How to Determine Which ERP is Best for Your Business
What is ERP Software?
If you found this article – you are either familiar with ERP and want to learn more, or you stumbled onto this series as part of trying to understand what an ERP software is. To give you a brief overview…
Enterprise Resource Planning, often referred to as ERP, is a general term for software that is used to manage and integrate business planning and operations through automating business tasks. Every business is unique, but core functions such as finance, marketing, sales, HR, and purchasing stay consistent from industry to industry.
The interactions between divisions are complex and before the information age, collaboration was tracked on pieces of paper. Today, businesses send data from sales campaigns to finance, and then further to accounting within seconds. The speed of business outpaced the communication and operating structures of the past, creating a distinct need for automated systems.
How is an ERP Used?
As each business adapts internal systems to speed up communication and coordination, the tools of each ERP system are configured from the base version to perfectly fit a business’ operations. A large portion of these configurations come in the form of integrations.
For example, many if not all businesses use a CRM (Customer Relationship Management) technology to maintain a record of touchpoints with prospects and customers. Systems such as Salesforce and Hubspot are industry leaders in this space, but each must be connected to a purposefully configured ERP.
This example extends to systems in Finance, Accounting, Marketing, and all other aspects of operations.
Consider an interaction as simple as a customer paying online. This process integrates customer data from sales, banking information held in accounting, and financial forecasting updates – all of which must occur within a few seconds. Modern integrations are numerous and constantly evolving. The micro-services and APIs offered can require entire teams of IT professionals to consistently maintain service. Extending the previous example, we can see that if the banking API is not updated, customers won’t be able to complete purchases, even if all other systems are functioning.
This helps demonstrate how an ERP is extremely effective for speeding up business operations and the fragility of inter-dependencies between each system.
Things to Consider for Your Business
As mentioned above, the use cases for a successful ERP system are entirely dependent on the function of the business. Because of this, three primary factors should influence the implementation of an automated system: Business Internal Structure, Growth, and Efficiency.
Internal Structure
The customization of an ERP system is highly dependent on the operations of the business. While this section will be explained in more detail regarding the models, the internal structure of a business should consider the following questions:
- How is information being stored?
- Is the data siloed?
- Do the departments operate in cross-functional teams or independently?
- What security concerns are there?
These are only a few of the many questions that highlight the need for documentation when modeling even the simplest of organizational structures.
Growth
Nearly all companies follow the mantra, “Grow or Die”. Even if this does not describe your company culture, the pursuit of building more products, supplying more services, or acquiring more customers is a constant theme for businesses. While the goal of growth is inspiring and unites the company through a single vision, the infrastructure to expand and maintain operations rarely is considered.
A familiar example is:
“For the next fiscal year, we need to increase sales by 20% and product manufacturing will need to keep pace if we are going to hit our goal.”
If the current ERP consists of a spreadsheet and a notepad, real business growth is highly unlikely. Alternatively, if a business knows that it plans for significant growth and decides to implement a larger ERP than required for its current operations, business growth is no longer limited by the constraints of the current organization.
Properly automated business systems that align with the goals of the company vision can yield higher returns if proper infrastructure is considered alongside business growth.
Efficiency
Efficiency is considered to be the real competitive advantage of implementing an ERP system. Each business has a specific strength that differentiates it from the competition. Consequently, the well-rounded operations of the same business require everything to work in lockstep. Traditionally, this would mean hiring more people to fill the gaps in the organization; however, automated tools have since streamlined that process.
Using the same example as above for customers who pay online…
This used to be done through a phone call where a business representative would collect the billing information, write down the amount due for the affiliated customer, and manually submit the order.
Automation can speed up the parts of a business that are slowing down operations. The main question to consider for efficiency is:
“What part of the business contributes to slowing down your ability to translate sales into profit?”
By addressing the largest need first, an ERP can add the most value.
After detailing how the internal structure, the growth rate, and the efficiency of the ERP must function in the business, the considerations for which software to implement become drastically easier. Many companies are offering an ERP system, all highlighting different features. Looking for automating business tasks before doing an internal audit usually ends up wasting a lot of time and money implementing a solution that does not perfectly fit your business needs.
Small, Medium, and Large ERPs
After determining the needs of your business, the next step is to find an ERP that supports the features required- this is where defining the specific requirements of your business comes into play. The size of your company plays a large role in filtering down the list of potential ERP providers.
Small ERPs
An ERP for smaller organizations typically does not have all the bells and whistles of enterprise software. However, the typical small business does not need complex data architecture and a large team to maintain service. Below are a few companies that provide ERP software for smaller organizations.
- Acumatica
- TallyPrime
- Odoo
- Sage Intacct
Additionally, ERP systems that fit smaller organizations tend to use more integration technologies. These software companies understand that they cannot provide all of the services at the enterprise level, and therefore allow for more API integrations to customize their software.
Medium ERPs
An ERP for medium size organizations typically will have more features than a small business ERP, but still may not have the ‘all-in-one’ capabilities of an enterprise suite. Interestingly, the small to mid-size ERP offerings tend to be the same companies which allow for easy scaling and growth. Below are a few companies that provide ERP software for medium-sized organizations.
- Acumatica
- TallyPrime
- SYSPRO
- Odoo
Large ERPs
Organizations that use Large ERPs most likely have highly complex operational structures and thousands of features for a custom ERP, along with a budget to support that investment. Integrations with all other software are far more common since these companies tend to set the standard for API integration. Firmly entrenched, these software platforms have had decades to perfect operations and are at the top of the ERP hierarchy, with the price tag to match. Below are a few companies that provide ERP software for large organizations.
- NetSuite
- SAP
- Microsoft Dynamics 365
- Sage Intacct
So, How Do You Determine Which ERP is Best for Your Business?
Schedule a conversation with one of our Account Managers to get a better feel for the best approach to selecting the right software to support your specific business goals. In the event you don’t already have a technology roadmap in place, we will likely recommend starting there to help plan your tech stack to ensure you’re investing in the right solutions at the right time and NOT wasting time or money trying to deploy solutions that don’t fit your business objectives.
