How to Compare ERP Vendors and Their Products
Shopping for a new enterprise resource planning (ERP) system isn’t easy. In fact, it may be the corporate equivalent of going to the dentist. The process is uncomfortable, but put it off too long, and small issues can turn into big, painful problems. So many options are available from so many vendors that it’s overwhelming to companies that look at ERP systems only once every 10 years.
Each software vendor has functions and modules that you can mix and match in different ways to meet your organization’s specific needs. That’s why companies need an evaluation process to help them compare offerings.
In the past, companies typically chose the server operating system and database before they even looked at software. Now, the bigger early decision is cloud or on premises, and this decision guides which ERP vendors you want to approach. It also guides how you build your request for proposal questions and determine areas for evaluation. Vendor responses enable you to determine your budget for the costs of ERP.
You must also construct costing models for several differing time periods. Locking in prices years in advanced is great if it’s an option, but vendors will guarantee a price more than a few years out.
Next, gather estimated pricing as early as possible. This approach is more common than it used to be because so many smaller cloud companies advertise pricing. Nevertheless, most ERP vendors are still reticent to give details until they make a formal proposal.
Get an estimate—whether it’s based on cost per user or estimated enterprise cost—to rule out unlikely vendors. Some vendors might be too expensive; others may be too cheap, indicating an inability to customize or tailor their product to your organization’s needs. Price may also be a proxy for experience as newer entrants tend to charge less than well-known, long-standing vendors.
Experience can cut both ways. Some vendors might be able and willing to create a version of their software specific to your niche. Others will try to shoehorn their generic installation into every situation.
Customized may sound good, but it comes with risks. Adapting your processes to the proven software may be the way to go: This is part of the comparison process.
Another dimension to examine is how unified the ERP vendor’s offering truly is. Some vendors have developed all the components themselves. They might sell everything all at once with few options. This approach is particularly common with cloud vendors, which want everyone to use the same version with the same options to minimize their support issues.
Other vendors may try to craft a solution by using different modules tailored to your needs. This approach could result in a reduced cost and streamlined installation because they can deploy only a subset of functions. It also might make future expansion and purchases of extensions necessary.
Still other vendors—typically, larger ones—have acquired competitors over time. Different modules to them may come from different original sources and have different ways of working.
Reputation and Support
Don’t forget to examine the support options, including ongoing training, because your personnel will need training. This also goes to how as a company you like to deliver training—in person, online, train the trainer, short videos, and so on.
How do most customers report issues? What is the vendor’s response time? Are there limits on the number of support hours? The answers vary widely among ERP vendors. In addition, try to network in various trade groups people in your company belong to to find real people who have real experience with the ERP vendor’s support. That is a great way to get real opinions and even some anecdotes to ask the vendor about.