What do you need to know before implementing an ERP system?

Published on April 22, 2019
Last modified on July 08, 2021

What are the signs that your business needs ERP?

Any business can benefit from using ERP, but for some businesses more than others, ERP can mean more than just a more convenient option and rather an indispensable tool in the operation.

The necessity of ERP for a business presents itself in different forms—whether it’s the strain from inefficient practices, i.e.

  • Does your business suffer from having to juggle multiple systems and spending too much time on manual data entries just to get such systems synchronized?
  • Are mistakes recurrent in the data that flows in and out of your organization because your processes are not automated?

Or the desire for better management of business processes:

  • Do you want to divert the time and resources you spend on manual processes to higher-value tasks?
  • Are you looking for ways to enhance both your employee and customer experience?
  • Even though you’re still getting by with unintegrated systems, is business growth and expansion in your future?

Ultimately, you will have to have a thorough look at your specific current business situation to establish whether or not you need an ERP solution.

What do you need to know before implementing an ERP system?

1. ‘Enterprise Resource Planning' is not just for large enterprises (anymore).

Smaller sized businesses from every industry are now increasingly adapting ERP with the realization that systems integration is an important business move in this digital economy.

While ERP had its origins from managing and automating processes of large enterprises (mostly in the manufacturing industry), ERP vendors have released a wide range of solutions over the years to cater to virtually every type of business there is.

So even if you’re a small business, you’re bound to find a solution fit for your specific needs.

2. Implementing ERP can be a costly investment.

Although ERP solutions tailor-made for small businesses are now commonplace, it doesn’t change the fact that investing in an ERP system can be considerably expensive.

It’s not just the cost of the software itself, but hosting, integration, maintenance, and staff training costs all contribute to a substantial amount that you need to allot for in order to complete your implementation.

3. You can have your ERP in-house or in the cloud.

ERP solutions typically fall into one of two categories: on-premises or cloud-based.

Each of these two options carries its own set of benefits and drawbacks—and as with deciding whether or not you need ERP in the first place, the choice between an on-premises and a cloud-based implementation largely depends on your specific business needs.

On-premises ERP

Essentially, on-premises ERP means that the system is deployed and hosted locally on your own servers. This means that you have more control over the system, and any sensitive data contained within it is safely on-site.

However, having your ERP in-house will require you to have dedicated personnel to take care of its maintenance. You will also need to supply the hardware and servers needed on top of the fees for the software itself, making this typically the more expensive option.

Cloud-based ERP

A cloud-based ERP implementation means that deployment and hosting are handled by your ERP provider or by another third party.

For companies that may not have the proper resources to maintain the ERP system on their own servers, this is obviously the better alternative.

If you don’t have a full-time staff, having your ERP in the cloud also means that a relatively more technically equipped partner manages the hosting of your ERP solution.

Meanwhile, some disadvantages of this option include the complete reliance on your ERP provider and the subscription-based pricing, as opposed to most on-premises deployments.

4. Your chosen ERP solution should be able to work with your current processes.

It should go without saying, but whatever ERP solution you end up choosing should be able to adapt to the systems and processes that you currently have, and not the other way around (unless your processes really do need some revamping).

The implementation of the software itself will take considerable time, and you don’t want to extend this period and your expenses by choosing a software that will require you to rebuild your current practices around it.

With that being said, take note that your ERP shouldn’t be too exclusive with your current practices either. Scalability is still an important factor to consider, especially as your business is bound to grow at one point or another.

Next: How do you integrate ERP with other parts of your company? »