How to Select Potential ERP Vendors

180 Systems_ How to Select Potential ERP Vendors

180 Systems_ How to Select Potential ERP Vendors

There are so many ERP systems from which to choose, many of which are not well known. The lesser-known ERP systems are often designed for a specific industry. The question is which systems should you include in your ERP system selection project. But first, we need to identify the types of ERP systems based on company size (tier) and by target market.

ERP Types

Tier 1Tier 2Tier 3
Customer revenue > $200M $25M – $200M < $25M
Customer employees > 500 100 – 500 < 100
Annual License fees > $200K $50K – $200K< $50K
Implementation fees: Annual License fees> 3:1 > 1.5:1<= 1.5:1

There’s no point in considering ERP systems from Tier 1 for small companies. However, the Tier 1 vendors like SAP and Oracle will say that their software is applicable not just for Tier 1 but also for Tier 2. This may be true if the company has complex business processes or expects significant growth.

ERP vendors can also be classified based on their target market:

  • Vendors with solutions for multiple industries. These vendors offer tier one systems, and it’s not surprising that they are more complicated to setup because of all the industries they support.
  • Vendors that offer a solution for a specific industry.
  • Vendors that offer an extension developed by a 3rd party for a specific industry. These vendors provide the 3rd party developer with not just the software/platform to develop solutions, but will also market these solutions worldwide making it worthwhile for the 3rd party developers.

The vendors with the vertical solutions or extensions may be small companies and appear not a good choice because of perceived risks, but:

  • Small companies can be successful.
  • They may have the best fit at the right price
  • The 3rd parties are certified by the larger ERP vendors
  • There are benefits of being a big fish in a small pond.

However, stay away from small vertical vendors even if they have a great fit at a great price if they:

  • Are using old technology and not investing in new technology
  • Don’t have enough resources to support the implementation or ongoing support
  • Are not able to give you good references
  • Are not able to demonstrate their financial stability

How to Identify Potential ERP Vendors

  • Check out our ERP Comparison which provides a comparison of ERP systems by multiple factors including application, tier, industries supported, number of customers and underlying technology
  • Internet searches
  • Contact colleagues
  • Contact industry associations
  • Look at trade journals for articles and advertisements
  • Attend trade shows
  • Contact exhibitors from trade shows
  • Contact Us

But the vendor may not be the implementer. The success of an ERP implementation depends equally on the software and the implementer. The implementers of ERP systems are often from smaller companies, but the risks are reduced if:

  • The ERP vendor has certified them
  • They have demonstrated their knowledge, industry experience and ability to support an implementation
  • There are many alternative implementers

How to Identify Potential ERP Implementers

  • Check out our ERP Comparison which also includes the implementers of the ERP systems
  • Contact the vendor for their recommendation which should primarily be based on their experience in your industry
  • Internet searches
  • Contact Us

Recommendation

We recommend casting a wide net of potential ERP vendors. You don’t want anyone in your company suggesting an additional system that appears to be appropriate when you have completed most of the selection journey. We also recommend considering both large and small vendors, but don’t waste your time unnecessarily or that of the vendors. You should have a relatively easy process to screen the systems. Our approach is to ask the vendors only to respond to the critical requirements in an RFP, and we aim for 20% of the requirements to be deemed critical.

Good luck and don’t hesitate to contact us.