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The first step in the ERP system selection process is to determine if the company actually needs ERP. If it is experiencing issues with disparate data and systems, communication disconnects among departments, operational inefficiencies and time lag, then an ERP system implementation serves as a potential remedy.
Beyond that, companies have other factors to examine when considering ERP and starting the ERP system selection process. Since ERP software is extremely varied, offering deep levels of customization, businesses are given enormous flexibility in their ERP options. However, the flexibility also makes the buying decision difficult, since there are so many ERP choices.
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 beginning to looking at options. Here are nine common ERP use cases that show how to choose customized ERP software.
1. Small company wants ERP benefits but is wary of initial costs
A small company wants to improve its business processes, eliminate the cost and the data inconsistencies of multiple systems, and improve operational efficiencies.
The company chooses a 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 has 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 a specifically designed ERP software system for its industry. The specialized ERP saves the company time in adapting the ERP system to its business environment and provides the best system selection for the 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 and newly acquired subsidiaries to this system. This ERP system selection process needs to be specialized.
The company uses a two-tier ERP approach that features a cloud-based ERP version of its on-premises system -- or compatible software from a different vendor -- with localization capability for the remote sites and new businesses in different countries. These new businesses and remote sites can get started on the cloud, giving the parent company the necessary time to potentially integrate them into an on-prem ERP system later, if at all. Over time, the company can also decide whether to move these remote offices over to its on-premises version of ERP or to migrate corporate over to the cloud-based version of the ERP system.
4. Manufacturer needs to streamline operations and costs
A manufacturer needs to integrate its manufacturing processes. 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 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.
5. Customer-oriented company needs per-project software
A company that does all of its work for customers on a per-project basis needs an ERP system that can track all its activities and resources, as well as track the costs for every project. This system would potentially provide the additional ability to predict project overruns or resource constraints.
The best ERP system selection for this company involves researching project-oriented software that offers end-to-end visibility and tracking of all project activities.
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.
7. Medium-size company needs improved analytics
A medium-size company wants to expand ERP for better analytics to improve its 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.
8. Small company has a CRM system but needs more functionality
A small company has a customer relationship management (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 makes an ERP system selection that addresses these new business functions and which is compatible with its existing CRM system as well.
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 are.
Because of this, the company carefully considers the flexibility and scalability of its initial ERP system selection, 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 are varied, it can be easy to go off course from company goals. The business 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 it is structured and how it functions. This will help the company on its way to a successful ERP implementation that considers 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.
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