A study conducted by Gartner in November 2020 showed that, despite the global economic and public health crisis, the ERP software market grew by 4%.
While for large companies it may be more obvious to choose an ERP to optimize business processes, for medium and small companies this strategic decision is still subject to the costs generated and the guarantee that it can be adapted to the specific needs they have.
What exactly does this management system consist of and what criteria should be taken into account to ensure the successful implementation of an ERP project? In this article, we will help you determine how to choose the right ERP for your company and when you should consider implementing it.
What is an ERP?
The first question that every manager or company director should ask himself before making the strategic decision to invest in a business management software is perhaps "what is an ERP and what is it for?
ERP (Enterprise Resource Planning) is a management solution that centralizes all the operational flows of a company (accounting, sales, human resources, etc.) in order to automate them and make them more efficient.
When to consider implementing an ERP system for your company?
The need to implement an ERP tool in companies arises mainly when it is noticed that:
How to choose an ERP system? → 9 criteria to choose an ERP system
Now that we have seen what an ERP is and the reasons why its implementation in the company is starting to be considered, let's analyze the fundamental criteria that must be considered for its correct choice.
1. The type of company
For an emerging company in its start-up phase, implementing an ERP may not be an important decision. The entrepreneur usually starts by organizing his database in Excel and then upgrades to an enterprise tool when he needs it.
Most likely, the first thing he will consider doing is acquiring CRM (Customer Relationship Management) software for sales management, or accounting software for organized bookkeeping. So far, there is no ERP on the horizon and, a priori, it would not be necessary.
On the other hand, the same SofDoit study concluded that 67% of companies that implement an ERP do not invoice more than two million euros per year. This could mean that a large percentage of SMEs today are opting for ERP software to manage their processes and be more competitive.
As for large companies and given the number of processes that take place in them, opting for a tool that centralizes management and is capable of optimizing it is a logical decision, the consideration of which is not subject to the costs of the same.
2. The sector of activity
In general, companies share similar processes:
A consulting agency, for example, will not proceed in the same way as a construction company:
3. Business specificities
ERP software has the advantage of being a kind of toolkit, adaptable to each company. If you work for a specific and well-defined business sector, an ERP tool can be ideal for your business management.
However, even if you are part of a certain field, your business model may be particular and different from the rest of the companies that are part of it. In this case, standard software may not be the ideal solution. In such a case, you have two alternatives:
Today, it is increasingly common for ERP systems to include or be equipped with APIs that allow them to interact with other solutions. This compatibility of tools allows you to choose a global solution that integrates with the tools you already use, as we saw in the previous point.
However, the ERP also offers different modules for each of the organization's departments, so it is possible to have the entire business structure in a single unified system.
5. Centralization
Beyond the size of a company to choose the solution that best suits its needs, the volume of processed workflow is what will make evident the need to implement an ERP software.
To the extent that the information entered by someone in the company is accessible to all departments, it will reduce the problems of information transmission. Everyone has access to the data they are interested in and can dig into it if necessary.
6. The software supplier
The importance of the ERP solution provider lies in ensuring technical support and having the necessary back-up to make the business processes evolve. The market offer is wide and there are many recognized brands that offer quality, scalable and adaptable options.
The flexibility of the software supplier is evaluated at the moment of requiring constant updates and verifying that it has sufficient resources to carry them out in the best way and in the shortest possible time.
7. Hosting
ERP solutions can be installed locally, on the company's own server or in the cloud.
Each of these two options offers different advantages, depending on the needs of each company. Let's take a look at just a few:
ERP in the cloud:
From a structural point of view, ERP is the backbone of the company. Common to all employees, the system is at the heart of everyone's tasks and progress. In terms of collaboration, its importance lies in the fact that it brings transparency to processes and communications.
Depending on the robustness of the ERP structure, for management and the various department heads, the management of activities can be simplified. The figures, available in a single place, can be compared to obtain a concrete view of the company's situation, whether from a financial, competitive or human point of view.
9. Implementation
One of the difficulties of implementing a new operating system is the change of mentality required on the part of employees with respect to the way the company plans its activity. The faster the transition is carried out, the better it will be for business continuity.
In this sense, the time required for the implementation, as well as the cost of the ERP software, are criteria to be taken into account when choosing.
Hence the importance of ensuring the smooth flow of internal exchanges through a specialized and efficient tool.
While for large companies it may be more obvious to choose an ERP to optimize business processes, for medium and small companies this strategic decision is still subject to the costs generated and the guarantee that it can be adapted to the specific needs they have.
What exactly does this management system consist of and what criteria should be taken into account to ensure the successful implementation of an ERP project? In this article, we will help you determine how to choose the right ERP for your company and when you should consider implementing it.
What is an ERP?
