Best ERP Software

Introduction of What is the Best ERP Software

Most companies know that Enterprise Resource Planning (ERP) software brings about many benefits. But Enterprise Resource Planning (ERP) Software and vendors selection and evaluation can be a hit and missed process.  Despite that everybody wants to have the best ERP software, some of those who chase the best ERP software may end up with software that perform much lower than their expectation.

So, is there a Best ERP software?  And, how to select and evaluate your Best ERP software?

This article looks at the myths about the Best ERP software and recommends practical criteria to evaluate your Best ERP software.

The Myths of Conventional Criteria for Best ERP Software

When people talk about the best ERP Software, some prominent brand names will instinctively come to their mind.  Usually, some conventional criteria will be mentioned when people talk about the Best ERP Software.  These criteria include:

1. Awards
2. Analyst Ranking
3. Tiers
4. Vendor Size
5. Prominent Customers
6. Number of Customers or Market Share

Let me explain why these conventional criteria are actually myths.

Awards

Many of the vendors like to mention the awards that they had received.  Some of these commonly mentioned awards are awards such as partner of the year awards, prestige brand awards, etc.

Marketing and Sales Driven

Nearly all the awards are marketing and sales driven.  Either they are created for the principal to motivate their distributors or are paid awards where money are paid that directly or indirectly leads to these awards.

If you look at the criteria of these awards, they are either not relevant to your needs or are criteria that the evaluators of these awards cannot realistically assess.

Irrelevant

If you study the criteria of these awards, most of these will not bring better outcomes to your company.  The main value-add probably is a better branding effect to the vendors and some time to your company.

Challenging to Assess

Who has the ability and resources to assess the vendors and their software in detail?  This is very time-consuming and impractical in reality.

Sponsored

Most of the organizations that give the awards often have financial relationships with the candidates who received the awards.  It is difficult to be impartial let alone to have accurate knowledge to assess the ERP software.

Analyst Ranking

The other commonly used criteria by the vendors to show that they are the best ERP software is the ranking of their software by analysts.   This is a myth as there is no one person who can know enough up-to-date detailed information on multiple ERP software to compare them.

I have been working hands-on with 7 ERP software throughout my ERP career.  Even the best ERP functional consultants that I worked with previously will discover older functionalities of the same ERP software that they have been working on for many years.  These were mostly functionalities that they did not know that they exist or did not understand how to apply previously.  It takes years to train a functional consultant to have sufficient competency in one ERP.  So, how are you going to have someone who knows many ERPs in detail in order to rank them accurately?  In particular, to have up-to-date knowledge of all these ERPs at the time of assessment.

I had even come across an article from an analyst who mistaken the history and functionalities of an ERP product with another closely related ERP product.  Fortunately, I was working with both ERP products during that period to be able to spot the mistake.  For others who are not familiar, they will probably believe that article because the person was an analyst.

Tiers

Some ERP salespeople will try to convince you that your company fits into tier 1 and so, their ERP is best suited for you because they are a tier 1 ERP.

In general, ERP or Enterprise Resource Planning softwares are categorized into tier 1, 2, and 3.  Tier 1 is for large enterprises and organizations and tier 3 is for smaller companies.

Different Definition

The tier categorization is mostly based on company revenue.  However, even that revenue value for tiers is not standardized among the analysts.

Revenue tier alone is not a correct determination of the best ERP software suitable for them.  More importantly, it is the volume of the transaction, the nature of the transaction, and the company requirement. 

Different Requirement

The best ERP software for higher transaction volume will need the ability to handle high transaction volume through a more robust database and software architecture.

The best ERP software for different types of business transactions will depend on the strength of the ERP.  Whether it is to handle manufacturing, projects, services, etc.

This is never a rigid fit.  Often, even tier 1 companies use a combination of different tier ERPs within their organization to reduce costs and meet differing needs.

Functionalities

Comparing functionality is another common criterion for selecting the best ERP software.  Often, a listing of required functionalities with weightage assigned is prepared by consultants or evaluation committees to aid the selection process.

Difficult to Compare at High Level

It is difficult to compare functionalities at a high level.  For example, sales order functionalities in one ERP may be executed differently from another ERP.  They may be different niche strengths and weaknesses.  So, a “yes” tick in the functionalities list of one ERP may not be equal to the “yes” tick of another ERP for the same criterion.

Paying for Functionalities that will Not be Used

Do you really need the complex functionalities of your selected best ERP software?  Does more comprehensive functionality better?  Will your user use these functionalities well?

More Functionalities = More Complexity

The more complex the functionality, the more setting, complexity, and time needed for implementation.  Sometimes, even the consultants were challenged to properly set up these functionalities.

At times, the functionalities that were demonstrated during the selling process may not be implemented during the project implementation.  Different consultants may have different preferences in their solutions and when more information is revealed during the project implementation, the final solution may change.

