ERP system: How to make the right choice?

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ERP System How to Make the Right Choice

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ERP system: 8 steps toward making the right choice

1. Identify your business needs
2. Build your ERP research team
3. Estimate the total cost and return on investment
4. Engage top management on the project
5. Functional requirements & integration with existing solutions
6. Build a list of ERP Systems that meet your requirements
7. Go through the customization phase
8. Draw the first conclusions

These days, an increasing number of companies are turning to ERP (Enterprise Resource Planning) systems, to automate some of the most important elements of their business, with the goal to achieve better management and workplace efficiency. In fact, chances are that you’ve already looked into using an ERP system for your own company.

Accounting, supply chain management, project management, manufacturing, sales, and compliance are just a few of the crucial business functions that are addressed by ERP systems. The benefits of implementing an ERP system are felt regardless of the company size or business unit, and it will become a competitive advantage within a few weeks.

Unfortunately, the wide range of offerings available on the marketplace today can oftentimes make choosing the right ERP system seem like an overwhelming challenge. Below are a few tips to help you make the right choice for your business.

1. Identify your business needs

Firstly, it helps to understand that an ERP system is designed to serve as integrated management software that will help you with a broad variety of company tasks, including sales and marketing, product planning and development, and even payroll. By eliminating information barriers between various departments, teams are able to work more efficiently and provide stellar results for customers.

While all ERP systems are designed to help management teams streamline their business processes, there is no denying that each company has their own specific needs, which will help determine the specific ERP solution perfect for said company. This is why it’s crucial to define what your business is looking to achieve, streamline, improve and/or eliminate with its ERP system. The ability to scale and grow your organization should be a key trigger and factor during your selection process.

The size of your business is one of the first factors to consider when choosing an ERP system. A larger company will likely have more data points that need to be integrated, with more users needing varying degrees of access permissions, based on their responsibilities. Even though smaller companies still have several departments and data points to be integrated into their system, they generally don’t need as sophisticated a system, because roles and responsibilities are mostly consolidated.

Moreover, small organizations are usually best served by ERP systems that are scalable – you want your ERP to be able to grow with you. After all, you don’t want your current system to become obsolete when your company takes off! A system that can adapt to your growing company is the ideal long-term solution.

2. Build your ERP research team

Having the right internal stakeholders and department leaders, who are knowledgeable on digital transformation, is an asset that will enable your company to make the right decisions when it comes to choosing an ERP platform. Build a selection team of well-informed people who will be able to create an actionable plan around your ERP implementation project.

While you might have the knowledge in-house to paint a rough picture of the ERP industry and make a list of the available products on the market, nothing’s better than having an expert consultant on your side to help you select the right system for your business. For instance, Big Bang’s cloud consultants are trained to develop a deep understanding of various industries and their requirements.

Our team of expert consultants is customer-centric and makes sure to conduct a thorough research specific to your business needs, in order to suggest the best-tailored solution possible. We are proud to be an agnostic cloud consulting firm that puts the customer first and not the product, and our industry experience allows us to better advise you.

3. Estimate the total cost and return on investment

An ERP system is a long-term investment, which is why cost is a major factor to consider when selecting the right software. Your research team will need to get your finance department involved – they’ll need to determine a budget and figure out how much money is currently available to acquire the ERP. Keep in mind, an ERP implementation comes with many different types of costs, for example:

  • The software cost
  • The customization cost
  • The overall maintenance and growth cost
  • The implementation cost

That’s why transparency is crucial throughout the whole process – often, vendors and sales representatives will try to sell software by omitting the “hidden fees” and only mentioning the platform’s cost. Uncovering the additional costs will empower your team to make a better decision and to know exactly what to expect in terms of investment.

Don’t forget that an implementation is not usually done alone. If you are in fact planning to use the services of a consulting firm – like Big Bang – take into consideration the budget for consulting services, as they will add on to the initial cost. There are two principal ways of managing the cost of those services: by setting a fixed bid or by tracking time and material needs.

If you go for a fixed bid, expect to agree on the scope, budget, and timeline with your consulting firm before the project kick-off. This means having a rigid plan and fixed costs with a clear payment schedule. The second option is much more flexible, collaborative and adaptable. Budgets can be flexible, within a reasonable range, because you end up paying only for the work completed, and the resources utilized during the project.

Either way, with a clearer idea of who and how you’re paying for your ERP implementation, you will have a better understanding of your project’s scope, making it easier to present to upper management for approval.

Talking about approval, the people managing the organization don’t just want to know about the money they’ll be spending – they also want to know about the money the ERP system is going to bring to their organization. Defining the return on investment (ROI) of your ERP software is a major factor that will determine if your project is going to be successful or not. Here is a list of tangible and intangible benefits an ERP implementation can provide in terms of ROI:

Tangible:

  • Reduced level of inventory
  • Reduced material costs
  • Reduced labor costs through better allocation and reduction of overtime
  • Improved production
  • Reduction of after sale services costs

Intangible:

  • Integration of information
  • Error reduction
  • Inventory level accuracy
  • Improved customer service
  • Improved customer experience
  • Establishment of standardized procedures
  • Improved accounting control and shorter sales to cash cycle
  • Legal and regulatory compliance

Thanks to an ERP solution, you’ll be able to provide your services and goods to a larger array of consumers, and therefore see an increase in revenue almost immediately after the implementation.

