Choosing and Implementing the Right ERP System for Your Business
Dec 18, 2024
Enterprise Resource Planning (ERP) systems should simplify and integrate business operations, making life easier for your business by unifying processes like accounting, sales, and supply chain management into a single platform. That’s the idea, anyway – if only it were that simple. Many businesses find their ERP systems falling short of expectations—becoming sources of frustration instead of solutions. This happens when systems are poorly adopted, underutilized, or misaligned with a company’s needs.
Choosing and implementing the right ERP system is about more than just the technology. In fact, we could argue the technology aspect shouldn’t even be the first consideration. The first essentials in considering an ERP are addressing cultural challenges, understanding your business’s needs, and setting up a process that ensures success from the start. Here’s how to evaluate your current ERP or choose a new one, implement it effectively, and make sure it delivers on its promise.
Understand Your Current ERP System
Before deciding to switch systems, take a close look at what’s not working with your current ERP. Is it limiting scalability, causing inefficiencies, or failing to integrate with other tools? Larry Bomback, a ProCFO with deep expertise in ERP systems, says many frustrations stem from a lack of training or understanding of the existing system.
“Usually, your existing ERP can solve the issues you’re identifying if you had better training or added enhancements,” says Bomback. He advises starting with a review of your pain points. If the system needs to be fully utilized, identify whether the problem lies in the software or its implementation and adoption. You may already have what you need and only require a fresh perspective on how you’re using it.
Evaluate Your Business’s Needs
If you are considering a new ERP, start by defining your business needs from the system. Start by engaging stakeholders across departments—finance, sales, IT, and anyone else who relies on ERP functionality. Use this process to identify pain points and create a list of needs and priorities.
- Must-Have Features: These are non-negotiable capabilities critical to your business’s success, like integration with other systems or specific reporting capabilities.
- Nice-to-Have Features: These are desirable but not essential. They can enhance functionality but shouldn’t overshadow your core requirements.
By creating a weighted matrix of these features, you can objectively evaluate potential systems, ensuring that critical needs carry more weight than optional extras. You won’t satisfy every person or department, and that’s not the point. Get enough important input so there’s buy-in on decision-making, an understanding of any compromises, and clarity on the path ahead.
Avoid Common Pitfalls in Choosing an ERP
Sales situations with ERPs can be tricky. Highly motivated salespeople will do a fantastic job showing you all their product’s incredible features and how exactly you’ve always needed it. But…well, maybe you haven’t. Do you need all those features you’ll be paying for? And what about those you do need but need to be added to the package?
- Avoid the temptation to buy based on future promises. Vendors often sell features “coming soon” or on the product roadmap. Treat these claims skeptically and focus on what the system can deliver today.
- Similarly, don’t overbuy. Some businesses select systems with extensive features they may never use, leading to unnecessary complexity and expense. Instead, choose a system that meets your current needs while offering room to grow.
Address Cultural Challenges
The success of an ERP implementation often hinges on cultural adoption. Resistance to change, reliance on outdated processes, and poor training can derail even the best systems. Technology alone can’t solve organizational problems.
To address these challenges:
- Engage Stakeholders Early: We talked about involving stakeholders, but involve employees early and from all departments to understand their workflows and challenges. Just being involved helps people feel a sense of ownership in the process.
- Create Buy-In: Show how the system will make their jobs easier and improve their processes.
- Focus on Training: Implement a “train-the-trainer” model, where a small, diverse group of employees becomes experts and trains others in smaller, targeted sessions.
Comprehensive, one-size-fits-all trainings often fail because they need to address specific departmental needs. Ongoing training that’s better customized to your particular issues ensures teams understand how to use the system effectively in their roles.
Build the Right Team
Successful ERP implementation requires the right team to guide the process. This team should include:
- A project leader from a relevant department like finance or sales.
- Representation from IT to manage technical requirements.
- Department heads or budget managers who will use or rely on data from the system.
The CFO is critical in ERP implementation, aligning the system with financial and strategic goals. They identify key must-haves like reporting capabilities, system integrations, and cash flow tools while managing the budget to balance costs and long-term benefits. A CFO bridges gaps between departments, unites stakeholders, and ensures the ERP effectively supports operations across the organization. If you don’t have a full-time CFO, or your CFO lacks experience with ERP implementation, a fractional CFO can provide this expertise with flexibility to keep the project on track while internal teams manage day-to-day responsibilities.
For larger or more complex implementations, consider hiring an external consultant to keep the project on track. Just be sure they approach the process impartially, without bias toward specific systems.
Plan for the Long Term
ERP implementation is not a short-term project, so get comfortable. For most businesses, the process can take 12 to 18 months, including evaluation, selection, and rollout. Be realistic about timelines, and don’t rush the process.
After implementation, continue to invest in training and system optimization. Too often, businesses treat ERP adoption as a one-and-done event, leading to underutilization over time. Regularly review how the system is being used and adjust as needed to make sure it’s evolving with your business.
Make an Informed Decision
Choosing and implementing the right ERP system requires a balance of strategic thinking and practical execution. By understanding your needs, addressing cultural challenges, and building a capable team, you can avoid common pitfalls and set your business up for success. With the right approach, your ERP system can deliver on its promise to make life easier—streamlining operations, improving efficiency, and supporting your organization’s growth.