The first question that every manager or company director should ask himself before making the strategic decision to invest in a business management software is perhaps "what is an ERP and what is it for?
ERP (Enterprise Resource Planning) is a management solution that centralizes all the operational flows of a company (accounting, sales, human resources, etc.) in order to automate them and make them more efficient.
When to consider implementing an ERP system for your company?
The need to implement an ERP tool in companies arises mainly when it is noticed that:
- Internal dysfunctions are becoming more and more common and start to accumulate.
- Business processes are becoming repetitive or cumbersome.
- The operational needs of the company are multiplying rapidly.
How to choose an ERP system? → 9 criteria to choose an ERP system
Now that we have seen what an ERP is and the reasons why its implementation in the company is starting to be considered, let's analyze the fundamental criteria that must be considered for its correct choice.
1. The type of company
For an emerging company in its start-up phase, implementing an ERP may not be an important decision. The entrepreneur usually starts by organizing his database in Excel and then upgrades to an enterprise tool when he needs it.
Most likely, the first thing he will consider doing is acquiring CRM (Customer Relationship Management) software for sales management, or accounting software for organized bookkeeping. So far, there is no ERP on the horizon and, a priori, it would not be necessary.
On the other hand, the same SofDoit study concluded that 67% of companies that implement an ERP do not invoice more than two million euros per year. This could mean that a large percentage of SMEs today are opting for ERP software to manage their processes and be more competitive.
As for large companies and given the number of processes that take place in them, opting for a tool that centralizes management and is capable of optimizing it is a logical decision, the consideration of which is not subject to the costs of the same.
2. The sector of activity
In general, companies share similar processes:
- Customer prospecting,
- commercial management,
- invoicing and accounting,
- internal administration, etc.
A consulting agency, for example, will not proceed in the same way as a construction company:
- Prospecting scenarios,
- presentation of budgets,
- calls for projects,
- invoicing per mission or per hour, etc.
3. Business specificities
ERP software has the advantage of being a kind of toolkit, adaptable to each company. If you work for a specific and well-defined business sector, an ERP tool can be ideal for your business management.
However, even if you are part of a certain field, your business model may be particular and different from the rest of the companies that are part of it. In this case, standard software may not be the ideal solution. In such a case, you have two alternatives:
- Opt for a specific ERP that meets specific needs. For example, if you have identified that human resources management is a key point for the success of your model, you could opt for an ERP system for human resources.
- Opt for a transversal ERP, capable of integrating with the other tools you already use in the different departments of your company.
Today, it is increasingly common for ERP systems to include or be equipped with APIs that allow them to interact with other solutions. This compatibility of tools allows you to choose a global solution that integrates with the tools you already use, as we saw in the previous point.
However, the ERP also offers different modules for each of the organization's departments, so it is possible to have the entire business structure in a single unified system.
5. Centralization
Beyond the size of a company to choose the solution that best suits its needs, the volume of processed workflow is what will make evident the need to implement an ERP software.
To the extent that the information entered by someone in the company is accessible to all departments, it will reduce the problems of information transmission. Everyone has access to the data they are interested in and can dig into it if necessary.
6. The software supplier
The importance of the ERP solution provider lies in ensuring technical support and having the necessary back-up to make the business processes evolve. The market offer is wide and there are many recognized brands that offer quality, scalable and adaptable options.
The flexibility of the software supplier is evaluated at the moment of requiring constant updates and verifying that it has sufficient resources to carry them out in the best way and in the shortest possible time.
7. Hosting
ERP solutions can be installed locally, on the company's own server or in the cloud.
Each of these two options offers different advantages, depending on the needs of each company. Let's take a look at just a few:
ERP in the cloud:
- Access to the functionalities at any time and from different types of devices, as long as you have Internet access;
- ideal for companies with international presence that require having a centralized database, accessible from different parts of the world.
- More efficient and optimized technical support thanks to the support of the service provider;
- greater security and protection of information as it remains in the company's private domain.
From a structural point of view, ERP is the backbone of the company. Common to all employees, the system is at the heart of everyone's tasks and progress. In terms of collaboration, its importance lies in the fact that it brings transparency to processes and communications.
Depending on the robustness of the ERP structure, for management and the various department heads, the management of activities can be simplified. The figures, available in a single place, can be compared to obtain a concrete view of the company's situation, whether from a financial, competitive or human point of view.
9. Implementation
One of the difficulties of implementing a new operating system is the change of mentality required on the part of employees with respect to the way the company plans its activity. The faster the transition is carried out, the better it will be for business continuity.
In this sense, the time required for the implementation, as well as the cost of the ERP software, are criteria to be taken into account when choosing.
Hence the importance of ensuring the smooth flow of internal exchanges through a specialized and efficient tool.