Four things to consider when looking for a new ERP vendor
If you’ve decided it’s time to replace your ERP and begun to research new systems, you’ve found a crowded landscape. At last count, there are over 140 companies offering an ERP system. Trying to narrow it down to the one that’s right for you is a daunting task. What criteria do you use to narrow your field? Your primary options are to look at specific functionality for your industry, firms with extensive experience in your vertical, the status of the publisher (i.e. how long it has been around, who owns it, etc.), and finally, if it is cloud-based, hosted, or on-premise.
Some would say look for providers who offer unique functionality for your particular industry. On the surface that sounds like a good approach, but it’s not that easy. If you look for good functionality in your industry as your criteria, you may find that they may not support the way you go to market, or are weak in other areas important to you.
Some providers offer excellent industry expertise in a particular vertical, but they are nursing a platform that is out of date from current industry standards (or it’s built on a platform being sunsetted by the original publisher) – a fact that may not be easy to uncover. In addition, some large firms have taken to a strategy of letting partners continue with older legacy platforms, while their financial commitment is to newer, more compliant products. So, you may buy into a product with a limited go-forward strategy.
The status of the publisher is also a consideration for many companies. Publishers break down into three basic categories:
- ERP Products. If this is being offered by a provider as their sole offering. These are established companies who have weathered ERP consolidation and maintained current technology standards. However, they may not fit your budget or functional needs.
- Up and comers. There are new ERP products being offered every year. These will have the latest technology, typically a SAAS offering, but not necessarily the depth of functionality your company needs. Some are so new that you may not want to take the risk of being an early adapter.
- Holding companies. These are typically financial firms who have acquired a number of legacy products, which may appear to meet your needs. Now the question is, what is their commitment to carrying these products forward? In some cases, these products have been bought and sold before and may even be openly on the market now. While they may have a great vertical fit for your needs, the future is uncertain.
Finally, we come to what is currently the most commonly discussed criteria. We have the “cloud” to consider. The first question you need to ask yourself when you get to this point is, “Am I comfortable having my product on a remote server, or do I need to have it on-site, so I can have total control of it?”
Every provider will say they have a cloud strategy, so it is important you have a clear understanding of the three types of cloud capabilities that exist:
- SaaS products. These products are engineered for the cloud and offer a true Software as a Service (SaaS) option from the beginning of their development. All aspects of day-to-day operations and maintenance are handled by the provider. Users login through their web browser and go about their daily routine. Updates are automatic, and nothing ‘lives’ onsite.
- Hosted. These are typically a traditional, on-premise product. Rather than being located on your company’s server, it is loaded onto a server in the cloud. Other than no on-site server, the operation and management of the system is the responsibility of the customer or is supported by a managed services agreement.
- Traditional on-premise model (which is probably what you are using today). This is still an option, however if this is your preference, it will limit your search; not all ERP providers offer a site license, as some are strictly cloud-based.
These four criteria (specific functionality, vertical experience, publisher status, and cloud capability) are all valid and worth considering. This is where a management consultant can make all the difference in your search. They should be fully aware of the status of these criteria and can help you narrow your field quickly and effectively, allowing your focus to be on the right criteria at the right time. Once you determine which criteria matters most to you, it’s time to move into the next step of this process. But that’s a topic for next time.