Investing in an ERP is a long-term decision and needs lot of attention. A company puts at stake time, money and effort in proportions and each of these are of high importance. It is very true that an ERP will make the firm efficient and dynamic. This in turn will lead to good decision making and eventually more profits. But it is also true that an incorrect ERP will lead to production gaps, incorrect data systems and can cost a lot more to the firm than just the monetary loss. It can make the firm fail to keep up to the commitments promised to the customers and can create a negative image in the market. Does that sound scary? Here are few things that you need to ask and ensure before making that ERP purchase:
- Will it suit the nature of your business?
Before choosing the ERP, you have to understand how well it will gel with your firm’s requirements. Supposedly, if you own an accounting firm and the ERP has advanced production related applications, it does not hold good for your firm. The firm must also consider the fact as to how well the technology is updated within the firm to install and maintain the ERP in the long run. A proper analysis will solve this issue. The firm must consider several factors such as the existing infrastructure and also take into account the sustainability of the implementation. The firm can always opt for SaaS (software as a service) applications in such scenarios.
- How long will the implementation take?
This is one of the crucial elements while choosing an ERP. No matter how planned your schedule is, ERP implementation takes more than the expected time. Consider this time as well while you are making your calculations. Accordingly the firm has to pick orders so that they don’t miss on the same due to technical glitches. SaaS operations need lesser time as most of the software is already developed and the vendor takes the ownership. The firm has to plan the migration process that will happen in phases. It must be observed that there is no data lost during transition as it might prove to be an expensive deal to the company.
- Is the ERP vendor credible?
It is better to do the homework than repent later. The firm must collect the feedback from couple of users to understand the performance of the ERP. Once the investment is done it is then impossible to revoke it. If the package doesn’t cover any important elements or if it has any flaws that might not serve the purpose of purchasing the ERP, all this can be found out only by talking to the existing users. If the firm doesn’t want to take any such risk then it can always go for bigger and established brands such as Oracle, SAP and others. But when it comes to purchasing from smaller vendors or start-ups then it has be certain about the
- What is the actual cost involved?
Purchasing of an ERP starts with licensing. There are several other costs involved with the same such as training, support, infrastructure, consultation fees and many others. Customisations will mean additional costs. All these have to be meticulously calculated and budgeted. Even though on the whole the cost of an ERP looks affordable it must be well understood that there are several expenses associated with the same.
- Is customisation possible at a later stage?
Every business will have its own set of requirements. Initially the firm might not feel the necessity to make any modifications to the existing system. But over time with regular usage there might be scope for genuine customisations. The firm will have to understand if there is a chance to go ahead with the changes and if yes, what will be the general costs involved. Though it isn’t possible to make a list of future customisations, it will good if the firm can predict at least the ones which are anticipated in the near future.
- Is it possible to upgrade the existing ERP?
ERP is a long-term solution. In the initial years when the firm is small very less features are utilised. However, once the company starts expanding it cannot go in search of another ERP. It will not work out financially and also will add to the time loss. So, here the firm has to upgrade the current software. For this the software must be compatible and flexible. The firm must understand the technical aspects of upgrades such as data conversion steps involved or is there a possibility of an extension feature and so on.
- What in case of technical glitches?
Every software comes with a set of issues. The firm has to talk with the vendor beforehand about the kind of support they provide if there are any bugs or other problems. It will be highly beneficial if the vendor can provide the firm with a knowledge base where the usual problems can be resolved with the firm’s IT team. Else, a group of users can get together and form an online community which can act as a support system where the vendor will be able to resolve the issues immediately. Proper back-up of data is as important as data security.
- How functional the ERP is?
The ERP that the firm has decided to purchase must be easy to use. As employees are going to use it for every single transaction and tracking, it must be flexible to modify it based on their job roles and specifications. If the ERP is easy to handle the firm can save the lengthy training time and go-live at an early stage. The employees will have an increased productivity with easy modules and simple instructions. This will overall lead to a good morale and working culture in terms of operations.
- Who will maintain it and how?
The ERP does not end with implementation. Once it is installed and the staff is trained then comes the maintenance aspect of it. The firm must discuss this thoroughly with the vendor. In case of SaaS applications, the external vendor will do it all but for in-house ERPs the firm must clarify it well with the vendor.
- Miscellaneous factors:
There are several other considerations for a firm to look into. To name a few are security, upgrades, data imports, SaaS features and so on. A successful ERP depends on meticulous planning, proper prediction of issues, testing at several stages and a good support system. The firm must consider each of them with deliberate importance and sort it out accordingly.
Once you know the answers to these questions, you are good to go with your ERP purchase. There are several firms who incur losses due to choosing an incorrect ERP. Don’t be the target to such avoidable situations. Do your research well and purchase a suitable ERP.