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How do I choose the right ERP system?

ERP system

You have decided that you need a new ERP system and you have to implement it in your company and are now faced with the challenge of choosing the right system. You want to make a well thought out decision because you are setting the course for the future.

ERP system as a central instrument for corporate management

ERP systems ensures the efficiency, transparency, and consistency of data and operations across the company. From sales to production planning and control, materials management, projects to billing and financial accounting, an integrated ERP system covers almost the entire value chain. On average, companies tie themselves to an ERP solution for six to ten years. Logically then, it should optimally support the company processes - not only today, but also for the foreseeable future. You should therefore draft suitable ERP selection criteria before actually selecting an ERP system. Only in that way can you narrow down the field of potential providers and find the right one. Before preselecting, get an overview of the market through Internet research. Internet research however, often lacks comparability between different providers. As a result, some client companies can be tempted to simply pick the cheapest offer based on incomplete information - and thus make a wrong decision with far reaching consequences.

Our catalogue below summarizes the five most important ERP system selection criteria. These points help you to ask the right questions.

1. Support your processes

The functional requirements of your new ERP system have the highest priority. Together with the specialist departments, you should record your processes and decide which of them should be replicated by the new ERP solution. The question is: Is the ERP software suitable for your processes and industry requirements?

2. Non-functional requirements

The non-functional ERP selection criteria include interfaces, the fulfilment of compliance requirements and the ongoing development of the software. Interfaces are important in order to be able to integrate the new ERP system into the existing IT landscape of your company. In addition, you want to be able to consistently copy data from source systems. Compliance requirements are again highly dependent on the industry. An overarching requirement is the revision-proof archiving of tax-relevant data and documents in Germany. If you are interested in a cloud system, you should put emphasis on that.

3. Scalability, flexibility, internationalization

Your software should also support you tomorrow. As your business grows and you develop new business models as you digitize, the ERP system should grow with you. It should be able to provide the operationally necessary functionality, capacity and performance in the long term.

4. Industry experience of the provider

When selecting your ERP, you should emphasize that the provider already successfully serves other companies in your industry. Get testimonials, case studies and references. At the very latest it is when your selected ERP providers visit you to make their pitch or come for a consultation, that they should be able to give a detailed explanation as to which industry know-how they bring with them and implement that into their ERP system.

5. Costs and follow-up costs of an ERP selection

The costs of a new ERP system do not stop after it is introduced. A realistic investment analysis includes not only the initial costs but also the long-term operating costs. This is the only way to determine the Total Cost of Change (TCC) over the life of the investment.

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