Top 5 Mistakes When Choosing ERP-MRP for SMBs
What are the top 5 mistakes when choosing an ERP/MRP solution for SMB company? Which ones can you easily avoid? Which are the key elements you need to consider when choosing an ERP/MRP for your company?
The introduction of a new, or replacement of an existing ERP / MRP system is one of the most important decisions SMBs make during the year. This process is very stressful, strenuous and often ends in failure. One joke could explain the challenges of choosing business software:
“Nothing is easier than quitting smoking, I quit it 50 times.”
Based on our experience, in this text, we will explain the most common mistakes that cause SMBs to make the wrong choice.
1. The choice is not made by the owner or top manager
According to their own “job descriptions”, the owner, CEO, GM, or top manager are very busy. It can be said that their time is the most expensive in the company. Leaving or delegating the decision to choose an ERP / MRP software solution to its subordinate employees will result in a high cost at best case.
Is the time saved by the owner (or top manager) more valuable than the wrong choice?
Parameters based on which the owner (or top manager) decides and the employees are diametrically different.
Parameters important to the owner (or top manager):
• New value
• Productivity increment
• Price/quality ratio
• Saving labor
• Long-term investment, long-term benefits
• Pragmatic feature “checklist”
Parameters when an employee decides:
• Implied additional liability, in addition to existing obligations
• Test only the top 5 solutions
• Always decides for the most expensive, due to lower risk
• It’s not directly his money in question
• Search for a replica of an existing system because it already has a built-in position
• Focuses on their own personal benefits
• Discredit any system that could potentially jeopardize his position
• Unrealistic feature “checklist”
Conclusion: In each part of the selection, the owner or top manager must be included.
ERP / MPR solutions are one of the most complex software solutions, and their complexity itself requires a deep and thorough analysis of each process. It’s impossible to do it in the short term.
The biggest trap is if you have short deadlines for choosing and implementing a new solution.
In practice, it happened that we were contacted on December 20th, with the wish to start applying the software from January 1st!
From our experience, for this kind of software and in the most ideal case, it’s impossible to make the choice under just 3 months.
Our recommendation is to make your selection in the period of reduced business activity (for example, off-season), because then you will not be pressed by deadlines.
When choosing a solution, you need to compare in detail your needs with the functionality of the solution.
On this link, you can see the ERPAG features list: https://www.erpag.com/features, and you can open a trial for free to fully explore our solution.
3. Unwillingness to compromise
There is no “magic” software that will cover all the processes in the way you have imagined.
“Typical” software such as ERPAG are designed so that they can be used by multiple users, each procedure is analyzed, there are as many common points as possible. When creating a procedure (or features), it is taken into consideration that their fusion and usage is compatible with as many users as possible.
It happened to us that the entire implementation reached its downfall due to the unwillingness of the user to change his habits even for the one “millimeter.”
In one implementation of the calculation of earnings, in our form, the coefficient was entered per hour, while the user insisted that it should be entered in full amount for a month. Even with our explanation that this information is entered only 12 times a year, the user’s response was that the management provides them a report with monthly amounts and that they do not want to calculate the coefficient by the calculator each month! We know that the user is always right, but the price of such change would only be paid off after 1000 years.
“Tailor-made” solutions are the most expensive and virtually inaccessible to SMBs. Through the joke, they say that the development of such a solution is more expensive than the worth of the SMB company that seeks such solution.
SMBs companies must be prepared for compromises. If a solution covers 80% of your processes, then you are on the right track.
4. The most expensive solution is the best one
If that was the case, everyone would drive “Rolls Royce”.
By choosing an expensive solution you did not get a guarantee that the system will suit you.
With such a choice you will get a system that is more complex than your needs.
Such a solution is designed for “enterprise” companies, whose organization is complex, having specialists whose only job is working in the information system. In SMBs, working in the information system is one of the operations (often additional) that the operator is working on during his regular working hours.
These are two completely different concepts, it is impossible to “downgrade” the solution provided for the “enterprise” company and apply it to SMBs. Nor it is possible to “upgrade” SMBs software solution for the enterprise.
It’s like buying a truck and a pick-up vehicle. If we need delivery around the city, we’ll buy a pick-up, we certainly will not buy a big truck or “Rolls Royce”.
Until the emergence of “cloud computing,” ERP / MPR solutions were inaccessible to SMBs, primarily due to price.
In our blog, we explained how it is possible for us to get on the market with a good price: https://blog.erpag.com/2019/04/mrperp-app-from-49.html
5. Choosing an “open source” solution or a start-up company
With every emergence of new technology and the occurrence of “cloud computing,” “start-up” companies start to pop up.
If you are planning a long-term use of an ERP / MRP solution, the choice of a start-up company is quite risky because 90% of the start-up companies get shut down.
The first goal of a start-up or open source solution is to reach as many users as possible. Their funding is not from profits, but from donations or investors. The ultimate goal is the sale of users or acquisitions from already established businesses.
Creating an ERP / MPR solution on the cloud platform itself is not revolutionary. Almost all major companies have launched new “cloud” versions (for example, Intuit QuickBooks: https://quickbooks.intuit.com/). We do not expect major players to overtake start-up or open source companies. According to our estimation, in the upcoming period, we expect “quenching” of a lot of ERP / MPR solutions.
ERPAG has evolved from MS-DOS, through Windows, and the current Cloud-Based version. In all these phases, it was financed and developed from its own profits. We were established in 1996 and our plans have always been and will be long-termed.
2019. ERPAG Inc