Chances are, your current IT infrastructure has pain points and needs to change to support your organizational goals. An ERP selection and implementation is only part of this strategy, but is a large part and shouldn’t be overlooked.
Complex organizations often prefer on-premise ERP software, but this isn’t the only reason to go on-premise. There can be several other factors when developing an IT strategy such as:
- IT support and staff skillsets
- Government regulations, such as HIPPA, ITAR, SOX or PCI compliance
- DRP costs
- Depth of functionality
While most major ERP vendors can easily address most issues, cloud ERP is still in its pre-teen years and has a little ways to go to match the full power of on-premise solutions. This is why companies like Oracle, Microsoft and SAP are pouring millions of dollars into R&D and acquisitions.
That being said, cloud ERP could very well be a great fit for your organization. It will be hard to tell without performing due diligence and knowing exactly what questions to ask, which is why we say it is vital to have experts assist you in your evaluation.
A few questions that you will definitely want to ask any ERP vendor include:
- What is your product roadmap?
- Do you have experience or expertise in our industry?
- What type of technology are you investing in? (Cloud or On-Premise)
- Are you researching anything cutting edge, such as AI, machine learning or blockchain?
- How often do you have a major update?
- Are you continually improving your integration models?
In addition to deployment options, you’ll need to consider integration strategies. One approach is implementing a single ERP system with all the functionality you need. This is often the simplest approach requiring the fewest technical resources. However, it may not enhance your competitive advantage. Oftentimes, you will need different ERP systems for different functional areas. This is known as a best-of-breed approach.
Integrating multiple ERP systems (a best-of-breed approach) is challenging in terms of data management, process standardization and organizational change. At the same time, a best-of-breed approach may reduce your need for software customization because you can simply select different products to cover functionality gaps in your other products. This isn’t as bad as it sounds as it is getting easier and faster to integrate solutions with standardization of data formats.
If you’re considering a best-of-breed approach, you may be interested in our blog post about ERP vs. CRM.
Speaking of customization, do you have a customization strategy?
Your IT strategy should specify how you’ll handle customization requests. While every ERP system requires some amount of customization, you should strive to minimize it. This will make upgrades a lot easier in the future.
It is essential that you have your customization approval process documented and adhere to it. If not, you may experience scope creep. We have seen this happen to dozens of companies, and people do lose jobs over it. Scope creep can easily start to cost tens of thousands, if not hundreds of thousands, of dollars. This is not to mention the risks involved when upgrading to a new version of your ERP system.
To Customize or not to Customize – That is the Question
When deciding whether to fulfill a customization request, consider whether you absolutely need that functionality and what it affects. In many cases, you may just need to train employees to perform a process more efficiently.
Developing a resource strategy for ERP implementation is also important. Most organizations use a combination of internal and external resources. You’ll need both technical and business skillsets, which can be hard to find in-house. Employee bandwidth is also an issue when using in-house resources so be wary of this when assigning tasks as employees can quickly experience burnout.