How to choose the right ERP system

6 min read
Saumya Dwivedi

Today, businesses must use the power of technology to maintain their position in the market. As they move through different phases of growth, it is imperative to streamline business processes to ensure further growth. Indian businesses are keen to stay ahead of this curve. In fact, cloud ERP system adoption by small and medium businesses in India is expected to rise by 23% through 2022.

Enterprise resource planning systems provide the requisite technological flexibility to achieve business goals.

ERP is a system that stores all data of an organization in one place, allowing departments to automate various processes related to sales, services and human resources.

ERP systems bring together various business processes such as:

  • Customer relationship management (CRM)
  •  Supply chain management
  • Pricing and product management
  • Human resources
  • Financial management

Earlier, there was a perception that the ERP system is only for large corporations. However, an increasing number of small and medium enterprises are using the technology to skyrocket their growth.

How to choose an ERP system

Selection of the right ERP system is important because it’s a big commitment of time and money. You will not want to implement a system, only to find it lacks something you need. We have listed some important factors below:

  1. Technical fit.
  2. Cost.
  3. On-site or in the cloud?
  4. Compatibility.
  5. Accessibility on mobile devices.

Let us explore how an ERP system can empower you to make better decisions by enabling a seamless flow of information across business functions.

How to choose the right ERP system for your business

ERP System Business Man with Briefcase
An ERP system can speed growth by coordinating key business systems.
Photo: Adeolu Eletu on Unsplash

There are a plethora of choices in the market. Below mentioned are some of the most popular ERP systems in India:

With so many ERP options available, selecting the right software for your business can be a daunting task. We have listed some important factors below:

1. Technical fit

An ERP system streamlines and integrates various processes of a business. For this purpose, either:

  • The existing systems have to be replaced with the new comprehensive system OR
  • Old systems have to be integrated with the new ERP application

If you want to keep your existing systems, then it becomes critical for the new ERP to have integration capabilities. In this case, you would choose the ERP application that has built-in integration capabilities with your existing IT system.

2. Cost

Cost is a major parameter while finalizing the right enterprise resource planning system for your company.

Select the option that offers you the maximum required functionality at the lowest cost.

While evaluating the cost, you should also take into account the cost of maintenance and support of the application post-deployment. You do not want to buy a system without highly-rated tech support, as there will certainly be times when you will need it.

ERP System Indian Currency
Make sure the ERP provider offers high-quality tech support.
Photo: on Unsplash

3. On-site or in the cloud?

An ERP application can be hosted on-premise or on cloud infrastructure. Both have their positives and negatives.

Remote cloud hosting is cheaper, since you need not purchase the infrastructure — the provider owns and maintains it. Cloud hosting is also easy to scale up as your needs grow.

However, there is a risk of a data breach, since your confidential customer data is stored on servers outside your business.

Generally, large corporations prefer on-premise hosting, whereas small companies go with a leaner structure by adopting cloud-hosted ERP solutions.

4. Compatibility

ERP systems that closely mirror your business processes require less customization and are therefore easy to maintain and update. Minimal customization also saves you time and money while implementing the application. Choose the system that most closely suits your business and industry.

5. Accessibility on mobile devices

We are living in an era of mobility and smartphones. Therefore, an ERP system that supports information access on both the desktop and smartphones is the need of the hour.

Before finalizing, ask vendors whether their application supports access via mobile phones.

Be sure to ask ERP vendors to provide verifiable references among their past customers. You can directly get in touch with those customers and ask them about the quality of services provided by various ERP vendors.

You can also ask your colleagues in various industry forums or other networks for ERP vendor recommendations.

Benefits of using an ERP system

Some of the main advantages of implementing the ERP system are mentioned below:

Growth advantage

Some businesses remain stuck with old systems that have been patched together and require a lot of duplication in work. As a result, employees spend unnecessary time doing everyday tasks.

To accelerate growth, investment in the enterprise resource planning system is a necessity. The right ERP system empowers businesses to:

  • Achieve the scale of operations, whether regional or global
  • Improve the customer’s experience, which leads to growth
  • Make faster and better decisions based on accurate data

Small businesses of today have the potential to become the large corporations of tomorrow.

Streamlined processes

Chances of error increases as the scale of your business increases. These errors can prove to be very costly if you have to shut down the production even for a few hours.

ERP systems provide relevant real-time information for decision making.

For example, a hospital has to manage various compliance and processes. An ERP is a must for this industry as the business can manage patient care, compliances, supplies control, payroll, and many other processes from one place.

Integrated information

The most amazing thing about ERP is that all the modules pull data from the same database.

This architecture helps in keeping the data consistent, accurate and unique. It prevents duplication of work and gives the most accurate information in real time. It also helps in getting the 360-degree understanding of the customer — like the medium through which the customer is acquired, history of their past purchases, complaints and so on.

Increased productivity

ERP helps in automating the redundant processes, thus improving the productivity of the business.

Individuals get more time to perform value-added tasks and work on other pressing tasks that may truly acquire more attention.

Enterprise resource planning systems in summary

An ERP system has the power to take your business to new heights. Given the complexity and cost of implementation, choosing the right ERP system is a very critical step and demands thoughtful evaluation of all the major parameters.

In this article, I have explained some of the factors that can help you zero in on the right ERP system and vendor. Mainly, you should:

  • Understand your business processes
  • Be clear about what you want the ERP system to do for you
  • Deploy your best resources for the implementation

Follow the best practices, and you will be able to achieve high returns on your investment with the help of this powerful technology.

This post does not represent an endorsement of any of these products. Information was accurate as of publication date.