The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.
ERP Evaluation Criteria
1. Deployment Options
Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.
While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. Whether you’re evaluating SAP, Oracle or Microsoft Dynamics, their cloud implementation resume may be smaller than you expect.
For example, if your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.
Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box, and if they can be scaled.
3. Technical Fit
While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which of your processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.
Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.
5. Return on Investment
Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.
If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.
6. Product Viability
You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.
While new technology can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and organizational change management. Even if you select the best solution from among SAP, Oracle and Microsoft Dynamics, you won’t transform your organization unless you enable change by focusing on your people and processes.