Choosing the right ERP (Enterprise Resource Planning) Software

ERP software integrates the information used by various departments of an organization so that it can be shared, accessed and managed in an efficient manner. However, implementing a well-established ERP software is often a high investment in terms of money, time and resources. This warrants a thorough study on which ERP package is suitable to an organization's needs before the package is purchased.
So, what are those factors that a company needs to consider to select an ERP software? Here are a few -

a) First, decide if you want to go for an ERP implementation.
ERP packages usually come pre-built with business processes that are most widely used in industry. While a good portion of these processes can be configured to suit your organization's needs, they may not always be a perfect fit to what you want. Most ERP implementations require an organization to consider going in for Business Process Reengineering (BPR) prior to the ERP implementation, so that the organization's business processes match or come close to what the ERP delivers! This certainly comes as a shock to many companies that are used to getting software systems built-to-order. If not a BPR, some ERP implementations demand atleast some modifications to certain business processes, and many organizations find it difficult to change the way things have always been done. Since the very purpose of using an ERP is to have various departments integrate and manage data efficiently, it is vital that the decision makers of those departments together arrive at a go/no-go decision for an ERP rollout.

b) Does the product provide most of the features you want?
One ERP package might be excellent for Human Capital Management, while one might be the default to choose for Supply Chain Management, while yet another may be the best fit for Customer Relationship Management. Do an evaluation - which major business function is most relevant in your organization to have an ERP rollout? Choose the package that is believed to be the best for that business function, and evaluate if the package does a fairly good job of addressing the pain points of the other business functions. For example, if your key concern area is Human Capital Management, and say you decide to implement PeopleSoft, check if the SCM and CRM capabilities of PeopleSoft would suffice to cater to those respective functions, or if you would have to go in for some other ERP system for those functions and try to integrate with HCM.

Other features you might want to consider are -
(i) Usability of the ERP over the internet
(ii) Support of data exchange via XML, EDI, flat files etc.
(iii) Availability of business functions as modules (eg. Benefits, Payroll, Accounts Payables, etc).
(iv) Multilingual and multicurrency support
(v) Flexible enough to allow users to create ad-hoc reports
(vi) Ability to run on different operating systems and use different databases.

c) Ask for a demo of the product
The Sales & Marketing team responsible for selling the ERP can be counted upon to present to you the features of the ERP in a stunning Power Point/Flash presentation. That's great! But are you sure that WYSIWYG? Insist on a demo of the product and keep your business users and technical team as part of the audience. Perhaps the business users are looking for a more user-friendly product with a jazzier looking screen, while the technical team wants to evaluate how easy it is to configure or customize the product. A balance usually needs to be struck between what each evaluating party wants. So, go for the demo and try to experience the product first hand.

d) Evaluate the Total Cost of Ownership
Perhaps the ERP being evaluated doesn't cost too much to implement. But what about the costs you would incur AFTER the implementation? How often does the ERP need an upgrade or a patch? What are the support costs? How easily is talent that can support/upgrade/implement the ERP available in the market? How well is the company selling the product doing in its business? If you wish to outsource support, can that be easily accomplished with the product? It is best not to evaluate an ERP product looking only at how well it fits your present requirements, rather keeping in mind its fit for your mid and long term requirements.

There's a good article on CNN.com that gives suggestions on how to choose the right ERP package. While its a somewhat dated article (Feb 1999) and even talks about how the ERP should address the Y2K issue [:-)], many of what the article contains is very much valid in this day.

Happy reading and good luck in choosing an ERP that best matches your needs!

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