3 key considerations when selecting an ERP

I was at an accounting conference a couple of weeks ago and when I mentioned that I help companies choose ERP solutions, several people asked me "What's the best ERP on the market?". My answer is always the same - "there are courses for horses". All of the systems have their various strengths and weaknesses, that's why it's important that you take the time to maximize your chances of choosing the right ERP for your firm. After all, you're likely going to have to live with your ERP for 10 or 20 years. The least you can do is to really think through what you need, and put the contenders through their paces. Here's 3 key considerations when going through this process:

Choose the right partner

Most major ERP vendors do not implement their product. They rely on a network of partners/resellers to provide implementation services and support to their clients. In most cases the partner will also lead the sales campaign. It's very similar to the automotive model where there is a manufacturer and a dealer. The ERP partner is going to do your oil change, rotate your tires, and fix your brakes - i.e. write custom reports for you, help you with upgrades, provide support.

Your relationship is going to be with the partner, and it is going to be a long term relationship. So make sure you like working with the partner's team, that you find them responsive, and you find them highly competent. Some partners have particular vertical expertise like manufacturing or distribution or aerospace. Make sure your chosen partner has a lot of experience in your particular vertical.

Determine the right platform

There are lots of ways you can deploy your RFP. Here are the three most popular:

Multi-tenant Cloud - This is where multiple companies share the same ERP environment within a data centre. Some of these data centres are the size of a small town. Upgrades are not optional - all companies are upgraded at the same time. Customization is limited because of the shared nature of the solution. Costs are shared across all the member companies which can lower the per user cost. It's similar to living in a condominium. One of the driving factors in the rise of the cloud architecture is that you are outsourcing a lot of the security risk to the manager of the data centre. You can also scale very rapidly with a multi-tenant configuration. Adding additional users anywhere is straightforward.

Private Cloud - Private cloud means that your ERP is hosted at a data centre as a single instance. You can choose when you upgrade and have a lot more flexibility in how you may want to customize the system. Security is still overseen by the data centre. Where you choose to host the solution is up to you. Your vendor will often offer to host the solution for you, but rates can vary - it's good to shop around. I had one client whose vendor offered hosting for $4,000 per month. They asked their IT services firm for a quote, and they agreed to host their ERP for them for $100 per month.

On-premise - This last option is becoming less and less popular, but is still an alternative for firms that are willing to host their ERP themselves. If you already have a server room and have some solid technical expertise on staff, you can save some money by going the on-prem route. This is totally DIY - you provide the server(s) and the networking. You purchase the licenses rather than paying a monthly subscription fee. You are also fully responsible for the security of the system, so you need to be very comfortable with cybersecurity. If you have unstable internet at your location, this may be your only option.

Use a Consultant

This is a little self-serving, but I think the purchase of a new ERP is a text book case where a consultant can be helpful. Buying an ERP is an infrequent purchase. In many cases there will be few folks still around from the last time you purchased an ERP. This is also an expensive undertaking - even for a relatively small company purchasing and implementing an ERP is going to be a six figure investment. It's also a mission-critical project - the proper ERP will improve your efficiency, enhance the customer experience, and ultimately increase your profitability. The wrong ERP? well, not so much.

An ERP consultant can provide guidance through the often confusing process of selecting an ERP. They can introduce you to new vendors that you may not have been aware of, they can manage the vendors for you, they can ensure that all options are explored, and that the vendors are put through their paces and fully evaluated. A good consultant will not choose the ERP for you, but will help you navigate the decision making process and provide the structure necessary to build consensus and ultimately make an informed decision.

A typical structured approach to the selection of an ERP is going to be three to four months. It's a very worthwhile investment when you consider what is at stake.

Ken Tucker is the founder and lead consultant at Connaught Ealing Solutions. Connaught Ealing Solutions offers consulting services around digital transformation, enterprise software selection, and fractional CIO services.