When it comes time to evaluate the plethora of enterprise resource planning (ERP) solutions, making a decision can be intimidating for any company.
With the advent of cloud-based delivery or software as a service (SaaS), more companies are considering getting into the ERP market and there are also more vendors offering up products. How is one to choose the best fit? Since making a decision is one that could affect everyone at your company and the very ability of the business to eke out an extra profit from efficiencies gained, it’s not one to be taken lightly.
Luckily, you’re not on your own. Keean Persaud, who is the managing director for Eval-Source and an ITBusiness.ca blogger, can help you navigate the cloud ERP market. Get started by watching our Hangouts on Air discussion above.
We’ve provided an edited transcript of the discussion below, but be sure to watch the video (above) to hear how finding the right channel partner can help you mould an ERP system to your business and how vendors are tailoring their solutions to better cater to small- to mid-sized firms.
Brian Jackson: Why did you choose to specifically focus on cloud or SaaS ERP solutions in your guide?
Keean Persaud: It’s the third version of our ERP guide, so we’ve been doing this for quite a long time. With cloud, we’ve seen the ERP market really blow up. And in the SaaS market, ERP is a topic that’s discussed a lot. So it’s a great topic to get everyone educated about SaaS. Because ERP has traditionally been an on-premises type of solution, but we’ve seen SaaS getting more popular with both mid-sized and enterprise organizations.
BJ: You address the fact that just understanding how software vendors categorize ERP systems can help simplify the buying process. What should a company know about that?
KP: Categorization can make or break an evaluation in terms of ending up with a solution that doesn’t fit your exact needs. It’s such a big component of the evaluation process. Basically there are two large categories and ERP vendors develop their solution based on their specialization. So it’s either ERP for services or ERP for manufacturing. Under manufacturing, you have sub-categories like process, discrete, and mixed mode. Under services, you have verticals like non-profit, healthcare, or mining, for example. We really stress that categorization is a big component and just the research aspect of looking at ERP systems.
BJ: You have a scoring method that evaluates software based specifically on how it matches a firm’s needs. Tell me how a firm identifies what it needs from software and then evaluates ERP based on that.
KP: There’s a point where a company gets to, where manual processes are getting too cumbersome and each department has a hard time getting best practices into their business processes. So the ERP is to automate and drive efficiency. When your company is starting to look at ERP systems, there’s a small exercise we recommend right off the bat. Really understand your resources and how they operate and what processes they have.
So when I say resources, I mean your departments. Those resources work together to help your business run and they work together but have independent requirements. The first step is to understand how each resource operates and contributes to the entire organization. From there, you’ll go into the departments and go to the subject matter experts or the business leaders and they’ll identify their needs within the different verticals.
The modules within an ERP is module based – they want to make sure every one of your needs is serviced in each module they have and that relates to your independent departments. One of the biggest aspects of getting ready for ERP is a prioritization of your requirements. One of the biggest mistakes a company makes is not understanding what requirements they require the most.
BJ: How can leaders of business units outside the IT department be involved in ERP system selection?
KP: When we help companies evaluate ERP, it is a prerequisite for us to include the business department leaders in the process because they know day-in and day-out in the processes that are automated. For a subject matter expert or business leader, we suggest they communicate to IT they will be a significant part of this process and their input is important for determining the requirements of the organization. Right now, we’re seeing a lot of CFOs taking over the evaluations. IT is still there, but the CFO is bringing in the business leaders. This is a collective process within the company – both the business and IT side will be affected and both the IT and the business need to be represented in the evaluation.
BJ: You say that software vendors are better addressing the SMB market for ERP lately. At what point should a smaller business consider ERP and where should it start looking for a solution?
The ERP really addresses automation and best practices. When these systems were built, they were built for large enterprise organizations and at the time, they were the only companies that could afford a system like this. With the emergence of cloud, vendors can deliver smaller ERP systems not only in functionality but in price point, so it’s easier to get on an ERP. When the SMB reaches the point when they need to automate a process, they need best practices. That’s when they can look at ERP and take advantage of this system.
BJ: Is there one leading ERP solution vendor that businesses should consider?
KP: The ERP vendor market landscape has grown considerably. We are constantly doing analyst briefings with new ERP vendors on a weekly basis. There’s not one particular vendor that we’d suggest in all situations. There are vendors that have been on the market a long time, like SAP, or Epicor, but there is not one leader for ERP – it’s too vast a software market to say that. There’s too many vendors that specialize in verticals and it’s just too broad to say one vendor is a leader in that space.