Ten questions to ask when choosing an ERP system
When considering strategic implications it is important to understand the implications of “best of breed and “best in class” enterprise resource planning (ERP) systems.
A best of breed enterprise application provides an organization with specialized functions such as standalone quality management or inventory tracking systems. Best of breed systems are offered by separate vendors.
Best of breed solution is oftentimes the best choice if a company’s business requirements are so specific that a single ERP can’t address their unique set of business conditions.
Yet oftentimes, an organization might be best served by what is termed “best in class ERP.” These are solutions offered by ERP vendors from tier one, two or three that combine core functions of a manufacturing enterprise into a single, integrated enterprise-wide software suite. There is tight integration between functions, linking manufacturing, finance, supply chain management, quality, inventory, supply chain, maintenance and other functions in a single universe.
Key ERP questions
When it comes to ERP questions, should a company pursue a single integrated ERP solution or implement and interface multiple best-of-breed packages? What are the pros and cons? The following questions should be considered.
1. How close does the integrated ERP system come to meeting your needs? Consider the current state vs. the desired future state – which approach has the most potential to meet requirements? If your current system is falling short of your needs in a specialized area it may be worthwhile evaluating a best of breed solution to bridge the gap.
2. Can you achieve your purposes without the application(s) being integrated to another department’s information? If a standalone solution would work without affecting efficiency and flow of information – it may be a more economical approach.
3. Are your application needs so specialized in one or more areas that you feel an integrated solution just won’t address them? If you’ve exhausted integrated options – consider a best of breed add-on to solve the problem.
4. What skills do you have in your IT staff? Can they manage multiple applications from different vendors, different databases? Be sure that your existing IT organization can work with the technology and consider the added costs of training and support in your decision.
5. Is the best of breed application addressing a short-term problem? How does it apply in the overall strategic direction of the business? Would integrated ERP provide a better long-term approach? Consider the long-term impact of a short-term decision – replacing your current ERP may be the better alternative in terms of total cost of ownership over the long haul.
6. If you are considering a single integrated system – how well does it handle a business flow? Are there multiple places where data is entered or are transactions flowed through the entire system without re-entry? Don’t underestimate the value of integrated data and the impact it can have on your workforce efficiency.
7. How does the best of breed compare to the integrated solution, process by process? Be sure to consider the impact of a best of breed in the overall business process, how does it enhance the value of a process beyond that of the integrated solution?
8. How does the long-term viability of the best of breed vendor compare to the integrated ERP vendor? Research the financial viability and stability of a best of breed vendor – sometimes a product that fits a unique niche does not have the stability for long term support that a larger ERP vendor provides.
9. Do you have negotiating power with the integrated ERP vendor? Be sure to review the terms and conditions of support and upgrades from a best of breed vendor to ensure that you are getting their best price based on current and projected growth.
10. Does the best of breed vendor support different delivery methods? i.e. Cloud vs. on-premise. Which deliver method offers the most advantage to your organization? Cloud can offer more flexibility in usage of the product, and can reduce the need for additional IT infrastructure costs when supplementing your existing ERP.
Martin Davis, Ultra Consultants, a CFE Media content partner. This article originally appeared on Ultra Consultants’ blog.
Original content can be found at ultraconsultants.com.