Six Golden Rules for Choosing an ERP Software System that Fits Your Needs
Historically, ERP software systems were only available as on-premise software. With on-premise solutions, the software applications are purchased by businesses at the onset and the enterprise systems are installed and deployed on site on the company’s internal servers. However, over the last five years or so, cloud-based ERP solutions have emerged, offering new innovative software solutions and alternatives for the ERP software market. With cloud-based alternatives, the ERP vendor provides their customers access to the software via an alternative delivery system – the Internet.
There is certainly no denying that there is much hype in the ERP marketplace regarding the strengths of cloud-based ERP relative to traditional, on-premise ERP software solutions. However, as with any enterprise software option, both have their pros, cons and tradeoffs. For example, with cloud-based models, the vendor or service provider is responsible for all software, hardware, research and development, upgrades, hosting and software maintenance.
Conversely, while an online option may appear to be the right choice for the organization today, should the organization want to bring the service in-house in the future, this could lead to potentially challenging and costly data migration obstacles.
When choosing between cloud-based and traditional ERP solutions, a lot depends on the following variables:
- The complexity of your business. Are you struggling with managing a costly hairball of multiple business applications, pieced together over time? Is this environment preventing you from remaining agile and making the quick, decisive actions required in today’s competitive business environment? If so, you may be properly positioned to explore cloud-based ERP systems such as NetSuite which brings all areas of your business – from financials to customer relationship management, and eCommerce – together under a single platform.
- Are your functional requirements being met? Meeting functional requirements is vital to a successful ERP implementation. It’s not just a matter of going through the list of features and capabilities of an ERP system. Truly understanding the functional requirements of the business and selecting a system that properly aligns is paramount. Which leads me to my next point…
- Your business growth level. The purpose of ERP software is to enhance your business. Organizations need to gauge their requirements and plan accurately before selecting ERP software, as a wrong selection can hamper a company’s growth, profitability, and its survival in the competitive market. For example, if your business growth demands additional software features and functions, you might consider leveraging cloud-based ERP alternatives for the ease of scalability.
- Is business intelligence of strategic importance? With some cloud-based ERP solutions, dashboarding and out-of-the-box reporting capabilities can be limited. Consider how you typically, or intend to, use business intelligence throughout your organization. Do you need the ability to build reports on the fly and share them across the company? If so, some on premise ERP systems such as Microsoft Dynamics GP provide the ability for ‘light user licenses’, providing employees with limited system access at a fraction of the full user license cost.
- Level of integration required with third-party enterprise software applications. As business requirements evolve, the scoping and planning of third-party systems integration in the context of ERP implementations becomes more complex and important. Some of the considerations, before embarking on a project which includes third-party integrations, are costs, timeline for completion, risks to critical business functions that are required for go-live, and resource availability to support and drive processes.
- Sensitivity to initial capital outlays vs. ongoing operational costs. With cloud-based ERP solutions, you’ll benefit from substantial IT savings. The cloud eliminates costly hardware and infrastructure, while automating upgrades and simplifying customization.
Regardless of the path you choose, it’s helpful to keep in mind the driving force behind implementing an ERP system – to drive standardization across the enterprise resulting in greater operational efficiencies.
Cloud-based ERP software may not be for everyone, while on-premise could still be appealing to many. It is important to carefully consider your spectrum of ERP software options, as there are numerous possibilities, and at BCG Systems we recognize that it can be daunting to weigh the pros and cons of all the solutions on the market. That’s why we want to help simplify that process.
Access the recording of our recent educational seminar, ERP Shootout: A Closer Look at NetSuite and Microsoft Dynamics GP, where we showcase two of the leading ERP software solutions – one on-premise, and one cloud-based – to help you determine the appropriate fit for your business.