The definitive guide to ERP selection: key steps & criteria

Even if you find a perfectly fitting solution feature-wise, chances are you will still need to customize an ERP platform when your business grows more complex. Therefore, you need to ensure the ERP platform allows for extension and customization with no adverse effects on other ERP components.

• Can new software features/modules be added?
• How well does an ERP platform support your business plans?
• Does an ERP platform allow for extended customization?
• What support for ERP customization is provided?
• How much does ERP customization cost?

For the effectiveness and usability of the solution, you have to ensure the platform's uptime and performance are well-aligned with your business specifics. For real-time business-critical workloads, some ERP vendors guarantee up to 99.9% uptime, which means a company faces up to no more than 8.76 hours of downtime a year.

• Can an ERP platform meet your technical needs?
• How many users will use the ERP platform?
• How many users will use the platform daily?
• What are the most common ERP workloads?

The ideas for future ERP enhancements usually come long after the initial ERP implementation. So when selecting an ERP platform, consider your future needs, the growing complexity of business workflows, and whether the solution can fully cater to them. Also, pay attention to ERP’s pricing model to understand the cost of adding new users or implementing it across multiple sites. For example, on-premises solutions may need additional servers to scale.

• Will we need to add users in the future?
• Can an ERP platform accommodate more employees, departments, and types of users?
• Does our organization have the potential to expand into new markets or go global?

Make sure the ERP platform supports the required security level and satisfies all regulatory and compliance requirements. Opt for ERP systems with comprehensive security mechanisms, including role-based data access control, multi-factor authentication options, consistent approach to patching and vulnerability management, data encryption capabilities, dynamic data masking, and more.

• Are security upgrades included in licensing?
• What level of flexibility do you need for access control management?
• Does the platform offer built-in functionality to support your industry-specific requirements?

Since an ERP system needs to access and use data from other corporate applications and systems as well as third-party tools you use, look for software with rich system integration capabilities, such as standard communication protocols, open and easy-to-use APIs, and pre-built connectors.

• How does an ERP system support integrations with our business applications, including legacy systems?
• How will data migration be performed? Is real-time data synchronization enabled?
• What out-of-the-box integration tools does the ERP platform have?
• Does an ERP system support EDI?
• How is data consistency enabled across systems?

In-depth industry expertise defines how well the ERP platform caters to the business specifics of the company. It may not be necessarily an industry-specific ERP solution, but should still offer customized extensions and ensure compliance with common industry regulations. 

It’s a good tactic to choose a platform that was successfully implemented by companies from your field, especially companies of comparable size and with similar requirements and corporate culture. 

• Does the nature of your business require a specialized industry platform?
• How long has the vendor been working in your industry and have they been successful in it?
• Does the ERP system cater to my business market segment?
• Are there many successful implementation cases?
• Can the vendor provide customer references?

When choosing an ERP vendor, you have to decide whether you deploy the solution on your own IT infrastructure or in the cloud, where the implementation and maintenance is performed by the provider.

When considering deployment options, factor in IT support and staff skill sets, your geolocation, and government regulations such as GDPR and CCPA.

Some ERP vendors offer both deployment options or a hybrid approach, while most offer only one model. If you choose the former, make sure the vendor doesn’t plan to discontinue the selected option in the near future.

• How much will an on-premises and a cloud-based ERP system cost?
• Does a vendor offer cloud migration support?
• What are the egress charges?

Ensure that the ERP platform caters to end-users’ needs and is easy to use. Therefore, factor in usability and ease of navigation, the learning curve, and a typical adoption rate. An additional advantage will be free access to training videos and product documentation, an online knowledgebase or user community, and a call center. 

• Have employees used an ERP system before?
• Are your end-users tech-savvy?
• What training will be most effective for end users?
• Are ongoing support and training for end-users included in the licensing fees?
• Is user experience consistent across departments/devices?
• Are there an intuitive user interface and self-service capabilities for non-tech users?

ERP software requires solid tech support for ongoing daily operations and issue resolution. Thus, when choosing a new ERP system, determine the type of support and maintenance approach offered, SLA types, how version compatibility is maintained, and who the vendor’s implementation partners are.

• What minimal functional support is available? Is it included in the pricing?
• Is infrastructure monitoring available? How often are reports on the system’s performance issued?
• What support escalation options are available?
• What is the guaranteed response time for each type of support?

To make sure the ERP platform will be supported over the contract’s duration and the vendor will continue investing in it, weigh in how long the product has been on the market, its global presence, customer base, ongoing R&D investments, and so on. Prioritize ERP systems that have recently been updated. And vice versa, if a product has not been recently updated, the vendor may be planning to discontinue it. Because advanced technologies can improve many ERP operations, look for systems that offer such capabilities as Internet of Things (IoT) integration, mobile access, BI, workflow automation, and ML and AI incorporation.

• What is the vendor’s product roadmap? What new features/versions/updates are planned?
• Does the vendor publish updates on a prescribed schedule?
• How frequently are updates and patches planned?
• Is there an additional charge for a new feature upgrade?
• Does the ERP system support AI/machine learning, IoT, blockchain, and other advanced tech?

There are a couple of cost factors to take into account, including initial purchase of software and hardware, license fees, implementation and setup costs, software support and maintenance costs, and end-user expenses.

Firstly, you have to decide on the deployment model. With on-premises ERP solutions, you take on the heavy lifting of all upfront hardware and software acquisition costs, configuration and customization, employee training, ongoing administration, upgrades, and security.

Cloud-based ERP solutions are usually provided as a service (SaaS), thus you pay a subscription fee that is defined by the functional scope, number of users, infrastructure resources consumed, and support level. No doubt, the absence of heavy upfront investments makes SaaS ERPs appealing, however, in the long run, this model may prove more expensive.

Don’t eliminate ERP vendors too early on because of the price tag. TCO comes into the picture only after you know what system’s functionality, integrations, customization, and support level you need as well as your recurring software costs and costs for a three- and five-year period.

• Does the software licensing model align well with our business needs?
• Does the pricing include security, maintenance, and updates?
• How soon will we see return on investments (ROI)?
• What is the cost of the transition from legacy platforms?

To evaluate vendor credibility, trustworthiness, and risks related to the long-term partnership, consider company credibility (its age, financial health, development methodology), active customer base, case studies, and pricing policy transparency.

• How long has the ERP vendor been on the market?
• Does the ERP vendor have a clear development approach?
• Who are the vendor’s clientele?
• Are the vendor’s pricing and development policies predictable?