What to look for when choosing an ERP: settle it in your business before the vendor call

You have talked to three vendors. All three demos went by with clean screens, fast reports and plenty of modules. You have to decide, and all you have is the impression that “they all looked good.” Managers are pleased, vendors are keen; but your orders, your stock codes and your approval chain did not appear in any demo. That is because a demo shows the vendor’s process, not yours. An ERP (enterprise resource planning) system is software that brings processes such as sales, purchasing, stock, production and finance into a single data flow; and the right choice depends less on how nice the screens are than on how closely it fits the way your business works.

This article is a checklist of what you need to settle in your business before talking to a vendor. It contains no product, price or competitor comparison.

Is ERP the same as accounting software?

Accounting software keeps financial records: invoices, collections, payments, the chart of accounts. ERP also covers the operation that produces those records: quote, order, purchase request, stock movement, production order. The difference shows in the flow. In accounting software, an invoice is entered after the work is done; in an ERP, the order, shipment, stock deduction and financial record are parts of the same flow. In practice many companies keep working with an outside accountant and accounting software even when they use an ERP, so the data flow between the ERP and the accounting software is one of the first questions to ask.

What is an ERP system for an SME?

ERP for an SME means ERP that does the same job with a smaller team and less formality; but what is decisive is the number of processes, not the size of the business. A fifteen-person manufacturer can manage more processes than a twenty-person trading company. Instead of “is it suitable for an SME?”, ask “which processes that I run today with Excel and WhatsApp are breaking?” That answer decides your ERP need.

Criteria to settle before talking to a vendor

Of the eight rows in the table, the criterion discussed least but causing the most trouble is user adoption. The person who buys the system and the person who will use it every day are often not the same. If the warehouse worker, the sales rep and the production supervisor do not take part in the selection, the system is set up on paper but people go back to Excel in the field. Bring at least one end user to the demo and ask them “can you do your job on this screen?”

A ready-made package, or an ERP adapted to your way of working?

The plus of a ready-made package is familiar screens, a faster start and a common structure used by similar businesses. The minus is that when your process does not fit the package, either the process has to change or Excel files remain outside the package. An adapted ERP is built around your processes, approval structure and integrations; in return it needs time for needs analysis and a person to make decisions, and as the scope grows it becomes a project that has to be managed. Neither is right in every situation; look at how much of your processes is standard.

YazSis’s ERP approach is closer to the second group. The page aims to bring sales, purchasing, stock and warehouse, production, finance and management processes together in the same data flow, according to the business’s real working model. The principles are summed up under four headings: keeping the existing system (completing missing processes without ripping out a working ERP), extending with custom modules, joining data through API and database integrations, and measuring and improving with management reports. For a workflow the standard product does not cover, the custom software side comes in. Let us also note that if your processes are largely standard, a ready-made package may take less work.

How long are Excel and accounting software enough?

In a business with few products, a single warehouse and a few employees, Excel and accounting software are perfectly adequate; in that case buying an ERP brings unnecessary complexity. Look again once the signs that should put it on the agenda start to pile up:

• The same customer or product information is entered in three different files and does not match.
• The stock count and the recorded stock keep drifting apart.
• Information goes from sales to production or purchasing by word of mouth; the question “where is that order?” is answered by phone.
• Cost and price calculations sit in a file on one person’s computer.
• The management report takes one person days and is out of date by the time it appears.
• Approvals stay in e-mail or WhatsApp, and who approved what cannot be found afterwards.

Where should I start choosing an ERP for a 50-person manufacturer?

A hypothetical example: a manufacturer with fifty employees that buys semi-finished goods and assembles them. Orders come by phone and e-mail, stock is in Excel, production orders are on paper, and accounting is with an outside accountant. The steps to take before talking to a vendor are:

1. Draw the delivery line on one page: quote, order, purchasing, production, shipment and collection.
2. At each step, mark the tool and the waiting point: who uses which file, and where does the work wait?
3. Pick the two or three steps that cost the most time and errors: let the scope of the first phase be these, not everything at once.
4. Name the data owners: who holds the stock codes, the customer list and the bills of materials, and who will clean them?
5. Write your own scenario for the demo: show the flow of a real order, with a real bill of materials and a real stock shortage.
6. Score the criteria: apply the table above to the vendors with the same questions, and separately assess whether users will really use the system after go-live.

In this example, a reasonable first phase might be to connect stock and purchasing with the production order in the same flow: material counted in the warehouse feeds the purchase request and the production order. Sales, finance and management reports are added to the same data infrastructure in the second phase. Your process map decides which order is right for you; another business’s order may not be right for you.

The most common mistake is keeping the scope wide from the very start. Projects that try to move everything at once run into user habits. Settling the most painful process first and adding the others to the same data infrastructure later reduces both the risk and the training load.

Ask the vendor for it in writing before you decide

What is said in a demo is spoken; what counts in the project is the written scope. Before the decision meeting, ask for written answers on these six points:

• Which processes will go live in the first phase, and with which user group.
• The scope of data migration and who is responsible for cleaning.
• The list of systems to be integrated, the direction of data and who will be notified when there is an error.
• The training and go-live plan; how much support each role will get.
• How the permission matrix will be set up and how change records will be kept.
• How a new need that comes up during the project will be handled and approved.

This list is not meant to test the vendor but to make sure both sides are talking about the same project. If the answers are vague, that is important information too: a vague scope becomes the most disputed topic later on.

If you would like to discuss your ERP need together with your own processes, you can request a meeting from the ERP page.