How to get the choice of your company's ERP right

Changing ERP is one of the most expensive decisions to undo in a company, because it touches sales, purchasing, warehouse, production and accounting at the same time. You have to choose with a method, and the method starts by describing how you work today. These are the seven steps we follow with the companies that consult us.

1. Describe your processes before looking at programs

Before asking for demonstrations, write down how information flows in your company today: who takes an order, how stock is reserved, when invoices are issued and at which point time is lost. With that map you will know what you need and will not pay for functions nobody is going to use.

It is enough to go through the main workflows and note what is done, with which tool and who does it. In sales, quotes, orders, price lists, discounts and customer follow-up. In purchasing and warehouse, purchase orders, receipts, locations, stocktaking and shipments. If you manufacture, orders, consumption, times and costs. And in administration, invoicing, collections and payments, accounting and taxes.

Also note what is specific to your industry: in a ceramics plant, shades and calibres; in a theatre, the box office and capacity; in a sofa manufacturer, the configurable product. If the ERP does not handle those details, you will end up keeping parallel spreadsheets.

A consultancy can also draw up that map. UserIT has a strategic alliance with Laecel, a consultancy for SMEs in the Valencia area: Laecel reviews processes, responsibilities and data before the tool is chosen, and UserIT implements W3ERP.

2. Compare what the standard covers with what will need customising

No ERP fits one hundred per cent out of the box. What you must find out is how much the standard program covers and how the rest is solved: by configuring it, with custom development or by changing how you work. Ask to see it with real cases from your company, for example a complicated order from last month.

Also ask who makes those adaptations and what happens to them when a new version of the program comes out. If the customisation is done by a third party on someone else’s product, every update can turn into a small project. In W3ERP, the platform, the standard program and the customisation are developed by the same team, and the adaptations are maintained by the people who know the code.

3. Check how it connects to everything else

An ERP rarely works alone. It receives orders from an online store or a B2B portal, exchanges documents with large retailers, sends e-invoices and records to the Spanish Tax Agency and feeds management dashboards. Every missing connection means manual work and, sooner or later, errors.

Before deciding, check at least these connections:

• EDI with the customers and suppliers that require it.
• E-invoicing, which will become mandatory between companies, and VeriFactu or the SII, depending on your case.
• Banks, for direct debit batches, statement reconciliation and payment files.
• An online store for consumers and a portal for business customers.
• Radio-frequency terminals in the warehouse, if you move a lot of volume.

4. Decide whether you want it in the cloud or on your own servers

A web or cloud ERP is used from the browser, with nothing to install on the workstations, and the provider takes care of the server, backups and updates. One installed on your own servers gives you physical control of the data, but equipment, security and backups have to be maintained with your own or contracted staff.

For most SMEs the web option makes day-to-day work simpler: people work the same way in the office, in the warehouse or when travelling, and there is no need to replace servers every few years. Whatever you choose, ask where the data are hosted, who makes the backups and how you would recover your information if you change provider one day.

5. Calculate the total cost over five years

Licences are only part of what an ERP costs. To compare offers, add up over five years the implementation, customisations, hosting or servers, maintenance, support and the hours your team will spend on the start-up. That sum is called the total cost of ownership.

Ask each provider to price these items separately:

• The implementation, with the process analysis, configuration, data migration and training.
• Custom developments for what the standard does not cover.
• The infrastructure, whether cloud hosting or servers, and its maintenance.
• Support and updates from the first year onwards.

If an offer does not break down any of these items, ask whether it is included and how much it will cost.

6. Ask who will look after you after go-live

An ERP is used for years, and for almost all that time what counts is support: who answers when an invoice will not go out, how long they take and whether they can fix the problem themselves or have to pass it on to another manufacturer. Ask before signing and request references from clients in your industry.

It helps a lot when support and development are in the same company. If whoever handles the incident can talk directly to whoever programs the ERP, problems are solved sooner, and the improvements you ask for do not depend on another manufacturer’s waiting list.

7. Test with your own data and plan in phases

Before deciding, ask for a demonstration with your items, your customers and a real order, and check the whole journey: from the order to the delivery note, from there to the invoice and then to the accounts. Then plan the implementation in phases and start with the area that holds you back most.

Implementing in phases reduces risk and spreads the team’s effort. The usual approach is to start with the sales and finance core and then add the warehouse, production, online sales or dashboards. Each new phase works with the data the previous one already loaded.

Common mistakes when choosing an ERP

We see the same mistakes in very different companies: choosing the flashiest demonstration, underestimating data migration, not setting aside team time for training, leaving the people who will use the program every day out of the decision and comparing offers that do not include the same things. Almost all of them show once the program is already running.

The last one is avoided by asking all providers for the same breakdown as in step 5. For the one before, invite the person who takes orders and the person who prepares shipments to the demonstration, as well as management.

How we do it at UserIT

At USER Informática we develop W3ERP in Valencia and implement it ourselves: we analyse your processes, show you how much the standard covers and what will need adapting, and start with the module that holds you back most. If you want to check it with your data, tell us about your case and we will prepare a no-obligation demonstration.

The eight W3ERP modules are described one by one on their page.