Prominent Customers References

I once worked in an ERP company that claimed to be the best ERP software for a particular industry and they had many customer references to back up their claim.  Years after I worked with a few other ERPs, I realized that the previously claimed best ERP software for that particular industry actually did not have the best functionalities to be used for that industry.  There are other ERPs that have strong functionalities for that industry although they did not claim to be the best ERP software for that particular industry.  This is just the ERP industry marketing strategy of “Verticalization“.

It is most important to understand how these reference customers utilized the software instead of just taking it on the surface.

Number of Customers or Market Share

Another common criterion for the best ERP software that the ERP salesperson like to highlight is the number of customers or market share of their product.

Does the bigger the vendor, the better their ERP Software?

Firstly, the vendor may have multiple products that contribute to their revenue.  Your shortlisted product may only be a small part of their revenue contribution.

Secondly, ERP for smaller companies tends to have more customer count.  And, ERP for big companies tends to have higher revenue.

Software History

Conventional wisdom makes us believe that the older the company, the better it should be.

Historically, there are many well-known ERP software that were acquired or went dormant.  Some of these include Symix, PeopleSoft, Baan, and many more.

The core of ERP software is the execution of the various business flows.  These processes will become more and more comprehensive, huge to upgrade or maintain over the years.  It is thus very time-consuming and expensive to rewrite the codes of these processes to new technology or platform.  So, most older ERP companies choose to keep these old core within the same old technology and add layers of new technologies on top of the old core to make it appear modern. The downside is that it will require more powerful and expensive hardware to drive this old core technologies through the modern layers of new technology.  Of course, this is often marketed as an advancement in technologies.

On the other hand, a new ERP does not make it better as at the other extreme is the consideration of the survivability of this newcomer in the highly competitive ERP market and the lack of depth of the software.

When we think of the best car in the world, some big names will appear in our minds.  However, how many of us actually buy those “Best” cars?

So, in reality, there is no one Best ERP Software, but better ERP software that meets the needs of your company.

Practical Criteria for Best ERP Software

If the conventional criteria for determining the best ERP software have serious drawbacks, then what should be the criteria for selecting and evaluating your best Enterprise Resource Planning (ERP) Software?

There are some practical criteria for determining your best ERP Software:

1. Software Capability to Enhance your Business Processes
2. Implementation Capability of the Vendor
3. Timeline and Budget
4. Availability in your Region
5. ROI – customization for year-end closing
6. Sustainability

Let us go through them in more detail:

Software Capability to Enhance your Business Processes

This is not just about the individual functionality of the ERP Software.

You should try to evaluate the ERP Software as close to your actual business operations by designing a realistic demo flow.  This will also help you to understand the ability of the consultant in suggesting improvements or highlighting how the ERP Software enhances your business processes.

Implementation Capability of the Vendor

It is not just about the ERP Software, but should also consider the ability of the consultant to deliver the best solution that caters to your business needs.

The combination of the best ERP Software with incompetent consultants and project managers is the formula for a project disaster.

Timeline and Budget

How we wish that we have unlimited time and budget.  In reality, these are important criteria for selecting our best ERP software.

The longer the project lasts, the higher the risk for uncertainty such as project personnel attrition and change in project scope.

Availability in your Region

Why is the availability of consultants and software in your region important?  Firstly, this determines your long-term switching cost when you need to change your consultant.  Secondly, it affects the cost of the availability of personnel resources.  Thirdly, it demonstrates the degree of localization of the software in your region.

ROI

Every investment decisions need to be justified by its ROI (Return on Investment).

Years ago, I have a customer asking for customization for automating the year-end closing process.  After finding out more information, I realized that this process only took them one day per year to carry out with their existing method.  Furthermore, I calculated that it will take them more than 7 years to break even.  Eventually, I advised them not to carry out this customization.

So, think carefully when you want to commit to customization through programming.  It is not just the initial costs, but also the recurring costs for support and future upgrading.

Sustainability

There is no point in acquiring the best ERP software and discovering that your ERP vendor is no longer available to support you a year later.

Or, you can no longer afford the recurring costs of keeping the system.

A comprehensive ERP evaluation and selection process does require special knowledge and experience so as to minimize the risk and achieve a lower Total Cost of Ownership (TCO).

Conclusion on Best ERP Software

There was a famous sales pitch from a well know ERP company: 

“Nobody got fired by choosing our XXX ERP because we are the best.”

ERP selection and evaluation is not an exact science. Often it is more an art.  Just like choosing a car of your liking, there is no Best ERP software.  However, there is better ERP software that suits your current and future needs.

Having realistic expectations and a vision for continuous business performance enhancement will drive you toward the right path of finding the Best ERP Software that is suitable for you.

Learn More about the author, Raymond Yap, and how we can help you.in

#erp #erpsoftware #erpselection