ERP: choosing the right system

An Enterprise Resource Planning (ERP) system can transform a business. It integrates departments and processes, such as finance, manufacturing, sales, HR and customer relations, into a single, unified platform. It provides a central point of truth and data, which can increase productivity, reduce errors and strengthen collaboration.

 

It’s therefore little surprise to learn that demand for ERP software is booming. The market is likely to grow by around 14% a year, over the next six years, hitting $229.79 billion – up from 2024’s figure of $87.73 billion.

 

But investing in an ERP without setting out clear, measurable goals for what needs to be achieved can lead to significant internal problems and wasted money. Getting exactly the right system for your company’s needs and processes is vital.

 

 

Establishing objectives

Every company needs an ERP for slightly different reasons. Company leaders and all those developing and working on the new system must be very clear about what they are.

 

Set out your specific goals

Which processes are least efficient, and how can an ERP improve them? Our Stiltz system has been designed to, among other things, improve stock availability across our operations in Europe, Asia, the UK, and North America.

 

Do HR teams need an ERP to help with managing employee payroll and bonuses, particularly in relation to sales teams, perhaps?

 

An ERP might prove to be of great value in tightening links between new and changing orders, production scheduling, and the buying of raw materials. It could be useful to revitalise companies’ financial reporting, which often needs reviewing and updating as a business grows. It’s important to assess what sort of insights your business is currently lacking.

 

Ensure company-wide engagement

Form a steering committee to determine ERP goals and lead the organisation through implementation. This should include senior leaders from across the business, such as finance, operations, IT or any team using, or hoping to benefit from, the ERP.

 

Wherever possible, senior leadership teams, including CEOs and CFOs, should consult individual employees at all levels across the business to find out where existing processes or systems are causing them specific problems, and how an ERP could help.

 

What are your measures of success?

Establish robust performance markers that will show whether the ERP has met the objectives set.

 

This might - for instance - include an increase of 20% in customer satisfaction, or a five per cent reduction in manufacturing costs, or evidence of the removal of silos.

 

 

Choosing the best system
As the market accelerates, there is an increasing number of ERP options available. Take time to research and select the most suitable system for company size and complexity of need.

 

Bespoke or off-the-shelf?

SaaS solutions can be an affordable option, and their growing sophistication (including using AI) and availability are big factors driving the growth in ERP software uptake. But though they may be excellent for SMEs, for other organisations, a system developed and controlled in-house can offer greater customisation and scalability and, ultimately, be more cost-effective.

 

Smaller companies may find that straightforward CRM or accounting tools (Zoho, for example) handle functions such as sales leads and revenue monitoring very well. But bigger businesses generally need something more powerful, a system able to deal with complicated manufacturing operations, supply chains, distribution and thousands of customer relationships.

 

Some ERPs can be particularly effective at finance planning, giving flexibility through dimensions and tagging, and allowing more dynamic, detailed reporting.

 

Adaptability is key

A good ERP should be flexible enough to change over time with the company, as it grows in size and/or when different job functions and processes need to be incorporated into the system.

 

Stiltz is currently integrating our wholly owned Chinese manufacturing operations into our system, five years after the Oracle-based ERP was rolled out to UK and US sales, operations, logistics and finance. We have added bolt-ons to our ERP for evolving marketing needs and the tracking of customer journeys.

 

An ERP should challenge, not consolidate, existing systems

It’s important that a new system is as easy as possible for all employees to use, as well as for any vendors who might access it. IT teams and management can help by the provision of straightforward, relevant and accessible training. But the ERP system must drive efficiency by improving the way an organisation operates, rather than simply fitting in with legacy processes.

 

Opt for established solutions

Though in some cases a fresh, innovative platform might meet requirements, in most cases it is recommended to choose established off-the-shelf ERP software.

 

Make sure it has a track record of updatability and scalability. If it has a relatively wide customer base, it is likely to be more stable and reliable, long-term, and have good customer support.

 

If you can, seek testimonials from similar-sized or profiled businesses that use the system to understand how a particular ERP has worked well or otherwise.

 

If employees have good ERP knowledge, or have used it or something similar extensively before, making use of their expertise can be an excellent option. Designate them as “super users” who can guide management on how a system can be best applied, warn of possible issues and how to overcome them, and quickly help colleagues with any questions or problems, during or after implementation.

 

Be aware of unexpected costs

It goes without saying that choosing an ERP that will stretch your finances too far is unwise. But be aware that implementation of any system is very likely to bring unforeseen problems, and so allow for a contingency buffer of up to 25%.

 

Put in the time to avoid future problems

Choosing the right ERP might take time and resources. But that is likely to be far less effort than firefighting ongoing problems caused by selecting a system which is not compatible with either business size or operational profile.

 

Conduct a thorough investigation of a product before committing, including stress-testing features to ensure it suits all user abilities. 

 

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Mike Lord is Chairman and CEO of Stiltz, the UK’s leading homelift provider

 

Main image courtesy of iStockPhoto.com and Benjamas Deekam