In the over 15 years I’ve been an ERP advisor, I’ve discovered a trend in oversights managers and business owners make when they are thinking about buying ERP. Although most seem obvious, it’s surprising how many businesses neglect these basic rules: scalability and adaptability, TCO, avoiding dream systems and keeping your freedom.
1. Think about the future
When buying an ERP system, you’re not doing it just for this year. You’re doing it for many years to come. So think about your growth and expansion plans. Is the solution you foresee scalable to your “best case scenario” growth figures? And is it adaptable, in case you need to modify your business case to suit changing circumstances?
2. Look at the Total Cost of Ownership
Another quite obvious point, which is overlooked surprisingly often. Most business owners see the cost of implementation in terms of consultancy costs, installation costs, training costs and license fees. These are usually cleary stated on any ERP vendors quote. However, much of the cost may be unclear or hidden. Some are easy to find with some more digging: costs of running and maintaining servers, installing updates. Some are more vague, such as the cost for time your people spend in setting up the systems, developing new business processes and getting used to the system. A brainstorming session to uncover all potential costs for the system will help.
3. Don’t try to automate everything at once
Business owners and managers tend to think of the purchasing of a new ERP system as an opportunity to design their dream system. This is usually a system where every process is automated, down to the last quarterly report and quirky interface. Usually the costs involved of building such a system brings them down to earth, but in case a vendor promises the moon for peanuts, take a moment to think of what you’re losing when over-automating your business with a customized system. Losing all flexibility in your processes and creating an upgrade nightmare should be reason enough to stick to standard.
4. Keep your freedom
Most ERP vendors will try to create a lock-in. They know that when you implement their system you’ll be dependent on them. That’s why their initial quote is usually quite low and reasonable. When you’ve passed the point of no return, that’s when the costs that were conveniently hidden in the fine print start popping up. To keep the leverage of your vendor as low as possible, ask yourself (and the vendor) what it would entail to switch vendors at every stage of the project, and after go-live. Try to avoid long-term contracts.