FAQ - Which ERP (enterprise resource planning) system to buy?

I wish there was an easy answer to the question "which software package to buy"? There are good packages and there are cheap packages but I do not yet know of any good cheap packages. At the top end of the price spectrum there is the highly flexible, feature rich (i.e. complicated) SAP R/3 which would cost you well over £1m to implement. There are then dozens of full function ERP/MRPII packages which you can implement for £100k upwards (including the cut down or "template" versions of SAP R/3). There are then hundreds of small packages that would cost £50k or less but have limited functionality and support. My suggestion is to start by seeing what the potential benefits are and therefore how much you can afford to spend. I nearly always find that companies with poor planning systems carry too much inventory and work in progress. The saving in inventory and work in progress alone can often justify the expense of a properly implemented full function planning system. Try the cost and benefit analysis example. Most companies find that an ERP package, when properly implemented with the help of software independent implementation experts such as ourselves, is the most cost effective project they ever undertake so well worth the investment. A report by CIO Communications (www.cio.com) which analysed the payback from 63 companies found that eight months after implementing the new system the median annual savings was $1.6million per year.

Once you know how much you can afford to spend, follow the software selection guide not forgetting to take advantage of any personal experience of packages in the company or with customers and suppliers. The biggest difference between the middle ranking packages is not the functionality but "bugs" and the support. Never forget that the software is not a critical success factor in a successful implementation provided you select a package that is well supported locally (see Popular ERP Packages), it is the understanding of the people using the package. I have seen the same package implemented successfully in one company but disastrously in another company so many times.

The best education course to prepare you for this important decision is the Business Excellence Fundamentals course; there are 1 day and 4 day versions of this course. Alternatively, you can purchase a copy of my book "Business Excellence" which you can buy on-line in paperback or e-book format which explains the selection and implementation process in more detail. You can use a credit card to purchase this book for £14.90, US$39 etc..

Phil Robinson - www.bpic.co.uk
BPIC - your manufacturing planning resource