Evaluating an ERP system’s value to your business is a challenging task. There is a host of real-time operational data and research findings to factor in while assessing an ERP solution’s veracity. Moreover, the stakes are too high as the ERP influences all departments of your business and a wrong system can have ramifications that linger for years.
Here are the five critical factors your ERP evaluation or selection committee must consider:
- Functionality: ERP vendors typically claim their system to be a “one-stop-shop” for organisations by offering functionality encompassing almost all departments and processes. However, it makes sense to evaluate how well an ERP system’s functionality matches your organisation’s needs. For e.g., if you need a high-performing CRM in your ERP, but you implement an accounting ERP that claims to have CRM features, it won’t add any value to your business.
- Module Integration: An ERP system interfaces with several other systems such as Mail server, Attendance systems, Bar Coding machines to exchange data. Additionally, all modules within an ERP must interface neatly with each other as well with cloud deployments to maintain seamless functioning.
- Technical Support: ERP implementation is a long-drawn process and requires technical support throughout its lifecycle. Your vendor must provide support in the form of online portal, email, live help desk and in-person staff.
- Vendor Credibility: It’s imperative to check the business background and credentials of your ERP implementation partner. ERP should be their core business and not an appendage.
- Financial Risk: Product cost will include not only initial license but also training and implementation costs. Consider if the ERP partner is charging you for usage or by user count.
Here’s how you can evaluate the different modules of an ERP system:
- Customer Relationship Management (CRM): An effective CRM module will provide a wholesome view of products, customers and processes across different platforms and devices.
- Procurement (SRM): This module must include efficient inventory control and scheduling features. Capacity Requirements Planning (CRP) and Materials Requirement Planning (MRP) must be components of this module.
- Production (PLM): Advanced Production Planning (APP) and engineering change management in PLM can smoothen the process changes and balance demand-supply chain that are a continuous challenge for most businesses.
- Distribution (SCM): A central Logistics hub in your ERP qualifies it to ease the Distribution module.
- Accounting/Finance: The ERP’s Accounting module must deliver on accounts payable, bank statement reconciliation, payroll and tax filing to reduce workload of the finance department and align compliance caveats.
- Human Resource Management System (HRMS): Workforce management, attendance and recruitment features are a must in your Human Resources ERP module.
- Governance: Governance, risk and compliance features in ERP systems allow easy adaptation to change in policy regulations and technology.
- Asset Management: Asset Lifecycle Management module must cover procurement and maintenance charges, service conditions and returns on investment in tangible terms.
- E-Commerce: If integrating ERP with e-Commerce for B2C functionality, look for two-way integration with webstores and marketplace integration.
Evaluate your ERP systems keeping in view your business requirements. Prioritising features into must-haves and deal breakers is a must for all ERP users.
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