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9 ERP use cases to consider before buying an ERP system

Choosing the right ERP system requires considering a dizzying array of factors from company size to business goals. To that end, here are nine use cases that can help simplify your research.

For organizations struggling with disparate data and systems, communication disconnects among departments, operational inefficiencies and time lags, an ERP system serves as a potential remedy.

Beyond that, companies have other factors to consider before starting the ERP system selection process. Since ERP software is extremely varied, offering deep levels of customization, businesses have enormous flexibility in their ERP options. However, the flexibility also makes the buying decision difficult.

Because there are so many different types of ERP systems, knowing the company's specific product, IT, operational infrastructure and business goals is paramount before looking at options. Here are nine common ERP use cases that can help with choosing ERP software.

1. Small to midsize company wants ERP benefits, but is wary of initial costs

A small to midsize company wants to improve its business processes, eliminate the costs and data inconsistencies of multiple systems and improve operational efficiencies.

The company chooses cloud-based ERP software that enables it to replace its systems and avoid making new capital investments into ERP hardware and software for its data center. The cloud vendor runs the ERP hardware and software that the company pays for as a monthly subscription.

2. Industry-focused company wants ERP aligned with its specific needs

A company in a highly specialized industry -- e.g., food and beverage -- wants ERP tailored to its specific business needs and pressures.

The company chooses an ERP software system specifically designed for its industry. The specialized ERP saves the company time in adapting the ERP system to its business environment and provides the best system for running business processes unique to its industry.

3. Large company needs to integrate new subsidiaries or remote offices

A large enterprise has an on-premises ERP system for its own internal processes, but requires a quick way to onboard new global business offices or newly acquired subsidiaries.

The company uses a two-tier ERP approach that features a cloud-based version of its on-premises ERP system -- or compatible software from a different vendor -- with localization capability for the remote sites in different countries. These sites can get started more quickly on the cloud, giving the parent company the necessary time to integrate them into the on-premises ERP system later, if at all.

Over time, the company can also decide whether to move these remote offices over to its on-premises ERP or to migrate corporate over to the cloud-based version.

4. Manufacturer needs to streamline operations and costs

A manufacturer needs to integrate its manufacturing processes and improve efficiency. The company also wants to get rid of the data discrepancies and software licensing costs from using disparate systems for each function.

The company starts with a material requirements planning-style ERP system that can solve issues of buying and managing components and raw materials, tracking orders starting with order placement and origination. The company can then begin processing these orders all the way through the operations of manufacturing, distribution and delivery, ending with order fulfillment and payment.

It can then use digital twins to monitor performance and IoT-connected sensors to engage in predictive maintenance and reduce costs associated with downtime.

5. Company expanding globally needs more automation

A company that currently uses basic accounting software is expanding globally and needs to automate things such as converting currency, which otherwise may need to be done manually. The company also needs more visibility into its finances, timely reporting capabilities and remote access.

The company chooses an ERP system that can automatically convert currencies. To reinforce efficiencies even further, its ERP system also integrates with other systems like credit card processing and payroll. The company can then generate reports from the ERP system and enable faster decision-making.

6. Service organization wants better coordination to reduce miscues

A professional services organization wants its finance, sales and operations to coordinate better. It also wants to reduce errors and operational miscues by ensuring that everyone is using the same data.

The company opts for a service-oriented ERP system that can track service engagements and record activities, resource consumption and costs as they occur. The system can also alert field operations to new service requests based on who is nearby, reducing resource waste.

7. Medium-size company needs improved analytics

A medium-size company wants to expand ERP for better analytics to improve operational efficiencies.

The company decides to add a business intelligence component to its ERP system. It also wants to shorten its financial close cycles and improve accounting accuracy. The company wants advanced financial scenario modeling and risk assessment analytics.

The business chooses an ERP suite with strong financial management capabilities, as well as AI, machine learning and predictive analytics to provide real-time information for decision-making.

8. Small company has a CRM system, but needs more functionality

A small company has a CRM system in place for its sales and marketing, but then decides that it also needs systems for functions like accounting and operations.

The company selects an ERP system that addresses these new business functions and is compatible with its existing CRM system.

9. Company wants a flexible and scalable ERP system

A company's initial goal is to start with only an individual component of ERP, like CRM or human capital management. It then adds functional modules later as it expands. Some of these individual systems are easier to expand into a full ERP suite than others.

Because of this, the company carefully considers the flexibility and scalability of its proposed ERP system, even though it does not need all the functions immediately.

ERP use cases and systems are complex, and complexity increases the risks for any implementation. For this reason, getting the right business partners or integrators to help with ERP implementation is as important as selecting the right system.

Because ERP use cases, choices and vendors vary, it can be easy to go off course from company goals. The organization should make every effort to ensure that it keeps the company's goals in sight while making an ERP system selection and always be aware of how the system is structured and how it functions.

These nine ERP use cases consider not only the ERP functions and modules that the company needs, but whether it wants to deploy them on premises, strictly in the cloud or in a hybrid combination of both.

Christine Parizo contributed to this report.

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