How To Select Your ERP, Dummies

What is a resource to an enterprise?

The same thing oil is to machine, or hand is to glove. They both rely on each other, and cannot function in silo, or has no use alone.

From a pen to the people, everything there is - is a resource.

When an enterprise starts growing, it needs a solution to manage these so-called resources – that is where ERP (Enterprise Resource Planning) solution/software comes in.

A few of the core function components, which the ERP provides, are

1.      General Ledger / Account Management

2.      Inventory Management

3.      Human Resource Planning and Management

4.      Billing and Invoicing

5.      Customer Relationship Management (CRM)

These feature, and additional features, can vary within the solution suite. Additionally, many solution providers will try to cater to customised needs.

For instance, Microsoft has rebranded its (acquired IBM Axapta) ERP solution a few times, now knows as Dynamics 365 for Finance and Operations. Another version, of the same solution, available in the market is Dynamics 365 for Retail.

 As the name suggests, both focus intensively on different functional areas.

Likewise, if you happen to visit the Dynamics365 page, various other versions are available as apps – to be included (either in free version or in paid version).

Then again, there are organisations who would opt for the complete suite, based on their research and need. However, seldom they need to use every bit of functionality provided.

Traditionally, small to medium size organisations use makeshift ways to manage and track resources.

The idea of not spending time and effort on an ERP software, to most, would seem cheap, quick, but would be lead to unorganised ways to doing things, which would be non-scalable, if the organisation were to grow.

As Andrew Marder mentions, unless you have a clear plan, for the need to have an ERP, it will cost you time and money, even if the ERP is free.

For instance, you would need around $20K to $100K if your yearly turnover were in the range of $10mil to $100mil, suggests Chuck Boecking (ERP specialist).

For decades, companies like Oracle, SAP, and Microsoft has been providing these solutions, with continuous enhancements. However, they come with a hefty price tag.

Then, there are open source solutions, most of which are available online – as web applications. They have limited support, if you face any issues. To get your issues resolved, you would need to subscribe to their support packages, which may come at a cost.

As I understand, you should think about these, before deciding if you need an ERP solution or not

1.      Your need for an ERP solution – do you want to declutter the ways you keep track of things, or are you able to manage with multiple applications or workbooks.

Keep in mind the scalability and the ease of transferring the knowledge, which is important for smooth sailing of routine activities.

2.      How much growth do you foresee – if you can delay switching to an ERP for some time, or will it be overwhelming if you have to do it in next 6 months or so?

3.      What areas you want to cover – not all enterprises have all the functions in-house, or cannot afford one.

Think if you need the solution for specific modules, or if you want to get all modules at once?

It does not make sense to buy a solution that can cover expense or inventory, when you do not have the in-house capability to maintain it, or rely on outsourcing for such tasks.

4.      Provision to expand – the selected ERP should provide easy ways to expand and integrate new modules, should the need arise.

If you decide to bring some of the outsourced work back to the firm, you should be able to integrate the function without affecting the existing solution.

Moreover, it should be easily linkable to the dataset you have, and do not require you to create duplicates.

Like, employee information is used for human resources, financials, billing, and etc.

Therefore, there should be a common dataset for employee information and all other modules should link to it – if they need to access employee related details.

5.      What the community says – If there are active support groups and communities, it should give you a fair idea about the product and user reviews.

The more the users, more the application is accepted and used.

Moreover, the support groups are helpful when you run in to any issue and are looking for solutions for similar or exact situations.

“When managers of a company select an ERP package to implement, they are “buying into” the ERP vendor’s view of a certain industry’s best practices and relying on the system to support their efforts to embrace these practices.” ~ Marianne Bradford

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