It’s also important to factor in your ROI in your process – after detailing the associated costs and benefits over time, also make sure that the ROI for the chosen ERP solution meets your company’s requirements.

4. Engage top management on the project

ERP system: How to make the right choice?

For your ERP project to be successful, you’ll need not only the approval but the enthusiastic support of your company’s top management. Building a strong case for your digital transformation plans will enable management to fully engage and see the advantages of the ERP implementation project.

To gain the support of your management, you should make sure that the ERP you have selected is transparent in terms of data protection, data ownership, and therefore database management. Show your management that you take into account the current challenges in your choice of solution.

Now that you’ve done your research, identified your business requirements, and calculated your budget, you need to be able to communicate the ROI of such an investment, in order to gain the full support of your upper management team. In addition, involving them in the software selection process will be noticed and appreciated.

Make sure your plan is thought through and thorough – stakeholders in the company will want to know that they are investing in a project that is achievable, profitable and actionable, in the desired timeline.

5. Functional requirements & integration with existing solutions

When choosing an ERP, another important factor to consider is the ability to access key information anytime, from anywhere. This functionality can make your life a lot simpler, especially if your company is growing fast. Many modern ERP systems now grant users cloud and mobile access. This can enable you to upload files, update information, and view real-time data, through the cloud and from any location.

For management, this means gaining access to files and information even when they are out of the office or even when traveling. These features are especially beneficial for businesses that work with a remote team of contractors or employees, ensuring that workers don’t need to be in the office to get their work done or stay connected with the company. This also allows management to continue to perform their job effectively, while traveling or working on business development outside of the office. Make sure that the ERP functions will have a positive impact on your current business processes.

Your ERP selection criteria should take each department’s demands and preferences into account. Specific industries and departments will have extremely particular functional needs. All departments and users should feel like the ERP is making their jobs easier – not the opposite.

Make sure your ERP system is also adaptable and easy to integrate with your existing infrastructure, as well as other existing software your company is using. You don’t want to end up with an ERP that cannot communicate with your other solutions – it defeats the purpose of streamlining your business processes. This step is crucial for a smooth implementation process. To get your employees on board with the new ERP, the implementation experience must be excellent. ERP integrations with other software can easily be done with the help of an expert team of consultants, like the specialists at Big Bang.

Our ERP Solutions Consultants are Here to Help!

6. Build a list of ERP Systems that meet your requirements

Before making a decision, make sure you are aware of all the options available to your company, not only in terms of product, but also in terms of strategy. Nowadays, many companies are opting for an ERP that uses a SaaS foundation and runs in the cloud rather than the traditional ERP system which runs on an onsite server and is supported by in-house IT staff.

The SaaS’ monthly subscription payments can be beneficial to minimize the software’s upfront costs, while freeing your organization of buying the ERP software as a whole. You can also adopt a hybrid strategy in which your company owns the ERP but uses shared servers to run it in the cloud. Open-source software is now frequently used in ERP system development.

Is your company looking to work on a single system that will encompass all departments, or with a best-of-breed approach where each department utilizes its own cloud software? Is a hybrid approach more beneficial? These are also questions you want to make sure to answer before making your final decision on which ERP is best for your business.

You can then go ahead and make a selection checklist of all ERP software products on the market that would fit your business requirements, with the help of your team of expert consultants.

7. Go through the customization phase

Customization and ease of use are also important when selecting an ERP system. You and your team will be using the ERP system day in and day out, so it’s essential that everything is easy to navigate, with an intuitive user interface. Your new system will truly streamline your processes and help you become more efficient. On the flip side, a difficult-to-navigate system will do just the opposite.

The proper customization of your new ERP solution will play a vital role in the process of streamlining as well. For example, you may customize certain processes within your system to be entirely automated, allowing you to save time and resources (and reduce human errors). Yet you may also need to retain manual control over some processes, due to the nature of the information.

Custom menus can also make a difference – this simple change can help your employees quickly navigate your system to access and provide important information.

8. Draw the first conclusions

As you go through the steps of consideration above, you will be better prepared to choose an ERP system that is properly-suited to your company’s unique needs, ideally with the aid of experts narrowing in on the most optimal options for your company. By implementing a solid ERP system, you’ll be able to break down the communication barriers between departments, so you can improve your processes, satisfy your customers, and achieve your overarching goals.

To get a free assessment or if you have any questions, please contact one of our experts.

Free Assessments by Big Bang

Andrei Banea

Director of Customer Solutions and Enablement
Andrei has a Master of Science (M.Sc) in Business Analysis and IT and a Bachelor’s degree in Finance. His educational background gives him all the technical and functional skills he needs to take on cloud solution services projects at Big Bang. As a critical-thinker, Andrei tackles every issue from an analytical point of view. This allows him to look at all the possibilities before making the right decision for the businesses he works with. Andrei is also a very dynamic…

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