trying to take shortcuts during their discovery process to find the right ERP software to best fit their needs. Evaluation and selection is an important process that can lead to long term efficiencies when tailored correctly.
A historical good place to start was to understand the different tiers of ERP software solutions. This method still holds true for on-premise or hosted solutions. In these instances, a company will need select a product and set of features specifically aimed at their business size, functions, and long-term budget. Today’s true cloud solutions are multi-tenant and subscription based. What this means is that much of the overall solution cloud solution costs, such as system infrastructure, are spread across a multitude of subscribers, thus reducing price per subscriber. Further, in a subscription model, organizations pay for portions of the solution they utilize, thus tailoring the solution to meet their immediate needs. The scalability of true cloud solutions has eliminated the historical Tiers in most cases.
On-Premise or Hosted Tiers
Tier I: Enterprise
Tier I ERP software is geared toward large companies, often multi-state or multi-national. These ERP solutions are the most complex and robust on the market and serve organizations who have complicated operational structures. ERP software was originally designed for these larger organizations to help them standardize their internal processes by connecting information systems. The number of modules offered is comprehensive, covering all areas of an organization.
Tier II: Midmarket
The Tier II software vendors cater toward the mid-range companies in regard to complexity and size. They are the “middle of the road” choice, meaning they are robust enough to meet specific needs but often less burdensome to implement and maintain. This tier is where you see more innovation taking place because they are able to be more agile in the marketplace than their Tier I counterparts. A lot of manufacturing companies fall into this category.
Tier III: Small Business
Tier III solutions often work best for small to mid-sized organizations with few locations and more simple process structures. Many of the offerings in this tier are tailored for a specific industry so there is typically less customization offered when compared to the other two tiers. However, the reduced functionality also leaves the door open for improvement in other areas, like mobile access and user experience.
If you are going to go with an on-premise or hosted solution, you need to determine which tier is appropriate for your environment. Then you can start to narrow your search find the ERP system that is right for your business process. When you start looking at software demonstrations, be sure to provide specific functions, workflows and features you want to see.
A better approach in today’s cloud world is to partner with a solution consultant and provide them with your goals, and problems you expect the ERP software to solve and see how they respond. Given the scalability of cloud solutions, they should be able to tailor a demonstration specifically to your business. Do they take the time to learn about your operations and incorporate your goals into the demo? This can be revealing in terms of what kind of partner the vendor will be over the long-term.
Ultimately, as you work your way through the vetting process, keep your eye on the prize: finding an ERP software that helps you make faster, smarter, data driven decisions by offering an on-demand, real time snapshot of what is happening behind the scenes in your organization.
For more information on implementing an ERP solution in your business, contact Tim Ernst, BerganKDV ERP Practice Group Leader.