ERP Systems reviews by real, verified users. Find unbiased ratings on user satisfaction, features, and price based on the most reviews available anywhere.
Products classified in the overall ERP Systems category are similar in many regards and help companies of all sizes solve their business problems. However, small business features, pricing, setup, and installation differ from businesses of other sizes, which is why we match buyers to the right Small Business ERP Systems to fit their needs. Compare product ratings based on reviews from enterprise users or connect with one of G2's buying advisors to find the right solutions within the Small Business ERP Systems category.
In addition to qualifying for inclusion in the ERP Systems category, to qualify for inclusion in the Small Business ERP Systems category, a product must have at least 10 reviews left by a reviewer from a small business.
As the world's #1 cloud ERP solution, NetSuite is the first and last business management solution your business will ever need. NetSuite provides a suite of cloud-based applications, which includes financials / Enterprise Resource Planning (ERP), HR, professional services automation and omnichannel commerce, used by more than 22,000 customers in 200+ countries.
Tally is a pioneer in the business software products arena. Since its inception in 1986, Tally’s simple yet powerful products have been revolutionizing the way businesses run. Having delivered path breaking technology consistently for more than 30 years, Tally symbolizes unmatched innovation and leadership. Today, it caters to millions of users across industries in 140 countries and continues to be the unchallenged industry leader in the enterprise resource planning software domain. With Bharat
Acumatica Cloud ERP provides the best business management solution for digitally resilient companies. Built for mobile and telework scenarios and easily integrated with the collaboration tools of your choice, Acumatica delivers flexibility, efficiency, and continuity of operations to growing small and mid-market organizations. Connected business. Delivered. Rapid integrations. Delivered. Remote collaboration. Delivered. Business resilience. Delivered. Future proof. Delivered.
Gain real-time financial and operational visibility throughout your business. Leverage comprehensive financial controls to ensure security and compliance. Streamline your business processes using extensive automation to reduces labor, and save costs. The Sage Intacct system includes accounting, cash management, purchasing, vendor management, financial consolidation, revenue recognition, subscription billing, contract management, project accounting, fund accounting, inventory management, and fi
Odoo is a fully integrated, customizable, open-source software packed with hundreds of expertly designed business applications. Odoo’s intuitive database is able to meet a majority of business needs, such as: CRM, Sales, Project, Manufacturing, Inventory, and Accounting, just to name a few. Odoo is an all-in-one software solution designed to meet the needs of companies, regardless of their size (or budget). The unbeatable, seamless nature of Odoo helps businesses become more efficient by reduci
Increase control over your small business with software designed to grow with you. Streamline key processes, gain greater insight into your business, and make decisions based on real-time information – so you can drive profitable growth. Lower the cost of managing your business, from financials, purchasing, inventory, sales, and customer relationships to project management, operations, and HR. Gain clear visibility and complete control over every aspect of your small business. Capture critical i
SAP S/4HANA is an intelligent ERP system designed to help you manage today’s business and capture tomorrow’s opportunities. Designed specifically for in-memory computing, SAP S/4HANA enables your entire organization to make better decisions, faster, with real time insight at the point of action. Deploy next generation business processes that drive increased efficiency and effectiveness. SAP S/4HANA also makes it easy to take advantage of the latest innovations. For example, machine learning buil
SAP Business ByDesign (ByD) is a comprehensive cloud enterprise resource planning software (Cloud ERP) that is sold and operated as software as a service (SaaS) by SAP SE. It is designed for small to medium-sized enterprises as well as subsidiary businesses. The software is designed to provide business processes across application areas from financials to human resources with embedded business analytics, mobility, e-learning, and support. SAP Business ByDesign is built on the principles of a se
MIE Trak Pro is an ERP offering that is ideal for most manufacturing businesses with modules designed to accommodate most production cycles and optimize the capabilities of repetitive, custom, quick-turn and mixed mode operations. MIE Trak Pro streamlines the following features for maximum speed, efficiency, accuracy and control all in real time: Accounting, Business Analytics, CRM, EDI, COM's Bar coding, HR, Inventory Control, Invoicing, Quality Control and Inspection, Repair and Maintenance,
Established in 1978, SYSPRO is an industry-built Enterprise Resource Planning (ERP) solution designed to simplify business complexity for manufacturers and distributors. SYSPRO provides an end-to-end fully integrated business solution for effective decision-making, strong cost control, streamlined processes, improved productivity, comprehensive reporting, and real-time data analysis. SYSPRO is highly scalable and can be deployed in the cloud, on-premise, or accessed via any mobile device. What
Sage 100 helps your growing small or medium company manage more than accounting — it unites your entire business at an affordable price. Best of all, it's easy and customizable. Sage 100 has the ability to connect your company to the cloud, giving your business access to web and mobile capabilities to confidently run your business. Sales and service people have access to customer information and can invoice customers and collect payments from the field. Procurement has deep visibility into inven
Dolibarr ERP & CRM is an Open Source and free software package to manage companies, freelancers or foundations. We can say Dolibarr is an ERP or CRM (or both depending on activated modules). It's an Open Source project built by modules addition (you enable only features you need), on a WAMP, MAMP or LAMP server (Apache, Mysql, PHP for all Operating Systems). Dolibarr is developed to offer an ERP and CRM software whose main goal is to be: - Simple to install - Simple to use - Simple to develo
Brightpearl is a Retail Operations Platform. Tightly integrated to all of your sales channels, Brightpearl connects your sales orders, fulfillment, inventory management, accounting, reporting and planning, warehouse management, replenishment and more. Designed specifically for retail business models, Brightpearl is built to reliably handle peak trading, integrates with the full retail tech ecosystem, is omnichannel-native, is the system of record for key trading data, provides real-time trading
Microsoft Dynamics GP (formerly Great Plains) software delivers comprehensive out-of-the-box business management functionality, from operations management and financial management to human resource management and manufacturing. It connects the many moving parts of your organization, giving you better visibility into and control over what۪s going on in your business.
