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How Midsize Companies Are Evaluating and Buying ERP

Every business, big or small, wants streamlined business processes and access to real-time data. These are key success factors for modern organizations as they seek efficiency and drive along their digital transformation journey.

Enterprise resource planning (ERP) solutions are crucial for enabling the digital backbone of modern business. An ERP platform can provide data transparency, help you make your operational processes leaner, cut costs, and connect external parties to your supply chain, all while leaving room for future expansion and enhancing your customers’ experience.

When is the right time to consider an ERP solution?

However, choosing an ERP platform is not a simple task. It requires budget and commitment from leadership, and change management from employees. Midsize businesses, which generally have lower budgets and fewer skilled IT resources, must consider several points before making a decision.

Things to Consider When Evaluating ERP Solutions

1. Cloud-based Options. For midsize companies, ERP should be a cloud-based solution rather than on-premise. Cloud-based ERP enables midsize businesses to reduce implementation costs and take advantage of subscription-based models that reduce upfront investment and enable users to access information on any device from any location.

2. Mobility. In the post-COVID world of hybrid and remote work, mobile ERP helps employees keep on different tasks and processes wherever they are, from phones, tablets, PCs or other devices. And securing these endpoint devices is a must.

3. IoT support. The Internet of Things (IoT) helps improve asset management, increases efficiency, and offers real-time business insights. Modern ERP should support IoT integration, which is necessary for smart factories and digital twins. Gartner has predicted that by 2023, one-third of mid-to-large-size companies that have rolled out IoT will have implemented at least one digital twin for a reason related to pandemic.

4. Affordability. Most ERP systems offer affordable prices and subscription plans that suit the size of any company—even small and midsize organizations whose budget constraints makes an upfront investment in high-cost software impossible.

5. Scalability. An ERP solution should have modules and features that support a business’s ability to grow. Replacing an existing system takes time and money, and could result in lost business opportunities if the new deployment fails.

6. Centralization. Your ERP platform should be able to unify different modules for different areas of the business, including payroll, bills of material, inventory, accounting, customer relationship management, supply chain management, and others, helping these different departments communicate.

7. Support for various business sectors. You should be able to customize your ERP for each business sector, supporting different needs and regulations to reduce deployment time.

8. Integrated AI and e-commerce with digital marketing. Modern ERP should leverage artificial intelligence (AI), and provide digital marketing automation to gain insights into the end-to-end customer journey. By providing a consistent experience through each stage of the customer and order lifecycle, your ERP system can present you with upsell and cross-sell opportunities.

9. The right partner. An ERP choice isn’t just about tech features. The consultant partner who implements the software should work with you to roll out your EPR platform, and should have experience in various business sectors and a professional team with intensive knowledge of the ERP offering.

TCO: Don't Neglect Overall Costs

ERP buyers often calculate costs simply by finding out the subscription price for a set number of users. Instead, you should determine your total cost of ownership (TCO). Typically:

  • System management and maintenance accounts for 5-10 percent of TCO
  • System infrastructure for 10-20 percent
  • The software itself for 15-30 percent
  • And human resources, including training and operating expenses, for as much as 40-60 percent

Once you’ve determined your overall TCO, you need to evaluate potential business outcomes from ERP deployment, such as cost reductions, saving on inventory, increasing productivity that allows you to reduce new hires or save on overtime costs, or reducing time to market to gain more opportunity as first movers. Only then can you determine your potential return on investment (ROI).

A Long Partnership is Key to Success

According to Statista, the global cloud ERP software market is projected to be worth $40.5 billion by 2025, growing at a CAGR of 13.6 percent from 2019 to 2025.

Moving to a cloud-based ERP solution is time-consuming and costly, as this platform is at the center of a business. But deploying a new ERP platform requires adjusting business processes and migrating everything from data to employees over to a new system.

Businesses need to understand which products suit their size, industry, and functionality requirements. The solution should also help your deal with future challenges. In choosing an ERP platform, you want to find a good and long-time partnership that can support future business growth—and can deliver visionary technologies that keep you ahead of the curve.

Download our free ERP Evaluation Guide for help with selecting the right ERP for your business.

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