Blog 5 critical mistakes to avoid when choosing ERP software

5 critical mistakes to avoid when choosing ERP software

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Organizations are trying to get back on track after the pandemic with digital transformation initiatives. The global ERP software market size will reach $71.63 billion by 2026, exhibiting a compound annual growth rate (CAGR) of 8.5%.

Before you jump into an ERP project, it’s best to look at some mistakes you should avoid making when choosing an ERP.

 

1. Not understanding what you need in ERP Software

Before diving in and choosing an ERP, it’s important to spend some time to understand your organizational needs. Determine if you need a fully integrated ERP software with all the modules or if you only need a few modules. Understand what type of issues you need to solve. For example, you may need to track the time spent on tasks across your organization, or you may need to streamline your financial processes.

If you’re a small to medium-sized company with a limited budget and resources, it makes sense to prioritize the areas where an ERP is needed. Today's Cloud-based ERPs and Software-as-a-Service business models drive economies of scale and flexible monthly subscription plans.

Read on: Should you choose a cloud-based ERP?

 

2. Failing to recognize the uniqueness of your business

Every industry is unique and if you fail to consider this aspect, you may choose an ERP that doesn’t fully meet your organization's requirements. It can lead to half-baked processes and result in you having to use other tools to support it. These can bring inefficiencies and can have a negative impact on optimization. There may be industry-specific functionalities that need to be addressed, like an ERP for the Food and Beverage industry. An ERP for the F&B industry may need to handle perishable raw materials, products with short shelf lives, and adapt to changing quality regulations. The ERP you choose should either have these features or be able to be customized at economical rates. Choosing an industry-specific solution will improve efficiency, enhance revenues, reduce costs, increase profitability, and help you achieve a faster ROI.

It would make sense to choose an ERP that’s suitable for your industry vertical as it would make it faster and easier to implement. Many modules are generic across industries that most ERPs have, like Project management, Finance, Operations, Sales, Human Resources, Payroll, etc. One option would be to use the generic ERP modules and integrate them with your industry-specific functions if they suit your processes.

 

3. Choosing the wrong ERP software vendor

Choosing the right vendor can make an ERP implementation successful but choose the wrong one and you’ll have a vendor that falls short of meeting your business needs. A common mistake is choosing an ERP software vendor who doesn't know your business well enough. Decision-makers tend to rely on big names that may be expensive and lack specialization for your company's needs. Choose an ERP vendor with a consultative approach to your business, knows your business, and has experience in the industry. Vendors should be in sync with the latest trends in the industry. Plan on having a long-term relationship with the ERP vendor as an IT partner who provides responsive support and new releases.

Choosing the right vendor will help you achieve a more rapid deployment, be more cost-effective, and improve efficiency.

 

4. Lack of attention to the ERP software implementation aspect

A common problem in ERP implementation is a lack of committed project managers and a dedicated team for the transformation. The project manager should be involved when choosing an ERP vendor as they’re the ones on the ground and have a better idea of the requirements. The project manager has to streamline and keep the project on track and devote sufficient time to this activity. Organizations must ensure that they have a dedicated project manager that can drive and support ERP implementation initiatives.

Documentation for business processes in an ERP is crucial for each department. Transition is easy and helps companies when staff move over to other departments. Proper training is also essential for the teams in terms of efficiency and productivity.

 

5. Missing the long-term ERP perspective

ERP investments should consider the long-term perspective. Technologies are constantly changing, and organizations are spending time, money, and effort in implementing an ERP solution. Beware of ERP deals that may be 'too good to be true’. They may have outdated technology, challenges in adapting to newer technology, or maybe a very rigid solution. These types of hindrances may result in you having to reinvest more money to upgrade the system or even replace the system.

Use sound business judgment when comparing ERP solutions and avoid making any hasty decisions that may affect the ROI of your ERP.

Read on: Get your ERP tailored the way you want.

 

Discover Vault ERP

We encourage you to try Vault ERP. A modern ERP that’s cloud-based and available as a SaaS application with impressive integration capabilities. Connect with our experienced ERP consultants and get an optimal solution that suits your company’s requirements.

 

Contact us for a free demo today!

 

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