Sage 300 is a comprehensive business management solution designed to keep your total cost of ownership low by supporting multiple technologies, databases, and operating systems. Available in multiple editions, Sage 300 gives you the opportunity to add users and adopt greater functionality as your business grows and offers built-in support for multiple languages and multicurrency transactions, so your business can comfortably reach around the globe. Sage 300 contains the power and tools to help y
Epicor Prophet 21—A fit-for-purpose, cloud-ready business system for distributors. Powered by Microsoft Azure, the most trusted cloud platform for enterprise, Epicor® Prophet 21® in the cloud brings you mission-critical, industry specific value to drive business growth – faster, easier, and more reliable than ever. Leading industry analysts have praised our cloud strategy and vision. Epicor Prophet 21 has been developed to fit distribution businesses and is continually improved with a focus o
Leverage world-class ERP software. Sharpen your competitive edge and drive growth with enterprise resource planning from SAP. With more than 40 years of experience and nearly 50,000 customers, our market-leading enterprise resource planning (ERP) software is a proven, trusted foundation built to support the world۪s largest organizations as well as small and midsize companies in 25 different industries. Leverage role-based access to critical data, applications, and analytical tools and stream
Is your business running multiple apps ? In a nutshell, BizAutomation takes away the pain of running your business on multiple apps. No more servers, no more Accounting here, and CRM there, etc... everything just runs beautifully on one exquisitely integrated cloud service. We call this the cloud ERP for smaller SMBs. For many smaller businesses this means they can finally replace QuickBooks, and all the other core apps that support it. The benefit is that all your departments will run on a s
Microsoft Dynamics NAV (formerly Navision) is business management software that delivers comprehensive business management functionality, from financials to your supply chain to manufacturing and more. It connects the many moving parts of your organization, giving you better visibility into and control over what's going on in your business. And it supports highly specific industries with powerful solutions created by Microsoft partners.
Epicor Software Corporation drives business growth. We provide flexible, industry-specific software that is designed to fit the precise needs of our manufacturing customers. More than 45 years of experience with our customers’ unique business processes and operational requirements built into every solution-in the cloud, hosted, or on premises. With a deep understanding of your industry, Epicor solutions spur growth while managing complexity. With margins for products eroding, customer demands in
Epicor BisTrack is a complete solution that offers all the functionality needed to process simple to complex transactions for LBM dealers and distributors. The functional areas of BisTrack support counter sales and point of sale, quote and order management, inventory control, purchasing, CRM, manufacturing, delivery dispatch, finance, and credit control. The technology components of BisTrack allow data to not only be stored but to be acted upon in a variety of ways with a variety of tools. Thes
OfficeBooks is a simple web based business management application optimized for distributors and manufacturing. Whether you hold inventory or not, OfficeBooks automates your purchase, sales and work orders generation - leaving you free to build your business. Our focus is on enabling our customers to take charge of their day and get things done.
Enterprise resource planning (ERP) evolved from materials requirements planning (MRP) software, which was created in the 1960s for large companies who needed to manage complex manufacturing operations. MRP was used mainly to identify, allocate, and track resources such as raw materials, parts, ingredients, and labor. As technology became more accessible, vendors added features for back office (accounting and HR) and front office (sales and CRM). While initially, only enterprises could afford to invest in ERP, it is now more affordable and widely used by small and medium-sized businesses.
