Choosing an ERP System: The Criteria That Really Matter
Choosing an ERP system is one of the most far-reaching IT decisions a company can make: the software will structure your sales, purchasing, inventory and accounting for ten years. Sales demos all look alike. The criteria that really matter lie elsewhere.
Criteria for choosing an ERP system
- Total cost, not the license. Licenses, integration, data migration, training, annual maintenance: ask for the five-year cost, not the entry price.
- Coverage of YOUR processes. List your ten most frequent daily operations and insist on seeing them in the software, with your data, not the demo data.
- Reversibility. Will you be able to get your data back in a usable format if you leave? A vendor who dodges the question has given you the answer.
- The ecosystem. Connectors to your online store, your bank, your industry-specific tools: an isolated ERP brings back the re-keying it was supposed to eliminate.
- Local support. An ERP project rarely fails because of the software, and almost always because of a sloppy integration or untrained teams.
The most expensive mistake: deciding on the strength of the demo
A demo is designed to win you over. The salesperson knows the product by heart, the data shown is perfect, everything flows without a hitch. Your reality is different: special cases, exceptions, a customer who pays in three installments, a product sold both by the unit and in batches. Ask to test the software with your own data and your three trickiest cases. If the vendor refuses or keeps putting it off, you have your answer before you even sign.
A concrete example
Take a 15-person wholesale SME that is torn between two ERPs. The first has a license at €45 per user per month, the second at €70. On paper, the first one wins easily.
Let’s look at five years:
- The “cheap” ERP: €40,500 in licenses, but integration is billed as an extra, there is no connector to the online store (so data is re-keyed every day) and the data migration drags on. Real cost around €90,000, plus an hour of data entry lost every day.
- The “more expensive” ERP: €63,000 in licenses, but integration included and native connectors to the store and the bank. Real cost around €80,000, with no re-keying.
The cheapest to buy becomes the most expensive to use. The license price tells you almost nothing about the real cost of the project.
Open source or proprietary?
Open source ERPs have a structural advantage: no per-user license fee, auditable code, and no dependence on a vendor’s commercial health. In return, the quality of the integrator becomes decisive: the integrator is the one who makes the project succeed.
A good ERP that is poorly integrated will do worse than an average ERP that is well integrated. Choose the support as carefully as the software.
Frequently asked questions
How much does an ERP cost for an SME?
It all depends on the scope, but always think in terms of the full cost over five years: licenses, integration, data migration, training and maintenance. For an SME, integration and support often weigh as much as the license itself.
How long does an ERP project take?
Expect three to nine months, depending on the size of the company and the number of processes to cover. A project promised “in a few weeks” usually hides a cut-rate integration that you will pay for later.
A full ERP or a simple industry-specific application?
If only one area is causing you pain, accounting or inventory for example, a well-connected specialized application is sometimes enough. An ERP really comes into its own when several departments need to share the same data without re-keying it.
Can you keep your accounting software?
Often, yes. Many companies connect their ERP to their accountant’s software rather than replacing everything. The real question is how to connect the tools, not whether to replace everything as a matter of course.
One last piece of advice before you sign
Have your quote reviewed by someone who has nothing to sell you. Within an hour, an outside eye will spot the vague lines, the “to be defined later” items and the missing connectors. That is often what prevents a €50,000 mistake.
To dig deeper: our method for running an ERP migration without interrupting your business, or tell us about your project.
