In my last Blog post I explained what is an ERP system and why consider it for your business. Now it’s time to consider the selection process of an ERP solution.
I cannot emphasize enough: selecting an ERP solution is a critical decision with many considerations at play. Consult an experienced, independent advisor to match the best options available to your specific business.
In 1972 SAP introduced the first packaged business software (for financial departments of organizations). Naturally, what evolved to become ERP software, was affordable to large corporations only. With time, however, the ERP software market have matured as new technologies emerged, business models were offered and ERP vendors came and go. SAP, by the way, is still around and leading the ERP market globally.
Today, ERP is considered a standard for medium to large sized organizations, and highly popular among small businesses as well. However, as we’ll see in the fourth post in this ERP Explained series, it is still one of the most challenging and resource-intensive projects an organization can face, let alone the financial burden in purchasing and implementing it. The main reason is the fact that an ERP project disrupts the comfort zone of individuals and whole teams, raising fears of unknown, and fears, as we know, are a bad companion when making decisions.
The first milestone is the understanding that a standard, packaged application, is the best bet for your business. This, by the way, is true even if you’re a small business with 5 employees writing $200,000 in annual revenues.
The realization that investing in a standard, encompassing information system is a worthwhile investment is important, albeit most business owners fail to realize that. The transition from a mom-and-pop business to a scalable business will greatly benefit from having the mentality, mindset and experience of a solid ERP platform (and there are affordable ERP solutions for small businesses).
The next thing to realize is that you are taking a risk if you’re heading to select an ERP solution on your own. The larger and more complex your business is – the greater the risk. The amount of moving parts here is enormous. Missing a single critical question may turn out very expensive down the road.
The first phase will be a thorough business requirements analysis, in light of your business industry, growth plan, structure, culture, policies and processes.
Once that business analysis document is in place, several key questions needs to be discussed (this list is mostly relevant for growing and large organizations, less for small businesses):
You consultant will lay out a selection process. Typically, you can expect the following:
In closing, I will repeat that an organizational and business transformation project involving an ERP software is one of the most crucial and impactful process your business will see. Missing the ball on this one may mean high expenses with limited growth, or even a down fall. Start early on, consult an independent, experienced professional and exercise due diligence in the selection process.
In my next post, I will present some of the main challenges in implementing an ERP solution, next to the bold benefits you can expect – stay tuned!
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