ERP evolved through organic development or mergers and acquisitions. The result was often a mix of multiple products that were more or less integrated and sold as a package or separately.
What Does ERP Stand For?
ERP stands for enterprise resource planning, meaning ERP systems are used to define, schedule, and track all the company's resources, from employees to materials and intellectual property.
ERP systems can be categorized using multiple criteria, such as platform or delivery model. Other criteria can be used to differentiate between ERP products, such as:
Best of breed vs. suites
ERP systems differ based on the way the modules of the system are implemented and used. Best of breed ERP provides all modules together, and buyers have little flexibility when it comes to choosing what features to use. A suite is a mix of modules and sometimes separates products that can be delivered in multiple combinations.
Open source vs. proprietary
ERP systems differ based on the source code of the system and its availability for customers and partners. Open-source ERP providers allow users to change the source code and make modifications. Vendors of proprietary ERP only allow certified partners to access and modify the source code of their system.
Depending on who develops and manages the system, some ERP vendors have full control of the product and only allow partners to create apps or extensions, while other ERP providers rely on resellers to add entire modules and change the source code.
Generic or vertical
Based on the types of features included, ERP can be generic or vertical. Generic ERP can be used by any company that doesn’t have industry-specific requirements, usually for back office and front office activities only.
Vertical or industry-specific ERP systems are described in more detail below:
Some ERP systems provide functionality for a limited number of industries. ERP vendors choose to specialize because a generic ERP solution will not be beneficial for companies who need features to address their specific challenges. It is also complicated to create ERP products or adapt them to new industries.
The level of specialization can vary from one product to another. While some products focus on industry sectors like manufacturing or distribution, others provide functionality for one industry only, such as fashion and apparel.
ERP for manufacturing: ERP systems for manufacturing industries differ from one another based on the production types of the finished products and the way they are manufactured. Such ERP systems are described below:
Compared to discrete manufacturing where the quality is managed for each product, in process manufacturing, a formula error can compromise an entire batch in process manufacturing. It is possible to adjust the quality of a batch by adding ingredients or additives for food processing. In some cases, like hazardous substances, it is more difficult to adjust the quality, and a recipe error may result in accidents or pollution.
Another challenge specific to process manufacturing is that ingredients and finished products have a limited shelf life and need to be used or consumed before their expiration date. This means that ingredients cannot be ordered and stored for unlimited periods of time, and the finished goods need to be delivered to retailers and consumers as soon as possible. Furthermore, products like food and beverage or hazardous materials require special storage and transportation conditions to maintain their quality and avoid accidents.
Due to the importance of customization, functionality like quote and proposal management or quote to order is critical for ETO manufacturing. Contract management is also essential to clearly define the expectations of the customer, service level agreements, and warranties.
Another essential module of ERP ETO is project management. Each product delivered is usually so complex that companies need to track tasks, milestones, and resources for each contract or customer. Project management helps ETO manufacturers offer custom products on time and monitor the resources used in production to calculate their final cost.
Distribution ERP software: Distributors are companies that buy products from manufacturers and resell them to other companies or directly to consumers. The core of the distribution business is the purchasing of products, their storage, and their delivery from the supplier to the customers. While most ERP systems offer features for purchasing, inventory, and shipping, that doesn’t necessarily make them an excellent choice for distribution companies.
The following are a few types of functionality that differentiate ERP for distribution from other kinds of ERP:
ERP for distribution should not be confused with supply chain and logistics software (SCM), which covers all activities performed by various partners from a supply chain network, including manufacturers, suppliers, logistics companies, and customs brokers.
Professional services automation software: Also known as ERP for professional services or PSA, this type of software is designed to address the specific needs of companies in industries such as consulting, design and architecture, IT services, legal and financial services, or training and development. All these companies have in common the fact that they rely extensively on specific knowledge and a professionalized workforce.
The core functionality for PSA software is project management. Project management software comes in different flavors, and buyers need to find the right tool for their company. The most basic project management products focus on task management and can only be beneficial for small companies or teams. These products usually provide no or little functionality for front and back office, which means that buyers will need to integrate them with accounting or sales software.
Project and portfolio management is an advanced type of project management software, which helps companies manage portfolios of projects. Medium and large professional services companies use this type of software because they have complex offerings and need to manage hundreds or thousands of projects simultaneously.
ERP for PSA combines traditional project management with various features for front office and back office, such as sales, marketing, billing, or accounting. Some PSA solutions also include project portfolio management. It is therefore vital for buyers to identify what features are included in an ERP for PSA system.
