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Your Guide to Selection Criteria for ERP Systems

Your Guide to Selection Criteria for ERP Systems

The selection of a new ERP system is a big decision. It requires a thorough review of how you do business today, as well as a clear vision for your company’s future. That may sound daunting, but fortunately, the ERP selection process does not have to be overly complicated. With a few key selection criteria for ERP systems, you can find the right software to accommodate your company’s current needs which can adapt with you as your company grows.

There is a fairly wide range of ERP solutions on the market. However, every ERP solution is different, and what’s best for a small manufacturing company won’t necessarily be great for a midsize professional services firm. By following some clearly defined selection criteria for ERP systems, you can quickly narrow down your list of candidates to the products that best fit your business.

How Does ERP Selection Criteria Differ from One Business to the Next?

Your evaluation criteria will likely be different, depending on which industry you are in. Business processes vary widely, even among businesses that sell similar products and services. Company size and complexity are also factors, as well as the primary markets in which your company operates.

Here are a few important selection criteria for ERP that may apply to your company:

Industry: Some industries have very specific requirements, which may be related to business processes, but which are often impacted by compliance needs. Job Shop manufacturers, for example, often need to calculate customer price quotes quickly, even as job specifications may vary greatly. Professional services firms generally need time and expense billing, utilization reports, and so on.

Compliance: Highly regulated industries such as pharmaceuticals, food and beverage, or defense contracting often have very specific regulatory requirements. FDA-regulated industries, for example, must be able to trace the ingredients used to make specific lots and batches of product, as well as to perform mock recalls in preparation for potential problems with their products. Aerospace & defense companies must be able to associate specific units with the specific aircraft on which they are installed. FDA, DoD, and other government agencies are routinely issuing new requirements. The best industry-specific ERP products will come from vendors who keep their products up-to-date with these changing needs.

Company size and complexity: Complex ERP systems are capable of managing a vast array of different business processes, but complexity comes at a cost. That includes the challenges of configuring and maintaining relatively complex software, as well as a steeper learning curve for some users. Your selection criteria for ERP systems should factor in the right balance between functionality and complexity.

Geography: If you’re selling within a single country, then you might not need things like multi-currency support or multi-language capabilities. If you operate multiple legal entities in different countries, however, you will probably need intercompany transactions and consolidated financial reports.

What Selection Criteria for ERP Systems are Important to Consider?

In addition to some of the company characteristics outlined above, you’ll also want to think about your future growth trajectory. Where do you want your business to be in five years? In ten years? Your ERP system can support you as you evolve, but to achieve that benefit, it’s helpful to consider selection criteria for ERP systems that include a future-oriented perspective.

Evolving business models: Many industries are being transformed by digitization. Manufacturers, for example, are frequently adding post-sales service as a new revenue stream. By adding internet connectivity to their products, manufacturers can monitor equipment health and predict their customers’ maintenance needs. A modern ERP system will allow for this kind of integration and analysis to support new business models as they evolve.

Cost: Naturally, the cost of a new ERP system will be a major factor in your decision. As you consider the overall price of ERP software, be sure to look at it from a “TCO” (total cost of ownership) perspective, including software license fees, implementation costs, training expenses, and post-implementation support.

Cloud vs. On-Premise ERP: Many companies are turning to cloud-based ERP software because of its security advantages, always-on connectivity, rapid innovation, and inherent flexibility. Cloud ERP also eliminates the need for ongoing investment in servers and IT management because these tasks are generally covered as part of the cloud ERP service.

Company resources: If your organization is operating with limited resources, like most companies today, you’ll want to consider the impact of a new ERP system on your people, processes, and existing technology. Cloud-based ERP makes it possible to do more with less, implementing your new system faster, and without investing in new IT equipment.

Implementation partner capabilities: Many companies overlook the importance of a good implementation partner. Your selection criteria for ERP partners should include their industry experience, project management skills, and technical expertise. The best ERP implementation partners have deep experience in companies similar to your own and have strong references from existing customers. Above all, think of your relationship with your ERP implementation partner as a long-term relationship.

What is the Best Way to Review Your Company’s Criteria?

Your selection criteria for ERP software are critically important in determining the overall success of your project. Here are some tips for reviewing those criteria with stakeholders in your organization.

Get management buy-in: First, ask top managers what matters most to them. The answers might surprise you. C-level executives often have big-picture priorities that aren’t frequently expressed to the organization as a whole. Very often, those kinds of needs emerge when you’re talking to them about a large-scale project like an ERP implementation. Be sure that these strategic priorities are addressed in your selection criteria for ERP.

Make it a team effort: Involve stakeholders from every department throughout the organization. Remember, ERP software is comprehensive by its very nature. It touches upon business processes throughout the company. Make sure that all of the affected departments have a voice in establishing the selection criteria.

Partner with the experts: Look for a team of experts who will take the time to get to know your company and help you establish the right selection criteria for your ERP system. The best ERP implementation partners usually represent more than one vendor, so they can help you choose the best ERP option for your organization. Ask for references and look for a company with a strong track record of success.

Getting Started: Setting Your Selection Criteria for ERP

As you work through the factors that are most meaningful to your business, you will inevitably find that it’s hard to balance competing priorities. Setting your selection criteria for ERP is nevertheless critically important. Here are some resources that can help you better understand the ERP selection process:

Does Your Business Need an ERP System?

4 Critical Things to Remember While Selecting an ERP System

12 Questions to Ask When Selecting an ERP Implementation Partner

As you dig deeper into the ERP selection process, we invite you to sit down with the experts at Synergy Resources to discuss your goals and objectives. We will take the time to understand the unique factors that drive your business; then we’ll work with you to find the best ERP system to meet your needs. To begin that conversation, reach out to our team at Synergy Resources today.

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