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The seas of ERP (Enterprise Resource Planning) are vast, and navigating the rocky waters of the current market is no simple task. The many midmarket ERP vendors all want your company’s business — in fact, Boston-based AMR Research calls it a “buyer’s market” — and they will try their best to dazzle you with spectacular product demos and enticing promises of a smooth-sailing deployment.
Don’t be fooled. Midmarket ERP offerings may be scaled down to meet the requirements particular to midmarket companies, but that doesn’t change the inherently complex — and expensive — nature of enterprisewide technology that links together many disparate business processes. To make sure that you choose wisely when committing to an ERP solution, ask at least these 10 questions when researching vendors and their products.
1. Do you know and understand the business problems your organization’s business leaders plan to solve with ERP? The first step in choosing the right solution for your organization is knowing exactly what you need that ERP package to do. This is easy if the ERP adoption is driven by an outdated point-solution, such as one for financial management, that must be replaced with an automated solution. Your company may be embarking on an ERP implementation to grow revenue, increase productivity and improve efficiency, but figuring out the specific problems that need to be fixed to meet these goals can take some digging.
Keep in mind that “many ERP installations have fallen short of expectations precisely because of a failure to determine and define detailed project goals at the outset,” according to British financial-software provider Lakeview.
2. Does your organization have a business-application vendor already? If your company currently uses applications in the Oracle-PeopleSoft, Oracle-JD Edwards or SAP business- application suites, your decision may be made for you. However, if you’re not satisfied with the vendor’s performance or if the ERP functionality doesn’t suit your organization’s needs, you don’t have to be locked in. Changing to a different vendor will probably interfere with the business to a certain degree, but it may be worth the disruption if it results in an ERP package that will ultimately reduce costs across your organization.
3. Does your organization have any legacy ERP systems to contend with? In the wake of a merger or acquisition, a newly expanded company is likely to have business applications from more than one ERP vendor scattered across the distributed environment. Aberdeen Group Inc. said in its “The 2007 ERP in the Mid-Market Benchmark Report” that 25 percent of the 650 midsize companies it surveyed plan to replace their ERP systems within three years.
The report goes on, “The proliferation of ERP contributes significantly to these replacement strategies, causing integration issues (43 percent), which create the desire to consolidate... multiple ERPs (40 percent).” Also, 37 percent of those respondents cited a need for a global, standardized solution with international capabilities. If your organization is replacing a legacy ERP system or consolidated multiple systems, it’s critically important to standardize business processes across the enterprise.
4. Is a vertical ERP solution suitable for your organization? In an effort to make ERP more accessible to midmarket companies, most vendors have released bundles with software tailored to specific industries — the choices are abundant and likely to target your organization’s industry, whatever it may be. Such a solution may speed deployment and decrease the amount of customization you require to fully support your organization’s business processes.
Irvine, Calif.-based ERP vendor Epicor Software Corp., for instance, offers solutions for financial-services, hospitality and entertainment, nonprofit and retail companies. Similarly, Infor, located in Alpharetta, Ga., offers solutions for aerospace, janitorial, life-sciences and shipbuilding companies, among others. Lawson, in St. Paul, Minn., has solutions for distribution and health care companies, while Microsoft’s offerings include those aimed at industrialequipment manufacturing and energy organizations.
5. What functionality will your organization actually use? You may not need an end-to-end solution that incorporates everything from payroll to fieldservice management to product-return authorizations to sales tax management. Aberdeen Group’s “The 2007 ERP in the Mid-Market Benchmark Report” reveals that the most frequently-used ERP applications are in the financial and manufacturing modules.
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