Through acquisitions or organic development, some vendors provide solutions that cover multiple industry sectors, such as manufacturing and distribution. Manufacturers can significantly benefit from this type of software when they prefer to have their own fleet and deliver products themselves. There are also distributors that may decide to mix products and sell them as packages, which is usually known as an assembly. Assembly activities are considered light manufacturing and do not require advanced features, but some ERP features used in production are needed, such as bill of materials, kitting, product configuration, or basic MRP.
Since manufacturing is one of the slowest-growing industry sectors, manufacturers are looking to increase revenues by delivering services related to the products they make and sell. These companies need an ERP system that can manage their manufacturing operations, as well as related services. For instance, a manufacturer of industrial lighting equipment may decide to provide installation and maintenance services to its customers.
Other vertical ERP systems
Vertical ERP systems focus on industry sectors other than manufacturing, distribution, or professional services. The term ERP is used in these industries to describe a system that combines front and back office features for the industry. ERP can be used interchangeably with terms that are specific to each sector, such as student information systems for education.
Construction ERP software: Construction software is used to manage projects for residential or industrial buildings, as well as infrastructure. Typical construction software doesn’t always include back office functions like accounting, which is why some vendors created ERP solutions for this industry. ERP for construction delivers all the modules needed to manage operations, project management, front office, and back office.
Education ERP software: Education software manages student admissions and enrollment, courses and examinations, or educational facilities for K–12 or higher education institutions. This type of software usually integrates with accounting solutions to track student payments and invoices and to manage the finances of the educational institution. ERP for education provides all features in one system or integrated package.
Energy: Energy industries, like mining or oil and gas, are asset-intensive, which means that they need asset management functionality. Due to the nature of their operations, energy companies also need environmental health and safety features to protect their employees and avoid pollution. ERP for energy usually combines all these features with typical back office (accounting) and front office (sales) modules.
Government: Government or public sector software focuses on managing the services provided to citizens and on maintaining public infrastructure such as roads, buildings, airports, and so on. Since most solutions designed for government agencies only cover some of the requirements mentioned above, ERP vendors created specific products for this industry.
Health care operations: Health care software can cover multiple requirements specific to this industry, such as medical scheduling and billing, practice management, and electronic health records (EHR). There are also products that cover the needs of specialized practitioners such as optometrists, physical therapists, or chiropractors. All these products are usually sold separately and require integration with accounting or sales software, which is why ERP vendors adapted their products to provide integrated systems for health care.
Retail management systems: Retail management systems are similar to ERP for distribution but offer additional features such as store management, merchandising, and assortment management. ERP for retail combines all these features with accounting to provide the full range of functionality required to manage a retail business.
Utilities software: Utilities is another asset-intensive industry, but it also requires specific billing features. Utility billing is based on consumption, which can vary from month to month, and invoices are usually generated based on meter readings. Also, utility companies generally have thousands or tens of thousands of customers who are billed individually every month. ERP for utilities provides complex billing features, as well as accounting, asset management, and inventory, as well as purchasing and sales.
The following are core features of ERP systems that can help users manage relationships with customers, plan and schedule operations, and monitor costs and profitability.
Accounting: ERP systems provide functionality for all accounting functions, from creating a general ledger (GL) and chart of accounts to creating invoices, processing payments, generating financial statements, and conducting financial close. Some ERP systems also include advanced features such as multicurrency and multi-entity management for global companies, project accounting for project-oriented firms, and fixed assets depreciation for asset-intensive industries such as manufacturing, construction, or utilities.
Front office: While all ERP systems have some sales and marketing features, the level of support for front office functionality varies significantly from one product to another. Some vendors develop modules for these features, while others prefer to integrate their ERP systems with CRM and marketing automation software.
Back office: Other than accounting, ERP systems include a wide range of back office features, from payroll and human resources (HR) to maintenance and regulatory compliance. These modules are delivered in multiple ways, such as standard functionality, add-ons, or through integration. For instance, ERP systems for medium and large manufacturers include a module for workforce management and integrate with talent management solutions. Similarly, maintenance features aren't usually robust, and buyers need to integrate ERP with computerized maintenance management systems (CMMS) or enterprise asset management (EAM) software.
Logistics: These features help companies manage their inventory of raw materials, components, and finished goods. Manufacturers need to buy, store, and optimize the use of raw materials such as fabric for fashion or parts for equipment manufacturing. This can be achieved by identifying demand and finding the best price to quality ratio components. Companies also need to track shipping to customers, from suppliers, and between multiple warehouses or production facilities.
Production: Production management functionality is the core of any ERP system for manufacturing companies. This module covers BOM, material resource planning (MRP), master production schedules (MPS), work in process (WIP), and quality control. Production managers use these features to monitor all stages of the manufacturing cycle, identify defective products, and track the shop floor equipment and personnel's status.
