Top 5 Common Myths of Selecting an ERP Solution

Posted on

All distribution companies, regardless of size, need tools to manage their business. Some may feel spreadsheets handle the basics, while others use a simple billing system. The innovators in the group understand that an ERP solution is much more than a means to track business activity. The capabilities provided by ERP offer operational efficiencies that allow good companies to grow profitably. These companies approach the implementation of ERP as an opportunity to improve the way their business works. They look for an ERP vendor that includes “best practices” advice and templates in their implementation methodology.

Top 5 Common Myths of Selecting an ERP Solution

Myth #1. A local vendor is the best option…

In today’s world of Internet connectivity, remote support is the most efficient method of delivering customer service and tracking service tickets. So whether it’s two blocks away or 2,000 miles away, the support is the same.

More important factors to consider in selecting an ERP vendor are the strength of their products and user base for your business. Do they have a strong user community that continues to expect products that meet the ever-changing requirements of your industry? Do they have a professional implementation staff with experience in companies like yours?

Myth #2. You can’t go wrong with SAP…

Being a small fish in a big pond is no fun! Tier One software companies like SAP and Oracle would like you to believe that choosing their solutions is the only safe company and career decision. This is not true. Consider the following:

SAP and Oracle use system integrators to implement their systems. These companies may have no experience in your specific line of business. Do these companies have a strong presence in your vertical? If not, any enhancements will not only require your efforts to design, but also your funds.

Finding a solution with the functionality that supports your industry, out of the box, is key to a successful and on-budget implementation.

Myth #3. Understanding the measurable business benefits is not necessary…

Why are you looking for a new ERP solution? Is your hardware outdated, or is your software no longer supported? Even if the reasons are not related to business improvement, your company should have goals for the implementation of an ERP solution.

Ask the ERP vendors you evaluate to explain the areas of improvement typically achieved and methods to measure the monetary value of these improvements. Key areas that an ERP solution should address include:

  • Reduction in operating costs
  • Reduction in inventory
  • Improved order to cash cycle time
  • Improved customer fill rates
  • Improved accuracy in orders

These are real results that can measure the improvement. Whether it’s just for yourself or for a board of directors, knowing the bottom line impact of your improvements is exciting and helps when making plans for growth.

Myth #4. ERP systems are all the same…

If that were true, selection would be a snap. But not only are ERP systems different, the companies that develop and support them are also very different.

You want to find an ERP vendor that will be a strong partner for your business now and in the future. As an extension of your staff, the right partner will be someone you can trust to provide the tools and skilled implementation resources with a track record of helping companies just like yours. Learn more about the vendors’ product roadmap and release schedule. If they don’t have one, it’s a bad omen for the future.

Ask questions about the vendor’s implementation methodology. It should be well-documented with proven results. Talk to other companies that have already been through the process to ensure the vendor is right for you.

Myth #5. Wait until the economy is on the rise…

Prepare to catch the wave before it crests and you will enjoy the best ride. Your competition did not wait, and they are already enjoying the benefits offered by their ERP solution. There are real bottom-line dollars to be achieved from the cost reductions and improved efficiencies that result from implementation of a good ERP solution.

As the economy waxes and wanes, you will be positioned to pounce on opportunities in the marketplace. Waiting has associated risk. Your competition will be aggressive in going after new business because they have already put systems and processes in place to handle them. They will have the tools to know which customers contribute the most to their bottom line.