Which Type of ERP System Is Right for Your Business?

by:
on September 14, 2018

Like the businesses that use them, ERP software comes in many shapes and sizes. But the days of shoving wooden blocks into round holes to get your ERP to do things you need them to are coming to the end.

Thanks to the proliferation of cloud-based solutions, third-party integrations and postmodern deployment, there’s never been a more opportune—or user-friendly—time to tailor your system to meet the unique needs of your business.

This hasn’t made the process of choosing the right ERP any easier, though. Whether you’re looking for your first ERP or to upgrade your existing one, you’re in for a lengthy, complex and potentially costly selection process.

To simplify matters and ease the pain of ERP adoption, once you’ve determined it’s time to invest in an ERP, you need to take stock of the specific needs of your business and the ways ERP software can address them.

Not doing so can lead to implementation failure or inadequate functionality that can stifle the growth of any small or midsize business (SMB).

If a company determines its specific needs, it’s more likely to find the most efficient and effective ERP for its specific business. This report will help guide you through the process.

What’s the Best Hosting Option for Your ERP?

Odds are, if you’re considering an ERP, you have a ton of data to work with. Where will you store it all? Who will maintain the servers, perform maintenance updates and ensure the data’s secure? Here are your options:

On-Premise

Up until recently, on-premise ERP systems weren’t just the industry standard—they were basically the only option available. For businesses with a dedicated IT team, hosting and managing an ERP using an on-premise server offers total control over your data.

The resources required to plan, set up, modify and maintain a locally hosted ERP system are well-documented. On the other hand, running an ERP on your servers means that you need an IT team that can fix any problems on site. For smaller SMBs, this may not be an option.

But if your business has the right organizational pieces in place, the security of being in control of your data can outweigh any residual growing pains from the implementation process.

 IDEAL FOR:  Larger, enterprise-level businesses that have the existing infrastructure and resources to manage their own data.

Cloud-Based

Gartner predicts that by 2020, fewer than 10 percent of ERP systems will reside solely on-premise (full report available to clients). This is, at least in part, due to the rise of postmodern ERP selection (more on that in a moment), but thrifty SMBs will favor the lower upfront costs and general convenience that cloud-based ERP solutions have to offer.

 IDEAL FOR:  SMBs seeking an agile and convenient hosting solution.

Understanding the Most Common Pricing Models

Cloud-based ERP systems ushered in not only a new way to store and manage data, but new pricing models as well. What was once considered an impenetrable market for low-cost buyers is suddenly more inclusive, offering more choice and fewer barriers to entry for buyers of all sizes and means.

Perpetual Licensing

This traditional pricing model has long been linked with on-premise ERP systems—and, consequently, the higher upfront costs associated with planning and implementing such a large and complex piece of software.

But lower recurring fees make this an attractive option for businesses that can withstand the early investment—even saving money in long run. For a glimpse into the potential cost difference between perpetual licenses and Software-as-a-Service (SaaS), check out our Total Cost of Ownership (TCO) Calculator.

 IDEAL FOR:  Larger businesses seeking a lower TCO and higher return on investment (ROI).

Software-as-a-Service

With lower barriers to entry and cheaper upfront costs, the SaaS model presents an enticing and affordable subscription-based ERP solution, effectively tearing down the wall between SMBs and ERPs.

In the broader software landscape, SaaS offerings grew by more than 26 percent in 2017, according to Gartner (full report available to clients). And in the ERP market alone, subscription-based models accounted for more than $10 billion in revenue in 2017.

This trend is expected to continue through the foreseeable future, with some going so far as to proclaim the death of the SaaS as a descriptor, given its near-universal penetration of the software marketplace.

 IDEAL FOR:  SMBs seeking an immediate, future-proof ERP solution with minimal initial investment.

Deployment Strategies and Best Practices

If you had to pick a single word to describe modern-day ERP software, “choice” would be as apt a descriptor as any. Nowhere is this more evident than the buffet of deployment options at buyers’ disposal.

All-in-One

Enterprise resource planning, at its core, offers businesses a way to streamline and consolidate data into a single unified system, thus maximizing efficiency and day-to-day operational workflow. This is precisely what an all-in-one solution provides.

Though the rise of postmodern ERP selection and best-of-breed software integrations has amplified the limitations of an all-in-one system, the benefits of having a centralized data hub are still more attractive for businesses with specific use cases.

 IDEAL FOR:  SMBs seeking to simplify and consolidate their operational workflows.

Postmodern

Over the last several years, a sizable portion of the software market has evolved to include the ability to communicate and share data across separate applications—mimicking what, in essence, ERP systems are designed to do.

These advancements paved the way for what’s known as postmodern ERP, an approach that enables businesses to retain best-of-breed applications while getting all the benefits of an all-in-one system.

For instance, if your business desires both the depth of a highly specialized piece of accounting software and the versatility of an ERP, many applications now provide a level of interoperability between disparate systems that wasn’t possible until recently.

It’s why some have dubbed the postmodern approach the future of ERP software—and why it’s worthy of consideration for businesses of all stripes.

 IDEAL FOR:  Businesses of any size seeking to integrate pre-existing or best-of-breed software across departments.

Where to Go From Here

Your first step should be to take a complete audit, with other stakeholders in the organization, to get a strong understanding of what your business needs out of an ERP system. With this information in mind, you should then determine the best hosting option, pricing model and deployment approach for your business.

If you’re still not sure which type of ERP to go with, don’t worry—our team of specialists is ready to assess your needs with a no-frills, no-commitment phone call.

Just give us a call at (888) 234-5187 for a free 15-minute phone consultation, or visit our ERP software page for information on vendors, pricing and more.

You may also like

Postmodern ERP: What It Is and Why It’s Important

Key Criteria For ERP Software Selection

When Does a Company Need an ERP?

Visit our ERP software page for information on vendors, pricing and more