The benefits of ERP system are well recognized, and selection of the right ERP software is the most vital step in ERP implementation. ERP implementation involves heavy expenditure and wrong software selection may lead to total failure of the ERP system causing heavy financial losses for the organization.
Criteria for ERP software selection
Defining the organizational requirements: Requirements vary with organizations, and detecting the prime needs of an organization is the first step of ERP selection. ERP software comes in a number of features allowing organizations to choose the right one according to their requirements. An organization can opt for few modules initially and add extra modules later based on the business demands. The organizational requirements may be many, but ERP software selection must be based on priorities.
Buying an ERP system or hiring an organization: Small and medium sized organizations with minimum requirements can either buy an ERP system or hire a third party vendor. This spares the organization from huge one time capital investment. The maintenance and implementation costs also get reduced considerably. The hired vendor also upgrades the installed ERP software regularly. On the other hand, buying an ERP system involves huge investment and other implementation problems.
Type of ERP required for an organization: ERP software selection varies with the organizational requirements and business processes. An organization should carefully select the software after chalking out the prime requirements. An organization can go for industry specific software or Vertical market software, meant for specific functions. Large organizations handling huge volume of data daily can opt for Horizontal market software, meant for carrying out many functions suitable for different types of industries.
Technology and hardware requirements of ERP implementation: The organization should clearly define the technological and hardware requirement of the ERP system based on the structure. The technology of ERP should be scalable and able to withstand load. It should accommodate basic features like strong database, various server options, e-commerce application and user- friendly interface, regular updating and able to support multi languages, multi divisions and multi-currency conversions in different geographical locations.
Selecting the suitable vendor: There are number of ERP vendors available in the market each presenting different features, service and cost. It is wise to prepare a list of reputed vendors and jot down the pros and cons of the ERP systems provided. The organization can seek references from other users to get an idea of the product and service. Calculation of critical success factors is vital while selecting an ERP vendor, as this calculation will decide the return on investment (ROI) in the future. The organization should check the various updating facilities of the ERP provided and the cost involved.