Having asked ‘What is ERP’ and having shown what it can do, the question that comes naturally is how to select which solution is right for my small business or organization. The options are numerous and there is in fact an entire business ecosystem around this specific question (consultants, resellers and companies that help you decide and/or implement the solution for you). It’s a huge subject but we’ll try to cover the basis to get you started.
Regardless of the specific nature of your small business, there are a number of criteria that you need to consider and apply in pretty much all cases. So here’s what you should take into account as a small business owner.
Features: Obviously whatever you choose needs to cover the basic aspects of your business requirements. Your choice will be different if you want to make your inventory management more efficient compared to handling better your customers and sales leads – or if you want to improve how you work on both fields. It’s important to prioritise your goals as most of the best solutions out there -targeted to small and middle size business- also focus on doing one or two things well. So, the feature set they offer should match your goals as closely as possible. Note that having more features than needed might sound like a good thing to have but, in reality, it adds unnecessary complexity and increases the learning curve (and drives hidden costs higher).
Data visualisation & export: Can your ERP generate a printable report of all interactions with customers, suppliers, affiliates etc? How about aggregate data graphs or end of month/year reports? What level of detail can the ERP provide in how your business works? Again, simplicity but also completeness in data visualization is key to understanding your business with a snapshot. Can you easily share this information among employees? Also, if you decide to change systems in the future is your information locked in the current ERP?
Usability: Perhaps a make-or-break aspect is how easy it is to understand how the software works in a glance. Do you and your employees have to undergo lengthy training to learn and change the way they work? Or is the solution so well designed that you’ll hardly ever need a manual? The abundance of solutions out there makes this particular criterion potentially the decisive factor: The ERP with the shallower learning curve usually prevails over the ERP with the most features. This is true especially in very small businesses.
Security: You’re trusting your crucial business data somewhere that at least initially feels foreign and you should be sure that proper encryption and security measures are in place where necessary. At the same time, security should be as much as needed, it shouldn’t get in the way of usability and you should ‘buy’ to the extent that you need it (e.g. there’s more reason for it if you know that in the past a competitor has been after your data)
Data import: It’s important to consider – especially if your business has been running for a few years now – how and to what extent will you be able to import your existing information into the new system. This is a function of what format your data are in currently, how well organised and easy to process are and to what extent you’ll need to manually edit in order to be able to start to actually work with them.
Maintenance: Once the system is in place, it’s not the end of the story. You will not to consider who and how much it will cost to maintain it and in what way it can be upgraded to include further features or needs that will arise in the future. Also, consider hardware equipment and additional licenses you might need as well as what the backup scheme in case of disaster. Hosted or Software-as-a Service solutions usually offer this out of the box so small business owners do not have to deal with upgrades, maintenance and installations. All is needed in the latter case is a web-browser and an Internet connection.
Miscellaneous: Apart from the above points there are a number of other details that are easy to forget but can hugely limit your solution if left unchecked. Most likely the system needs to support multiple currencies (e.g. in its reports) or have product tracking capabilities. Furthermore, there might be industry- or business-specific individual needs that must be covered in your particular case. Finally, government or institutions might require that certain regulations are met and a system that doesn’t support them is of little use.
Cost: Of course, once you have an idea of what you’re after, then comes the issue of what it costs both to begin with but also in the long run. Usually the core spend is a function of the users (or machines) the software will be installed for but other costs may also be involved.
Another important distinction is whether the ERP will be installed in your computers or whether it should run on the cloud. We look at this issue in the next post but before that let us know in the comments if you feel there are there any other factors that should be considered before deciding on ERP.