Your company has been around for several years and you have the wind in your sails. It goes well! It's going so well that you have trouble keeping up with the growth. You have to prepare the organization for the next step. You need to professionalise further and you are thinking of purchasing an ERP system. But yes, which system is best suited for my company? And how do the ERP systems differ?
The range of different software systems is indeed large. Here we describe 7 differences that you can take into account.
1. On-Premises or Cloud
Vendors of ERP-Systems often have two ways of offering the software. You can install it locally on a server within the walls of your company. This is called 'on premise'. But nowadays, it is very popular to offer the software as a cloud solution. Without going too deeply into this, the cloud is a collection of solutions in which the software is offered via an internet connection.
Simply put, you have the choice to place it on your server. You can do this yourself or have it done by the supplier of the software or by the implementation partner. Or you can opt for a cloud solution. Both solutions have advantages and disadvantages, such as security, availability, and scalability of the application. But trust in the supplier who 'manages' your data is also very important.
But the differences are not only in the technology. The costs between on-premise and cloud are also different. On premise, you often pay a purchase price for the software, and you often pay 15% or more for maintenance per year on the purchase price. The purchase amount typically depends on the functionality you use and the number of users. However, this differs per supplier. With a cloud solution, you pay a monthly fee. This is an all-in amount for usage, hosting and other services. Here, too, the monthly amount to be paid often depends on the functionality and the number of users.
Incidentally, with both solutions, the software does not become your property. You get the right to use the software, but it does not become your property. An exception to this is an 'Open Source' system, here you do not pay for the user right, but it also does not become your property. See also point 4 of this article.
2. Functionality
The range of functionality in an ERP system is extremely diverse. But the functionalities are also often offered as modules or apps, and you have the choice of what you want to purchase. You get the best user experience when all functionality is integrated in one package. You then really work in one package and do not have a different look and feel of the software for every app. There are also suppliers who offer apps, but these are not integrated, but form a link to your system. You suddenly have to deal with multiple suppliers of your software system. This means that the systems on both sides must be kept up-to-date to continue to communicate with each other. With an integrated system, you do not have this problem, and you only have to deal with the supplier of the software.
Many ERP systems are still very traditional and financially oriented. The packages are designed to present the correct financial figures. However, the current rapidly changing market demands more from an organization and direct customer contact is important and is becoming increasingly important. Look for an ERP system that also offers functionality that goes beyond sales, purchasing, stock and production, but also offers possibilities to manage your website and marketing.
3. Modern or outdated
Many ERP systems have been around for years and have been used for years by many companies. But just because the system is widely used doesn't mean it's the right package. Many ERP systems are so complex that they are almost no longer renewed, but only expanded. This often means even more complexity and a technically outdated system.
This can cause problems like;
- maintainability. The system is so complex and intertwined that adjustments in one place lead to problems in another (also known as regression)
- Not flexible. Adjustments to the system are not possible or are complex and expensive.
- Not a browser client. Every workstation has a so-called thick client. With every update, you have to update every workstation.
- Outdated and no clear interface. The whole look and feel of the system is no longer of this time and no longer recognizable and user-friendly.
- Accessibility. Making older systems accessible via the internet is often not easily possible.
When choosing a new system, get good advice about the underlying architecture, i.e., how is the system built and is it modern or outdated. If you don't do this, the growth of your company will soon be limited or slowed down by your system, while the system is supposed to help you.
4. Open-Source or Closed Source
Many ERP Systems are Closed Source (or called proprietary software). This means that the source code of the software is inaccessible to anyone. Not for the end user, but also not for a managed or implementation partner. The source code is the capital of the supplier, and it is heavily guarded. The revenue model of these suppliers is aimed at selling licenses, and copying of the software must be prevented for this.
For several years now, Open Source is emerging. Unlike Closed Source, the source code is available to everyone. Everyone can see how the software is put together and can modify it and use it freely. Often the software is free, but it doesn't have to be. The producer of this software can be a commercial company, but can also be a foundation. These companies make their money by providing services on the product. The idea is that if you work with a large group of people on the same product, you get a better product than the product is closed.
But perhaps the biggest advantage is the freedom to choose who you want to work with. You don't have to work with the manufacturer or supplier. The software is open, and you have the freedom to choose (with does not mention this vendor lock-in)
5. The Origin of the System
The strength of a system can often be derived from the history of the company and the system. There are systems that started as an accounting package and added functionalities over time. These packages are financially strong, but they sometimes fall short in other areas. ERP systems, for example, originated from the need to obtain a better financial overview or to be able to better plan a production process. There are also systems that arose from a project planning need. Often you can still see the origin of the system in the functionalities.
6. Niche systems
If you work in a niche market, there are often systems that have specialized in this. The supplier knows this market and the software is completely adapted to this. There are systems that are specially made for this niche market, but you also see many standard systems with a shell of functionality (often called verticals) specific for a certain industry. Which system is most suitable requires research into the specific requirements of the niche and whether the ERP system supports or can support this? A specialist in your market may be the best choice, but a new look can also be very refreshing at times.
7. The implementation partner
Although the range of systems is large and there are certainly large differences, the implementation partner makes the most significant difference. The system is a means to a certain end and not an end in itself.
Of course, the system must be suitable for the processes within your company. But implementing the software is a project and should be approached as such. The role that the implementation partner plays in this is crucial to the success of the project. So think carefully about whether the company that is going to set up the software for you suits you, speaks the same language and has its tracks, deserves in the field of software implementation and development.
Please let us know what you encounter with your choice for an ERP system.
How do ERP Systems differ?