Reporting and analytics: ERP analytics should provide statistics and insights on all activities managed using the system. When companies use separate systems for CRM or HR, they need to be integrated with ERP to transfer data between them. For instance, to estimate the demand for a product, procurement managers need multiple data types from different systems, such as sales history from CRM, open proposals from quote management, and shipping and returns from ERP.
Integration: Even though all departments of a company can use ERP, this doesn't happen very often because there are better options for functionality like sales and marketing, and buyers prefer a robust standalone CRM system to a light CRM module part of an ERP system. Integration between ERP and other software is, therefore, essential to ensure data consistency and avoid double data entry.
Platform: The success of an ERP system depends on the technology used to create, store, and manage it. A service-oriented architecture offers more flexibility and allows buyers to customize the software. Similarly, the database that stores all business information should keep data secure, allow users to back up the data, and facilitate integration with other data sources. Even cloud ERP uses databases, except that the vendor manages them on behalf of the customer.
Most common features of ERP systems
ERP systems can help businesses streamline business functions across the company. Managers and executives use it to monitor essential projects in real time and use historical data to define and optimize business strategies.
Single source of truth: ERP systems store all the company's information in one place, which avoids duplication and inconsistency in data quality. A single data repository also ensures that users' changes are reflected in the database, and everyone in the company has access to the most up-to-date information.
Visibility: Since all ERP users share the same system, they can access any data point that may help them be more productive. Also, customer-facing employees can find details about orders, transactions, or inventory availability. Finally, accountants can track all data on costs and profitability across all departments, business units, and geographical locations.
Automate operations and increase productivity: ERP systems can replace multiple types of software, add-ons, spreadsheets, or office tools used by various departments of a company. This allows users to spend less time switching between systems and focus more on operations. ERP also enables companies to define and implement company-wide business processes, which increases productivity and helps address accountability issues.
Since ERP provides features for most departments of a company, it is used by most, if not all, employees. The following list includes a few departments where ERP is necessary.
Accounting and finance: Accounting and finance departments need ERP for multiple purposes, the most important being the financial management of all the business transactions. Everything a company buys and sells, as well as all direct (wages, commissions) or indirect (insurance, utilities) costs, need to be tracked using generally accepted accounting principles (GAAP). Finance professionals use ERP to create financial statements and provide financial information for internal and external audits.
Operations: Operations teams use ERP to perform activities that are specific to the specialization of a company. For instance, production operations are specific to manufacturing companies, project management and delivery to professional services providers, and warehouse and inventory management to distributors. Some types of activities, such as inventory management, are essential for multiple types of companies. Others, like project and portfolio management, are specific to industry sectors such as professional services.
Sales: ERP is vital for sales teams because it contains a lot of valuable data on historical sales and information on products and services. Most ERP products also manage information on customer credit limits and can be used for debt collection.
Product: Product development teams may not always use ERP directly, but they rely on the information provided by the system. Sales data can show which products are most successful, while details on returns and defects help the company improve its offering. Engineers and designers can also use ERP and its integration with product lifecycle management (PLM) or computer-aided design (CAD) solutions to communicate product changes with the manufacturing department.
Purchasing and procurement: Purchasing and procurement is in charge of finding and buying any products and services that are needed by a company, such as raw materials and parts for manufacturers, consultants for professional services companies, or logistics providers for distributors. The most crucial challenge in procurement is to clearly understand what products or services a company needs and when. ERP systems provide information on sales orders that need to be fulfilled, which can be compared with the available inventory to determine what needs to be purchased. ERP systems also manage cost data for raw materials or components, which helps procurement professionals better negotiate.
Quality management: Quality management is essential in manufacturing but can also be important in distribution, and even professional services. For highly regulated industries such as food and beverage, the quality standards are high and penalties for non compliance hefty. While quality management can be provided as a standalone product, most ERP for manufacturing systems include features to track quality.
There are no other types of software that provide the same functional depth as ERP, therefore ERP cannot be completely replaced by other solutions. Buyers sometimes choose a mix of two or more solutions as an alternative to ERP. One of the solutions is usually accounting software, and the others vary depending on the company and its operations.
ERP software overlaps with the solutions mentioned below but rarely delivers all the features of these products. For this reason, companies may opt to buy and use them separately.
PLM software: Companies use PLM to design complex products and structures (such as a conveyor system for a warehouse). Most ERP systems for manufacturing integrate with PLM to transfer product data between the two systems. Very few vendors sell ERP and PLM solutions, but most of them offer preconfigured integration with the most popular PLM products.
