If you run a small enterprise, you may be used to managing your business data and processes manually with the help of just a few rudimentary digital tools. As your business grows, however, you’ll soon find that spread sheeting applications, websites, email clients, and other basic software can’t provide the agility and operational efficiency that your company needs to function at its best. A more specialized solution will enable you to fulfill more customer transactions, process higher volumes of business data, and manage more complex workflows with ease. For companies looking to streamline their business operations, enterprise resource planning (ERP) software systems are usually the most viable solution. The term ERP describes a collection of digital tools and applications designed to help companies manage their business operations more effectively. Depending on a company’s needs, ERP packages can include modules to help with planning, purchasing, marketing, sales, inventory management, accounting, and other crucial functions.
The trick to making the most of your ERP system is to choose a software suite that’s well-suited to the size, needs, and objectives of your business. Certain ERP providers will cater specifically to enterprises of a particular size, whereas others will have offerings available across the board for all types of companies. For example, when looking into offerings from the popular ERP provider SAP Philippines-based companies will immediately see that certain iterations of the system are designed specifically with the needs of small- to medium-sized businesses in mind.
Read on to learn more about the different ERP systems out there and how to choose the right type for your company:
Types of ERP Systems
ERP systems are typically differentiated on the market according to their particular deployment model. An ERP system can either be installed locally on the company’s servers or hosted in the cloud. Increasingly, certain ERP systems can be deployed in a hybrid setup where certain components are installed on-premises while others are cloud-based.
On-premise ERP systems are highly customizable ERP solutions that are hosted on company servers and maintained by your organization’s IT staff. This gives businesses greater control over their ERP. On-premise ERPs typically also enjoy tighter security and data privacy than other types. The tradeoff is that most on-premise ERPs will take longer to implement and cost you more upfront than other types.
Cloud-based ERPs, meanwhile, are hosted online and maintained mostly by your chosen ERP provider. While companies often express concern about the possible security risks posed by systems hosted in the cloud, cloud ERPs are fast becoming the preferred deployment model for companies the world over. This is because cloud enablement comes with a wide range of benefits, including lower upfront costs, greater flexibility and scalability, easier integration with third-party tools, and more.
Hybrid ERP systems, as previously mentioned, combine the best of what cloud-based ERPs and on-premise ERPs have to offer. While they are often more expensive than either of the previous two types, they’re the must-have choice for businesses that prize flexibility above all else.
Choosing the Right ERP for Your Business
In general, it’s good for companies to take a strategic approach when deciding what kind of ERP to use and which software providers to get it from. Instead of simply checking off a list of features, organizations must consider the needs of their business as a whole and how their chosen system should help them address those needs. Putting together a dedicated ERP selection team with participants from across all of your organization’s departments can help make this process more comprehensive.
Once you’ve gotten your team together, the following helpful tips can get you started on choosing the best possible system for your business:
Assess Your Current Business Processes
Choosing a new ERP is the perfect time to evaluate incumbent business practices, so you can figure out how to leverage what’s working well and refine or even remove processes that are inefficient or unnecessary. This analysis will, in turn, give you a clearer picture of what your company’s needs are and what you truly require from your ideal ERP system.
Decide on the Proper “Tier”
ERP systems are usually categorized between 3 tiers. Tier 1 systems are those intended for large, global enterprises, tier 2 for small- to midsized enterprises, and tier 3 exclusively for small businesses. While the differences between these tiers are not necessarily set in stone, the factors that usually determine what companies use systems in which tier include the following:
- Number of employees
- Number of users requiring access to the ERP
- Complexity of the organization’s processes
- Total organizational revenue
- Complexity of requirements
Figure Out What Functionalities You Require
Your selection team should have a good idea of what features and functions your chosen system must have. Do you want a software system with unparalleled longevity that will justify the significant amount of money you invest in it? A highly customizable system? A system that provides extensive industry-specific capabilities? A scalable system that can grow as your business does? Or something else?
One way to determine what you need is to have your team gather input from the employees who will be working with the software. These people are in the best position to tell you what business functions could benefit most from the support of an ERP system, as well as what functions they would like to have going forward.
Determine Your Implementation Requirements
Of course, deciding on an appropriate ERP solution has to do with more than the software’s functions. You’ll also have to look at your organization’s tech infrastructure and preferred methods of deployment. Consider your company’s particular requirements in terms of factors like data privacy and security, compliance, transaction processing, and flexibility. This will better enable you to choose a system that works with those requirements easily and efficiently.
The right ERP systems will bring a host of benefits to any company, whether you’re a multinational corporation or a small home-based enterprise. They help you cut costs, automate tedious manual tasks, produce more detailed and insightful reports, and much more. Once you have a solid idea about what your company requires and what systems are out there, choosing the right ERP solution should be a breeze.