Why 'the best ERP' may not always be the 'right ERP' for your business
December 20, 2021
Choosing an ERP for your business is not like choosing your new car. With the latter, you will not go wrong if you bet your money on the best brand and their latest model. Not so with your ERP. The reasons are several, but let us look at some important ones:
- An ERP is designed to manage business processes. That is a simple statement. But we know that processes are not the same across business domains. Why, they are not the same even within an industrial sector or domain. There is no statutory need to follow any standard business process. Now you get the drift: an ERP can be designed only for commonly used business practices across industries. If it is an ERP for a specific industrial domain – ‘vertical’ in ERP jargon, it is going to have very specific processes followed by most companies in that sector. However, that too does not mean it will suit every player from that sector.
- A good number of businesses may have started off with plain accounting packages, which are designed to address book-keeping needs and not business processes per se. This means that they cannot help you standardize your processes and bring in process discipline. The users of such systems also are not trained to think processes. They will find it a little tough adapting to a process-driven system, at least for some time. This can mean a longer timeframe for you to implement your ERP
- Some enterprises may have gone for custom-built software. These are likely to support their processes at an intimate level because of the freedom for the developer to do so. Even trivial processes may have been added to the system in a catch-all development approach. Commercial off-the-shelf (COTS) ERP may disappoint them initially as they will miss the exact mapping of their processes.
- Business is a very dynamic field. Hardly anything stays constant for a long time. There are new ways of doing business, right from buying things to selling. Government laws keep changing and you are expected to be compliant regarding commercial taxes, income tax etc. An ERP will most likely be designed around the situation in the country it was developed and may not fit well around country-specific requirements, however flexibly they may have been designed.
- Who are the users of an ERP? Obviously, business executives like you. And users are not the same across the world, even across a country. So, that adds another dimension to it. A software designed for a specific way of working and using may not suit all users anywhere in the world. However, we can claim that this can be handled by training. Still, the user remains an important component when you consider an ERP. You cannot try to force your users to work with a software if they find it totally different from the way they are used to work regularly.
- And finally, the most important aspect: depth of features. Product companies try to add more and more ‘generic’ features to their software as it gets used by more enterprises. This approach may make the product feature-heavy and a burden for those who do not need them. Further, it may be hard or impossible to strip some of these features off, which means that users must live with screens they cannot relate to. Though most ERP makers try to verticalize features specific to domains, a good number of feature and UI components will remain in the generic base.
- There could be a commercial impact too in the case of non-verticalized products. You will end up paying for features that you do not need or do not plan to use. Some high-end ERPs, not designed for MSME, will turn out to be a millstone around your neck as their module depth and feature complexity will leave you stumped. They have been designed for large, complex operations, and your business would not come anywhere closer. Stripping features down, though possible, will cost you a lot under the label of ‘customization’. In effect, you will be spending twice as much!
MSMEs are better off with mid-market ERPs that just about service their needs, which could be as high as 100%. Even if an ERP meets 80% + of your real needs, go for it. You will realize that there is quite a lot of value that you can tweak out them. Unless your business grows horizontally, there will hardly be a need to change your ERP. Vertical growth can hardly be the reason to go for a ‘high-end’ ERP because what you needed were not more features. Performance issues with your existing ERP should be resolved smartly by diagnosing the real causes.