Top Four Small Business ERP Software Selection Criteria

When a small business engages in an ERP selection project, it is important for the business’s selection team to gain a full understanding of both the small business ERP software that is being demonstrated and the ERP vendor who is selling the proposed software solution. By conducting a thorough analysis of both the software and vendor, the small business will be in a position to make a well-informed ERP selection. Below are four key criteria to keep in mind when selecting a small business ERP solution and ERP vendor.

1. The Small Business ERP Solution is a fully-integrated software product. For small businesses, it is imperative that the business select a fully-integrated ERP solution.  One of the single most significant benefits to be realized from ERP implementation is that all of the business’s departments can operate on a single software platform. With a fully-integrated ERP product, data is updated in real-time, the need for entering data into multiple software products is eliminated, and the organization can achieve significant time and cost savings due to more streamlined, efficient operations as a result of an increased technological linkage across all of the organization’s departments.

2. Scalability. When selecting a small business ERP system, it is important to select a system that offers the business significant room for future growth without the need to purchase additional modules, add-ons, bolt-ons, “pieces” of functionality, etc. When talking to various ERP vendors, the business’s selection team should make sure to ask the vendor what the smallest customer they have using the proposed software solution is in terms of number of concurrent users, and what the largest customer they have using the proposed software solution is in terms of number of concurrent users. The difference between the smallest and largest concurrent user figures for each ERP system is a fairly good indicator of each ERP’s degree of scalability. Scalability is also important in that by selecting an ERP solution that provides the business room for future growth, the business should have an opportunity to realize significant cost savings in the years following ERP implementation due to existing software functionality that is already built into the ERP system.

3. Customer Support and Successful ERP Implementation. Customer support and implementation methodology should be critical elements to every ERP selection project. When selecting an ERP vendor, the business’s selection team should look for a software supplier with a proven track record of successful ERP implementation (“successful” being defined as on-time, on-budget, and capable of performing normal business operations at go-live without disruption to the organization – entering, shipping, and invoicing customer orders, etc.). The selection team should ask potential software suppliers if they themselves provide implementation services directly or if they outsource their implementation services. Similarly, it is equally important to select an ERP vendor who is capable of delivering exceptional support, training, and ongoing functional enhancements for the ERP system long after initial go-live. Again, the selection team should ask potential ERP vendors if they provide direct technical support or if they outsource their technical support services to a third party and/or overseas.

4. Long-term ERP vendor viability. Selecting an ERP vendor with a long-term approach to technological development and who has continuously demonstrated long-term profitability and organizational sustainability is key. The ERP industry, unfortunately, is wrought with frequent acquisitions in which one software supplier will purchase the rights to one or more ERP products from another software supplier. When such an acquisition occurs, companies using an ERP system that is being acquired become vulnerable to increases in technical support costs and annual maintenance fees in order for the new software supplier to achieve a return on investment. Selecting a software supplier with a long-standing history of organizational longevity and profitability helps mitigate this risk.

By evaluating ERP vendors’ software functionality, the software’s degree of scalability, vendors’ approach to customer support and implementation, and vendors’ organizational longevity, small businesses engaging in an ERP software selection project will have the information necessary to make an educated final ERP selection.