There are a multitude of options to choose from when looking for new ERP systems. SaaS, cloud, on premise, best of breed, single ERP and a host of other options can make the ERP selection and implementation process overwhelming.
The bad news? There is no one size fits all answer to determining the right type of system for you. The good news? An objective evaluation framework can make navigating these challenges more clearly.
There are five key variables to consider when evaluating the proliferation of options at your disposal:
On-premise vs. cloud ERP systems. One of the first decisions is to determine if you want to own the software within the four walls of your IT department, or if a hosted cloud or SaaS solution may be a better option. In general, and as visualized in the above graphic, if your organization is very complex and has a heavy need for IT control, then it is much more likely you should gravitate to on premise ERP systems (the opposite is true for simple organizations that want to outsource their IT functions). It’s also important to remember that hybrid options can provide the best of both worlds: the flexibility of on premise without the need to build an expensive internal IT infrastructure.
Single ERP system vs. best of breed. Salesforce, Workday and other best-of-breed solutions have threatened the appeal of single ERP systems. However, best-of-breed solutions also create technical complexities that can be hard to manage. This includes integration, architecture and data issues that are less difficult in single ERP environments. When determining the right path for your organization, you must weigh the pros and cons of standardizing and consolidating your systems versus the flexibility and “better fit” that you may likely experience with a best-of-breed approach.
Standardized vs. flexible enterprise software. With over 200 ERP systems (and counting) in the market, not all are created equally in terms of flexibility. For example, SAP software is more rigid and standardized than Microsoft Dynamics, which may be a good thing if you are a globally siloed organization looking to consolidate and standardize your business processes. On the other hand, JD Edwards and Infor are commonly seen as more flexible options, which can be good if you are a rapidly changing organization. An objective assessment from independent ERP experts can help ensure that you find the right options that meet your needs.
Tier I vs. Tier II or III ERP systems. The scalability of your chosen ERP solution is another deciding factor. Tier II and Tier III systems may provide more unique, industry-specific functionality that is a better fit for your organization, but they may also not be as scalable as your organization grows and diversifies into new products, markets and customer bases. Choosing the right path will help you narrow down the field of options so you can focus on those that are the best fit for your organization.
To ERP or not to ERP. At the end of the day, you may find that a new ERP system is not what you need. It may be that process improvements, spot enterprise solutions or other more low-hanging fruit will deliver better improvements to your company. ERP vendors may insist that you need their software, but other non-ERP options should be considered just as carefully. These other options can often deliver close to the same benefits – but without the same cost or risk.
Whatever options you choose in each of the above instances, it is important to recognize that there is no perfect answer. Each will have tradeoffs, risks, pros and cons. It’s a matter of finding which is the right fit for you.