overbuy selecting erp software

Don’t Overbuy When Selecting an ERP System

Would you buy your teenager a $250,000 Ferrari to drive to school?  Of course not!  But some small and medium sized businesses (SMBs) consider using the very large ERP systems that are best used by multi-billion dollar global corporations.  Don’t get me wrong; these large ERP systems are packed with features and can support all sorts of complex business processes that the very largest of corporations need to have.  But there are serious disadvantages with these systems for those that just want something that can give immediate help in providing visibility and control to their business.

Here are some reasons why an ERP system designed for small and medium sized businesses may be a better choice.

  • The most obvious one is cost. Installing a large ERP system can cost hundreds of thousands or even millions of dollars.  There isn’t only initial acquisition cost; you also need to consider monthly software maintenance fees, consulting fees, the cost of your own IT team to keep the system running smoothly, and even the cost of the floor space, electricity, and cooling if you decide to go for an on-premise installation.
  • Another disadvantage is complexity. Many installations of large ERP systems can take years.  This is due to all the extra features and configuration options that an SMB may not even need.  Many companies will put together implementation teams and draw employees from their normal assignments for extended periods of time to work with outside consultants who can help them figure out how to map their existing business processes into the structures already programmed in to the large ERP system.
  • As a small and medium sized company, you may not be able to have the flexibility working with a large system vendor than you would working with someone with a product optimized for your sized business.  Many companies end up having to change their existing business processes to fit the large ERP system.  Rather than doing that, some smaller ERP vendors will customize the software to how you want to run your business.  So you won’t need to change your business processes.
  • Employee training and productivity may also be better with a less complex system.  Modern, next-generation cloud-based systems offer intuitive interfaces so that new employees can learn how to use the system in minimal time.  Some of the very large ERP systems will not be as easy to use.  This may be due to the fact that they have so many complex features (which you won’t be using) and many of them were developed years ago when intuitive interfaces were not as high a priority for software developers.
  • For an SMB, maintenance is always a concern.  They won’t have a large on-site IT staff that keep the system happy.  For most SMB’s, we recommend going with cloud-based systems.  In these situations, the vendor will take care of activities such as data backups, applying software updates, supplying floor space for the server, and all the utilities.  Since the cloud vendor will be doing this for multiple customers, they will achieve an economy of scale and charge you much less than if you were doing these activities on your own.
  • Typical installation times for SMB companies selecting a right-sized system are more often measured in weeks, instead of several months or even years.  This is primarily due to the reduced complexity.  If you need to pull employees out of their normal duties to finish the installation, the sooner you can get them back to their regular work, the better off you will be.
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There is one other caution we suggest when selecting an ERP system.  Although we are recommending that an SMB should not choose a system meant for multi-billion dollar corporations, we also would not recommend going too far and choosing a system that has no or limited growth capability.  One should look for systems that are scalable and can grow along with your business.  Perhaps these systems won’t be a good choice if your business gets all the way to the billion dollar level, but they should allow support business growth of 10X-100X so you would not have to switch to another system in only a few short years.

If you want to learn more about how an ERP system optimized for SMBs can improve your business, My Office Apps has business specialists available who can help you evaluate your business and uncover improvement opportunities.  Most of our team have been using ERP systems for many years under all sorts of different situations.  Our expertise within the SMB market, can provide insight into choosing the best ERP solution to help you streamline your business operations.