For a long time, enterprise resource planning (ERP) software used to be affordable and accessible only to large enterprises. It required heavy infrastructure such as multiple workstations and servers, along with dedicated IT teams for maintenance.
But that’s not the case anymore. With cloud-based technology, ERP vendors can offer their solutions to small businesses as well. ERP modules are sold as standalone software or integrated as a suite, with the vendor managing hardware and technical maintenance.
Before investing in ERP software, small businesses must find out about the features, deployment options, important integrations, etc., so that you buy the right solution.
In this buyers guide, we’ve defined the core features of ERP software, the deployment options, the emerging trends, and critical questions that you must ask potential vendors before purchasing a solution.
Jump to the following sections for a quick look:
ERP software is software that helps businesses track the information flowing across all their departments and functions. It’s mostly used by business operators and project managers at organizations with multiple departments such as accounting, sales, purchasing, human resources (HR), customer support, inventory, and customer relationship management (CRM).
Usually, organizations utilize all the applications of an ERP system or choose a combination of applications. This depends on the business size, type, and requirements.
To select the right ERP software for your small business, the first step is to understand the different types of solutions in the market. Let’s look at the two major types of ERP solutions:
Generalist ERP software: This software is designed to address and adapt to the needs of various business processes across different industries. It offers greater customization and integrations. Usually, large enterprises prefer this software to meet the requirements of all their departments.
Industry-specific ERP software: This software focuses on just a niche or specific industry such as retail, construction, or distribution. It’s designed to match the exact requirements of a business, saving valuable time and investment.
Key question to ask your vendor before you buy: Is your ERP software suitable for my business size and for the kind of business I do?
After you’ve decided the type of ERP software for your business, the next step is to choose a deployment option.
GetApp’s website focuses on products that can be deployed via the cloud. Cloud-based tools come with lower up-front costs, faster implementation time, and automatic updates; they also better support remote use, scale more easily, and minimize the need for IT staff and real estate. However, in this guide, we’ll summarize both deployment models.
Here are the deployment options available to buyers:
On-premise deployment: These solutions are hosted on the organization’s in-house servers and accessible from the office network. They typically incur a one-time, upfront cost and charge on a per-user license basis. In addition, users must also pay for any future software upgrades (e.g., new feature releases).
Cloud-based deployment: This option lets you access the software using a web browser or native mobile app. Cloud-based solutions offer subscription pricing where the vendor charges as per a per-month or per-user per-month pricing plan.
Key questions to ask your vendor before you buy: What deployment options do you offer? What’s the pricing plan for each option?
To see the results of ERP software, you need to choose a solution that offers features to meet your specific needs. In this section, we’ll take a look at some common features that you should look for when shortlisting a solution:
Accounting: Allows users to manage their organization’s financial transactions with functionalities such as general ledger, accounts payable, and accounts receivable. Additional features include billing, sales receipts, invoicing, and other financial reports such as balance sheet, profit and loss statement, and cashflow statement.
Invoicing management in QuickBooks
Business intelligence: Allows users to analyze and report their organization’s business data, such as key performance indicators (KPIs), to make smart business decisions. Core functionalities include data mining, reporting, and analytics.
Key performance indicators in Hubble
Customer relationship management: This feature allows users to manage customer-centric tasks such as customer contacts details, customer service and support, help desk, customer feedback, customer tracking, and targeted marketing.
Customer contacts management in Zoho One
Human resources: Allows users to manage core HR functions such as payroll, personnel tracking, benefits administration, learning management, employee scheduling, employee time and attendance, talent management, performance review, and applicant tracking.
Personnel tracking in kpi.com
Inventory management: Allows businesses to track up-to-date information regarding their product supply. Users can automatically order, store, track, and manage inventory items and raw materials. The feature includes electronic item scanning, managing sales and purchase orders, product categorizing, and automatic reordering.
Inventory management in Brightpearl
Supply chain management: Allows users to track goods while they move from manufacturing units to distribution centers and finally to retail stores.
Product movements in Megaventory
Key question to ask your vendor before you buy: Does your product include features relevant to my business needs?
*Note: The applications shown above are examples to show a feature in context and are not intended as endorsements or recommendations.
To make the best use of an ERP system, select a product that integrates with the apps you use. Integration allows for real-time data flow between the different applications, eliminating the need for manual data transfer.
These are some integrations that you should ask about when selecting ERP software:
Product lifecycle management (PLM) software. This integration will allow you to track information regarding product design, production, and consumption. It will give your PLM software access to useful information such as production costs, supplier data, customer details, and shipping data. All this information can be beneficial in current product designs and upcoming product development projects.
Business management software. The ERP software should integrate with your business management software to help you execute tasks efficiently and eliminate operational errors. Businesses use this software to improve their daily tasks and activities. This integration will improve overall workflow management and performance measurement.
Geographic information system (GIS) software. This integration will help you manage and track information and assets located across a diverse geographical area. It can help you analyze your complete supply chain as well as track the flow of raw materials and finished goods.
Key question to ask your vendor before you buy: Does your product integrate seamlessly with the solutions being used in my business?
Now that you've read about the common features of ERP software and the important integrations, the next step is to evaluate the advanced features. We haven't labeled these features as “common”, but these could be important based on your specific business type.
Here are some of the advanced features for you to consider when selecting ERP software:
eCommerce integration. Allows you to integrate seamlessly with various eCommerce websites such as Magento, WooCommerce, Shopify, QuickBooks, Square, and Stripe.
Depreciation tracking. Lets you calculate the depreciation of your fixed assets based on different accounting methods (such as cash basis accounting and accrual accounting) and business models.
Multilingual interface. Changes the user interface into a language of your choice to eliminate any language-related barriers at work.
Key question to ask your vendor before you buy: How many of the advanced features in your product are relevant to my business?
You’ll definitely want your ERP software to last for as long as possible. To ensure that you select the right vendor, read about some of the market trends. If your vendor is leveraging these trends, it could give you a competitive edge in the market.
Cloud ERP adoption is on the rise. Many small and midsize businesses are opting for cloud deployment as it’s affordable and has low upfront fees. Cloud-based ERP systems are an attractive alternative to traditional on-premise ERP systems. The implementation is quicker, the initial investment is lower, and businesses don't require full-time IT teams to maintain the hardware and servers.
Mobile ERP support sees growth. The demand for mobile access in ERP systems will continue to grow for all ERP solutions. This will lead to real-time access to information and, as a result, enhanced productivity.
We have referenced the following documents while creating this guide:
GetApp enterprise resource planning (ERP) software catalog (Date accessed: 2/12/2019)
ERP Software, Capterra (Date accessed: 2/12/2019)
*Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations, obtained from sources believed to be reliable at the time of publication.