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9 Questions You Should Ask When Choosing an ERP Provider

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So, you’ve been charged with validating and selecting a new ERP system. Your primary goal, of course, will be to select a system that meets all of your technical requirements. Inventory Management? Check. Fixed Assets? Check. Payroll? Check. As you’re searching for the system that checks all of your boxes, it is imperative that you also vet and select a partner that will not only support you, but who has your best interests at heart.

We’ve compiled a list of the top 9 questions you should ask potential ERP providers as you’re searching for the right fit.

1. How long will it take for my system to get up and running?

When you’re selecting a new ERP system and a partner to implement it, your number one concern is likely to be cost. But beyond that, you’re going to want to find out how much of a disruption this system transition will be. Central to your examination of disruption will be questions about the length of time of the implementation.

Truthfully, there is no one-size-fits-all ERP implementation. Every organization operates differently, even within industry verticals. However, your ERP provider should be able to provide you with a narrow estimate of the time that it will take to complete your project. When I say narrow, I mean that your provider should be able to give you a detailed project plan and a specific timeframe (i.e. “We expect that this project will take 7 to 8 weeks”). If you encounter an ERP partner that is unwilling to provide you with a reasonable timeframe, you should expect additional scope creep and escalating costs down the line. Ambiguity should be a red flag.

Instead, opt for a partner who provides you with a narrow time range and a detailed project plan. If that partner provides fixed-price implementations, that’s a good sign that they take scope creep very seriously.

2. How much do you charge for upgrades?

If you go out and search for “ERP upgrade”, you’re probably going to get a lot of results with headlines like, “Make your ERP upgrade as painless as possible,” or “How to know if you upgrade or re-implement your ERP system.”

There’s a reason that these are the articles that appear toward the top of this search. For years, companies have had to follow this script when purchasing a new ERP system:

  1. Spend a lot of time and money (and effort) on implementing the new system.
  2. Get as much time as possible from that implementation.
  3. Spend more time and money (and more effort) down the road to upgrade the existing system or scrap it altogether for a brand new implementation.

There’s a few obvious issues with this type of ERP upgrade strategy. First and foremost, it’s expensive. When you budget for an ERP implementation, you want to get the most value from that implementation. This pay-an-arm-and-a-leg approach to ERP upgrades incentivizes companies to maintain outdated systems.

Listen, updating an ERP system can be stressful for your accountants and operations people (and for you). It’s hard for staff to change the processes that they are used to following a system update. Inevitably, though, you are going to want to have that upgrade in order to take advantage of new features and security updates. It is much easier for staff to adjust to small, incremental updates than it is to jump ahead 4 versions on an ERP system. Not to mention that when you finally do decide to make that jump, you’ll need to choose between upgrading the system as-is or re-implementing to account for the process changes that have come about since the initial implementation (more on that when we get to #5).

When you ask your prospective ERP provider how much they charge for upgrades, they should be able to provide you with a specific cost for the upgrade. If it seems unreasonable, it probably is. If your partner is a cloud ERP partner, you should be able to reasonably expect free upgrades with your solution. Regardless, upgrade cost will become very important sooner than you might expect and it’s important to learn upfront what you can expect to pay down the road.

3. Do you offer a cloud solution?

This is an important question to ask when you are vetting potential ERP providers. If a provider tells you that they only deal with on-premises ERP deployments, you should proceed with a healthy amount of skepticism. This may indicate that this provider is slow to adopt and deploy new technologies, despite the potential benefits that those technologies bring to their clients.

Let’s talk about a few of the potential benefits of moving to a cloud ERP solution:

  1. Lower cost of ownership. Cloud solutions allow you to leverage shared server architecture and maintenance cost. If you choose to go with an on-premises ERP implementation, be aware that you will need to purchase your own servers, pay someone to perform maintenance on the servers and your system, and replace those servers every few years.
  2. Increased scalability. When you choose a cloud solution, you can more easily adapt your system to organizational growth and contraction. As your company grows, simply request additional capacity. You don’t have to worry about running out of server or drive space.
  3. Less downtime. Every system requires maintenance from time to time. When your entire system is installed on one machine, your provider will need to kick you out while they perform that maintenance. An experienced cloud ERP provider, however, will distribute your system over a series of smaller machines, providing you with redundancy and them with the ability to perform system maintenance without taking your system down. Bonus: redundancy provides you with additional security. If one of the machines that your ERP system is installed on experiences technical issues, you can rest assured that your ERP system will still be available on the other redundant machines.

Simply put, when you choose a cloud solution, you choose a cost-effective, secure, and scalable ERP solution.

4. Do you offer a subscription option?

In the past, it was difficult for many small and mid-sized companies to afford enterprise-level accounting systems. This was largely because those companies had to have cash on hand not only for the upfront implementation and licensing costs, but also because they had to pay up to 20% of the initial licensing cost every year to maintain their annual renewals.

In the age of cloud, however, access to robust ERP has become much more open. This is largely because many ERP providers offer a subscription option, whereby companies pay for their licensing monthly rather than annually. This spreads out the cost of the system over time, making it much more affordable. Perhaps more importantly, companies will only pay for the number of users that they actually have each month. That means that if you have a user leave suddenly, you can drop that user from your subscription for a month or two until you find a suitable replacement, and you won’t eat the cost.

5. How often will you meet with me to discuss my system?

One of the most common comments that I hear when I speak to clients look to switch ERP providers is, “I feel like there is so much that this system can do and we aren’t using it to its full potential.”

Your provider’s goal should be to make sure you never feel in the dark about your ERP system. The best way to reach that goal is for your partner to meet with you regularly to answer questions and make sure you are getting the most out of your system. Without that, your provider will be clueless as to how to best fine-tune your system to fit your needs as your business grows and changes. I recommend that you select a provider that will meet with you at least once per quarter to see how everything is going and re-evaluate your solution.

6. Can you integrate with my other systems?

Automate, automate, automate. If this is your goal for your new ERP system (and it should be), then you’re likely going to want to integrate your other systems with the new accounting software so as to eliminate manual data re-entry. Even if you choose to set up this integration down the road, you need to find out upfront if your partner is experienced with configuring and supporting the particular type of integration you’re looking for. That way, when the time comes, you know that the team that helped you configure your system (and who hopefully knows the most about it) will be ready to help take it to the next level.

7. How does support work?

 

The post 9 Questions You Should Ask When Choosing an ERP Provider appeared first on ERP Software Blog.

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