Enterprise asset management (EAM) software: Asset-intensive companies use EAM to track fixed assets, monitor their performance, and plan maintenance operations. While some ERP systems include functionality for maintenance or asset depreciation, large companies using complex equipment across multiple locations still require EAM for its advanced features such as predictive maintenance.
Supply chain management software: This type of software manages logistics operations across the entire supply chain. Distributors and wholesalers often use supply chain suites together with their ERP system to ensure that they have full visibility and control over their supply chain.
HR software: HR and talent management software provides functionality that is not usually part of an ERP system, such as recruiting, performance management, and employee engagement. Even when ERP has a module for payroll or workforce management, their features may not be sufficient for global companies or large organizations. These types of businesses may need a separate system to manage human resources.
CRM software: CRM is frequently used to complement the sales and marketing features of an ERP system. A few features that are not always included in ERP software are marketing campaign automation and lead generation. Companies using both systems need to be careful not to create duplicate data and processes, creating confusion, and generating inaccurate information.
Business intelligence software: While all ERP products have analytics modules, advanced features such as forecasting or predictive analytics aren’t always included. Companies that need these features use a separate business intelligence (BI) software that gathers and analyzes data from the ERP system and other data sources (software and databases).
Traditional ERP was installed on the premise of the buyer, which required investments in hardware and IT personnel. Also, ERP software had cluttered interfaces and could not be used remotely or on mobile devices. New technologies like the cloud delivery model and web-based interfaces made ERP systems more flexible and easier to use, but a few challenges persist.
Integration: The integration and consolidation of data between multiple systems or modules of an ERP suite are essential to avoid double entries and to ensure data accuracy. Ideally, all data should be transferred and synchronized between all ERP modules or products used by a company.
Cost: Due to their complexity, ERP systems require significant investments. The cost of the ERP platform can vary depending on how the solution is sold. An ERP product that provides standard ERP features (accounting, operations, and essential functions for front office) is more affordable but can get expensive in the long term, as companies grow and need advanced features. Conversely, a package that includes standard and advanced features will require a higher initial investment but may cost less over the long term.
Platforms: The platforms used to create ERP products, such as programming languages and databases, can have a significant impact on the performance and ease of use of the system. This can be a challenge when vendors acquire products that were built on various platforms or different versions of the same platform. While most vendors built their products to be compatible with the most popular databases, such as Microsoft SQL Server and Oracle RDBMS, some solutions were developed using other options, such as Progress and MySQL.
Delivery model: The delivery model refers to the physical location where the data is stored. Companies have been using their servers for a long time, but many companies are adopting the cloud model, which means that vendors are responsible for storing and managing the data. The cloud model is also known as software as a service (SaaS) and can be more complicated than it seems at first sight. SaaS can be single or multitenant, depending on how many companies share a database. Also, companies can use private, public, or hybrid clouds.
While any business can benefit from using ERP systems, it is most beneficial to mid-market and enterprise companies in manufacturing, distribution, and professional services.
Manufacturers: ERP's single data repository allows manufacturers to have more visibility into their costs, operations, and projects. Manufacturers in complex industries such as aerospace and defense may use multiple ERP systems for different types of activities. For example, a company may use an ERP system for manufacturing and another one for distribution.
Wholesalers and distributors: Distributors use ERP to manage their logistics operations, from inventory management and warehousing to shipping and receiving. These features are always included in ERP for distribution, but large companies may need advanced functionality such as transportation and fleet management or third-party logistics.
Professional services companies: ERP is mostly beneficial to medium and large professional services companies in complex industries such as architecture, engineering, and construction (AEC). These companies require a unified solution for accounting, project management, sales, and procurement. Small businesses in the professional services sector may benefit from using lightweight ERP, but they usually prefer a mix of multiple solutions such as project management and accounting.
The success of an ERP implementation depends a lot on the selection process. It is doubtful that a company will successfully deploy an ERP system that does not cover its specific business needs. Even if the system gets implemented, it will not provide substantial benefits such as increased productivity and profitability, cost reductions, and better visibility into the operations of the company.
Another selection challenge that will have a significant impact on the implementation is the possibility that companies may not find the ideal ERP for their business needs. One way to address this issue is to adopt a multitiered system, which means that several ERP systems are implemented for different purposes. For instance, a company may choose one ERP product for manufacturing and another one for distribution. While there are ERP systems that can cover both types of features, they are not always cost-effective, which is why SMBs tend to opt for a two-tier model.
Buyers may be tempted to create long lists of requirements with thousands of criteria or requirements that are too vague such as inventory control or purchasing. Ideally, an RFI should be detailed enough to cover the essential requirements but not too long to discourage employees and vendors from using it.
