ERP is not a four-letter word
By Randolph P. Johnston, M.C.S
March 16, 2023
Accounting software has evolved into a web- and mobile-enabled solution for various industries. In addition, vendors have added automation for core functions like accounts payable. Notably, Tier 1 Enterprise Resource Planning (ERP) features from the providers SAP and Oracle have become available down-market. While ERP solutions have traditionally been challenging to implement because they are complex and comprehensive, frequently with the gnashing of teeth, smaller ERP systems are easier to implement successfully. Selecting an ERP system will provide cost and operational benefits instead of a building block approach using an entry-level system that grows with add-ons like QuickBooks or Xero.
What is the right level of ERP software?
The simple answer is comprehensive enough to do your job. While products are commonly classed from Tier 1 (enterprise) down to Tier 5 (entry level) in our Accounting Software Pyramid, you should select a system that fits your needs and accommodates your growth for the next five to seven years. You may be surprised to learn that a Tier 2 or Tier 3 system may cost less to own than a Tier 5 system with add-ons. As more robust features are needed, you’ll find that Tier 1, 2 or 3 systems will be required to meet your needs. However, a PROP (Process Resource Operations Planning) Tier 4 product may have sufficient features for today’s needs and future growth if you have a small business. Common PROP solutions like AccountingSuite, Spire Systems, Zoho One, or Zoho Finance Plus may be all you need to accommodate growth to $10-50M in sales or more.
ERP features are available starting at Tier 1 through Tier 4 (PROP) solutions. “Mid-market” ERP solutions are in Tier 2-4. Leaders in the mid-market include Acumatica, Aptean, Dynamics 365, Epicor, Exact Globe+, Infor, Oracle NetSuite, Sage Intacct, SYSPRO and Workday. ERP features that may be helpful to your business include CRM, workflow, omnichannel retail/point of sale, distribution and manufacturing. In addition, more capable supply chain tools and analytics are available in more sophisticated products or can be added with third-party solutions. A good indication that you have more ERP features inside the system is that fewer third-party add-ons are needed for a complete solution. Furthermore, minimal additional reporting in spreadsheets is required when the system is doing its job.
How do you select your ERP system?
Consider the needs of your business and identify the top 10–15 things a new system must do for your business. Furthermore, list five to seven things you don’t want to lose from your existing platform. Set these items aside so you can use them as a sanity check later in the process during the final selection. It may be wise to choose an ERP project committee representing all operational interests in the business. Consider who on your team should be a project manager throughout the entire process. While a PMP certification may be helpful, it is not mandatory.
Independent ERP consultants are very difficult to find, and there are few in the market. Consider engaging with these consultants for your needs analysis, ERP selection and contracting. ERP vendors will want the process to go faster so they can close deals, but it will be in your best interest to proceed judiciously. Develop a budget and a schedule that you can use for management.
Next, review or create, if needed, process maps for your organization. The process maps can be used for a gap analysis when reviewing systems. Any installer will require these process maps to implement effectively on any platform. After you have process maps, you can create an RFQ describing your needs and progress to initial overview demonstrations. However, consider one word of caution. Be thoughtful about contacting resellers of products because they may claim your inquiry as a lead, tying them to your company potentially without the appropriate skills for a successful implementation.
How do I find the best ERP solutions?
So how do you discover and understand the best ERP solutions? Consider contacting peers in a similar business to discuss your needs and situation. They are likely to provide you with valuable insights and free advice. While there are more options, consider these five approaches:
- Peer recommendations within your industry or association.
- Educational events, such as the K2’s Technology Conference from the MNCPA.
- Anonymous web search analyzing reviews.
- Vendor conferences for your primary applications assuming that you’ll find third-party sponsors, implementation partners, and other users to discuss solutions.
- Consulting partner recommendations.
You have an application-rich environment to spot new ERP options at the Technology Conference with sessions like Accounting Solutions and Add-Ons For Small Businesses, Accounting Solutions: Mid-Market, Simplifying And Economizing Your Tech Stack, and Kicking It Up A Notch With KPIs.
An ERP implementation done correctly is beautiful
ERP options are becoming more capable than ever. Could you replace or add tools to your ERP to benefit the business? What can you do to eliminate unnecessary work and optimize work for everyone? If you follow the aforementioned steps, you can identify options for ERP solutions and select a solution. An ERP implementation done correctly is a beautiful thing. A poor ERP selection and implementation lead to unnecessary four-letter words. Protect your organization by carefully selecting, contracting, and implementing an ERP that fits your needs.
Randy is one of the shareholders of K2 Enterprises. At K2, Randy focuses on product reviews and developing technology strategies for K2 events. In addition, he is a consultant and advisor for technology companies and businesses, including CPA Firms. You may reach him at randy@k2e.com. Learn more about K2 Enterprises at www.k2e.com.
