Choosing ERP is an unenviable task. ERP is a huge commitment for a business; it’s expensive, complicated with many variables, impacts the day to day running of a business, and it’s long term. Therefore, it is paramount that you choose well. Additional pressure to an already difficult chore.
There are many different types of ERP for different needs. Making the right decision when it comes to purchasing ERP depends on a number of contributing factors: which part of the vendor landscape you need to explore, whether you require a software, system or solution; and the individual, specific needs, requirements, and market position of your business.
When you purchase a new car there are a number of basic requirements you will have; at the very least you expect it to have a working engine, steering system, wheels, brakes and seatbelts. These are your table stakes but whereas the table stakes for cars have largely remained the same over the last number of years, the table stakes that you would expect from any basic ERP application have changed significantly, as technology has evolved at a rapid pace.
What basic functions do you require from your ERP solution in the 21st century? The table stakes are the very basic requirements of any solution and often, if you opt for a piece of software from tier three, the table stakes will cater for around 80% of your requirements. Where functionality is lacking, you are likely to supplement your ERP software with additional third party software or existing business solutions. According to erpandit.com, the very basic table stakes you should expect of any ERP application are as follows1:
BI tools allow users to share and analyse the data that an ERP application collects from across the enterprise from a unified repository. A variety of automated reporting and analysis tools can help a business streamline operations and aid better decision making.
Customer Relationship Management (CRM)
CRM has long been a core component of any ERP offering, giving businesses a way of improving customer service by pulling together tools to fulfil orders, respond to customer enquiries and track the progress of marketing campaigns.
The typical accounting modules you would expect from any ERP application include general ledger, accounts receivable, accounts payable, billing, and fixed asset management. This is typically the most frequently used module within ERP.
Human Capital Management (HCM)
At a very basic level, the HCM module will include human resources management, performance management, payroll, and time and labour tracking. This is key to monitoring productivity within an organisation.
Manufacturing applications often include Product Data Management (PDM), Capacity Requirements Planning (CRP), Materials Requirements Planning (MRP), forecasting, Master Production Scheduling (MPS), work-order management and shop floor control.
Supply Chain Management
SCM improves the flow of materials through an organisation’s supply chain by managing planning, scheduling, procurement, and fulfilment. This is only included in ERP at a very basic level and often, buyers will purchase an additional, customised Advanced Planning and Scheduling (APS) tool, or similar, if they require this function at a higher level.
Advanced ERP requirements
The table stakes are sufficient if you are looking for relatively simple, low scale ERP software but what if you already have a Human Capital Management system which is performing well and don’t require this module within your ERP application? What if you have limited-life inventory and need a better way of managing this, far beyond the capabilities of basic supply chain management? What if you have a specific problem and need to better regulate your audit processes with a customised workflow? This is where you would opt for a system or a solution over a piece of software. It’s similar to purchasing a new Honda but deciding that you would like a different set of alloy wheels. In this instance, you would go out, purchase the new alloys and fit them yourself, customising your new car to fit your requirements.
It is vital that you understand these business issues and the problems you are aiming to solve before you embark on the ERP selection process. Knowing which tier to explore and whether you want software, a system or a solution is the key to making the right choice and getting the most out of your ERP investment. Individual requirements vary all the time but below are some of the typical advanced feature requirements that would push a buyer towards an ERP system.
This is the most obvious requirement of an ERP system, the need for better integration of existing business process management applications and greater availability across all ERP modules.
A control mechanism for exception and audit processes.
The ability to view and submit purchase orders and business critical data on a mobile device for any time, any place access to information.
The ability to monitor data modification and warehouse previous versions. Automation of information is often solved with data management modules.
Preconfigured templates for language and currency support for main economic regions of an international business.
Hosting and managed service support
Basic hosting and support is provided in any basic ERP software package but if required at a more advanced level, many vendors partner with hosting companies that can provide this additional functionality.
For companies that have specific problems within the business that they want ERP to solve, an ERP solution is the obvious choice. It is impossible to pigeonhole the features of ERP solutions because every user’s issue will be different but below are a few of the more common business issues that an ERP solution can solve. These issues are far too big to be affected by a piece of software and often, too specific to be affected by an ERP system. This is why a customised, bespoke solution is required.
If a company is going through a period of rapid growth, there is always the risk that it will outgrow all of its existing business process applications. By simply scaling up an ERP application, growth companies run the risk of having a system that is too large, should this growth falter and the company contracts in size. Businesses with sporadic growth patterns often require a solution that is customisable and which they are able to develop and change themselves.
Reduce manual labour time
Businesses that are spending too much time on manual labour often require a customised solution to help automate business processes. Depending on the existing business systems inside the company, this solution will often contain lots of additional modules.
Replacing a legacy system
Businesses that have an existing business process management application that is reaching its end of life can easily replace this with a like-for-like piece of software but often archived data can be lost during the switchover period. A more customised solution that can communicate data from a vault system, to a new system is often required.
Businesses that operate an e-commerce function have huge amounts of data passing through their ERP solution every day and require a custom built solution that can both handle and process this quantity of business information.