Since not all requirements have the same importance, buyers should assign them priorities and focus on the most important ones.
Create a long list
A long list should have no more than 10 products selected by eliminating all options that are clearly not a good fit for the buyer. This is not straightforward, though, and buyers need to research each product and understand its strengths and weaknesses. For example, a manufacturing company would not benefit from using ERP for professional services, and vice versa. There are also industry-specific requirements that can be used to differentiate between ERP solutions. A company in the food and beverage industry cannot use an ERP designed for fashion and apparel.
Also, the costs of ERP systems and the buyer's limited budget can have an impact on the long list. While every company wants to implement the best ERP software in the market, they may not always afford it.
Create a short list
The products in the long list can be very similar at first sight, so buyers need more details about the products and the vendors to create a shortlist. This is where the requirements list comes in handy. Decision makers use this list to generate RFIs, which ask vendors to provide detailed information on how they deliver the features needed by the buyer. Some vendors may decline to respond to RFIs, which automatically disqualifies them from the selection process. Others are eliminated because they provided unsatisfactory responses.
Vendors also provide testimonials and customer references, and technical documentation and prove that they have the qualifications and expertise to deliver the product on time and within budget.
Demos should be conducted live, using the ERP system being evaluated, not slide decks or screenshots. Vendors should follow a script and scenarios created by the buyer. An example of a scenario would be to show how the system can receive a shipment of finished goods, add them to inventory, allocate them to open sales orders, then pick them from the warehouse and ship them to each customer.
All vendors should use the same demo script, and buyers need to rate each criterion and scenario using a rating system such as scores from one to five (where one is the lowest rating and five the highest).
All members of the selection team who attend demos should rate the functionality being demonstrated. The results can then be combined and analyzed to identify the main strengths and weaknesses of each product.
Choose a selection team
The team usually includes the executive sponsor, one or more other executives (such as the CEO, CFO, or CTO), and subject matter experts from all the departments that will use the system. External consultants and project managers may also provide a neutral perspective or help with negotiations.
When the buying company is part of a larger business entity, representatives of the parent company are also part of the selection team. Similarly, companies with multiple locations should make sure to include employees from each production facility, warehouse, or subsidiary.
Understandably, companies want to reduce costs during negotiations, but this should not happen to the users' detriment. Instead, it is preferable to focus on getting the most value for the money. An example is customer support, which is included in the software's price but is usually limited to working hours and weekdays. Global companies may require 24/7 follow-the-sun support, which means that issues can be passed between teams in different time zones, so the ERP users do not have to wait too much for a resolution.
Negotiation also includes legal and contractual terms, as well as service level agreements (SLAs). One example is cloud uptime, which guarantees that SaaS products are operational. Most vendors provide an uptime of 95% and higher, but only a few hours a month can be very disruptive for companies in manufacturing, retail, or healthcare.
The final decision should be made by a team, not a single person. It is also essential to use a structured approach and the data gathered during the previous phases. Decision support systems can prioritize requirements, identify the strengths and weaknesses of each product, and create various buying scenarios.
The software cost can be straightforward (for cloud systems) or very complicated (for suites or packages with multiple modules, add-ons, extensions, etc.). The final cost of an ERP software is rarely the same as its list (or standard) cost. This is because vendors tend to combine multiple products and modules, offer incentives such as discounts and free licenses, and professional services.
Additional services are offered by vendors to improve and optimize the ERP system. Some examples include business process reengineering, configuration and customization, or industry-specific consulting. These services are rarely included in the standard price, and they may be quite expensive, which may significantly increase the total cost of the ERP system.
There are no set-in-stone criteria or standards for the success of ERP implementation. While companies aim to implement ERP on time and budget, these are not the only factors that make ERP implementation strategy successful. What matters most is user adoption, productivity increase, and financial benefits such as cost reductions. All these can only be achieved after using an ERP for at least one year, which is why implementation success cannot be measured immediately after the go-live date.
Depending on their complexity, ERP systems reach maximum efficiency in 2 to 5 years. This means that most users have adopted the system, and is used frequently (full adoption is ideal but difficult to achieve). ROI calculations are more relevant at this stage when users better understand the benefits and shortcomings of the system.
How are Enterprise Resource Planning (ERP) Systems Implemented?
Once a company has decided which ERP to purchase, there are two main approaches when it comes to the implementation of the system:
Big bang: This refers to the strategy of completely replacing legacy systems with a new ERP solution at a fixed date (also known as the go-live date). This applies to all locations and business units of the company, which should start using the new system at the same time.
Phased: Phased means that the ERP system is implemented gradually across the company, either by location or by department. For instance, the manufacturing and accounting departments may be the first to use the system, while other departments are still implementing it. Also, the headquarters of a company is usually the first to deploy an ERP solution, and the other locations are scheduled to go live at a later date.
Who is Responsible for ERP Systems Implementation?
Depending on the system's complexity, companies can choose to manage implementation using internal resources, personnel provided by the ERP vendor or its partners, and external consultants and project managers.
An ERP implementation should have an executive sponsor who oversees the project, approves budgets, and allocates resources. This person also manages the relationship with the vendor, its partners, and other external stakeholders involved in the project.
What Does the Implementation Process Look Like for ERP Systems?
Implementation of ERP is a complex process. ERP project implementation will disrupt business operations because employees will need to learn the new system while still using the old one, valuable data may be lost when transferred between systems, and the company may need to use both systems in parallel.
The typical stages of an ERP implementation are:
Data migration: Moving all the information from one ERP system to another is not easy but is necessary. Companies need historical data for forecasting purposes and sometimes for compliance. For instance, companies are required by law to keep tax documents for at least three years.
Setup of the new system: Once a company starts using a new ERP, all transactions will be associated with GL accounts and cannot be deleted. This makes it very difficult to remove GL accounts, which is why the initial setup of the system should be thoroughly performed and tested.
Training: Training employees takes time and can be costly, which is why some companies tend to rely on a few employees that learn the system very well and are supposed to train the others. This approach can be beneficial for small companies but not for large businesses with many employees and complex processes. Vendors and their partners are the most qualified to provide individual training, which usually includes learning content and hands-on practice.
Testing: Vendors usually provide a test database that should be used to familiarize users with the new system and to identify potential issues. Ideally, tests should be performed on a database that contains data and is configured in accordance with the business processes of the company.
The go-live date: The focus of the company and the ERP system vendor is to make the system work, but it is also essential to identify and address critical issues such as data inaccuracy or an incomplete setup of the system.
After-sales support: After-sales support allows companies to sail smoothly through the transition phase, which can take weeks or months. Sometimes companies may decide to manage this phase on their own, which is usually a mistake and can have serious long-term consequences.
Another essential factor that can impact the success of planning ERP is change management. Many ERP buyers wrongly assume that vendors provide change management as part of the implementation process. While vendors can and do help with some change management activities, such as addressing resistance to the new system, companies are ultimately responsible for defining and implementing the strategies. External consultants can help with advice and guidance, but each company needs to identify and address the issues that can be caused by such an important project as an ERP implementation.
Change management can be extremely beneficial to companies implementing ERP, but it is difficult to plan and implement. To ensure that they successfully manage change during implementation of an ERP system, companies should focus on the following:
Involving users as early as possible in the decision-making process, starting with the selection of a new ERP. A common mistake is to allow executives to choose an ERP system without consulting with subject matter experts from the company.
Communicating any changes or decisions related to the selection and implementation of an ERP product makes employees feel involved in the process. It also helps to encourage feedback and suggestions on how to improve the chances of success.
Business process reengineering allows companies to reevaluate how they function and find opportunities for improvement. Business processes should not be modified to fit the workflow of the new system. Also, companies need to understand processes from different departments and business entities. Learning how the system works and how it helps the company is much more critical than merely training users to use the product.
Encouraging collaboration and knowledge exchange between teams and departments can help companies optimize their ERP investments and make their employees more productive. Collaboration can also reduce the unhealthy competition between departments and align all employees with the goals of the company.
When Should You Implement ERP Systems?
Timing is critical when it comes to planning an ERP implementation project. The worst time to implement ERP is the peak season for a company, such as the winter holidays for retailers. The year-end of the fiscal period is not a good time either, but it helps to go live right after when all the books are in order.
Digital transformation in manufacturing can be achieved using intelligent technology such as the internet of things (IoT), virtual reality, and augmented reality. While ERP does not manage these technologies, the system needs to exchange data with both hardware (sensors and fixed assets) and software (IoT management and digital twins).
Artificial intelligence (AI)
There are multiple applications of AI that can make ERP more efficient. AI can analyze large amounts of complex data, identify trends, and suggest opportunities to improve operations. Robotic processing automation (RPA) is used to create bots that can perform basic tasks quickly and efficiently. Some ERP vendors use conversational user interfaces, which simulate a conversation between computers and users; these interfaces allow ERP users to find information by asking questions or telling computers to execute simple tasks such as sending an email or printing an invoice.
This type of software architecture is being increasingly used by vendors to provide more flexible solutions. As opposed to monolithic ERP, microservices allow buyers to implement and use collections of software modules from different products. For instance, a manufacturing company that handles its distribution and sells online will benefit from using a custom solution that includes features otherwise sold separately.