“ERP” Oversaturation & Misuse

The world of business software is full of buzzwords, and "ERP" (Enterprise Resource Planning) is no exception. As one of the most widely used buzzwords, it is no surprise that some “ERP systems” may be falsely labelled.

Used correctly, an ERP refers to a system that is designed to provide a comprehensive and integrated view of a company's operations, from financial management to supply chain management to human resources. It is meant to automate and streamline a variety of business processes, providing real-time data and insights to decision makers. A true ERP system will typically include modules for accounting, sales, purchasing, inventory management, production, and more. But just because a vendor calls their software an ERP doesn't mean it actually is one… In fact, many vendors are misleading companies by calling their software an ERP when it is something else entirely.

How Are You Being Mislead?

Many vendors today are simply slapping the label "ERP" on their software to make it sound more impressive and valuable. In many cases, what they're actually selling is just a collection of loosely-connected modules that don't provide a unified view of the business.  Be aware of the marketing and sales tactics often used by vendors, including vendors who report their system to be an ERP when in fact, their system only provides partial functionality. We explore these vendor tactics to watch out for further below.

Partial Functionality

When a vendor has a software that only provides a subset of ERP functionality, such as financial management or inventory management, their systems are not ERP’s. Companies who are looking to adopt a true ERP system should be wary of the functionalities that a vendors’ system provides, because in most cases, the point for introducing an ERP system within a business is to increase organizational efficiency. Using a system that acts as a fraction of what a true ERP system would provide, is a system that is only fractionally improving how company resources are utilized.

Vendor Marketing & Sales Tactics 

Expanding on systems with partial ERP functionality, vendors are often found using marketing tactics such as calling their systems "ERP light" or "ERP for small businesses,” when they don't offer the same level of integration and automation that a true ERP system would provide. Companies should be ware that some vendors play with words to make their systems sound more appealing to businesses.

Another thing to be especially cautious of when looking to adopt a new ERP system, is the fact that when you sign up for a demo, or a call; you can’t forget that you are speaking to the vendor’s sales team. The vendor’s sales team are people trained to sell their product and are not necessarily focused on your needs.  Demos are often presented by the A team, whereas the actual people who would be implementing the system are often the B or C teams. You should always ask for at least three referrals to get a sense of what the implementation team and process is with each vendor you’re considering. 

Keep Your Competitive Advantage

Some vendors will forego the need to capture current state processes from you. They’ll say that capturing current processes isn’t necessary and to shift your focus onto the future state, which they promise will be made easy because they have process best practices baked into their system. Sounds good right?  This is very risky for your business. They are misleading you with the promise that they have the best processes for your company. However, if your current state processes aren’t documented, you may be applying technology or automating an inefficient process. Moreover, if you apply a vendor’s best practices for processes, you can easily be lead to losing the competitive advantage of your specific processes. Therefore, never give up your advantage by letting a vendor dictate the project scope!

Are you using the right ERP System?

Choosing an ERP system for your company is a complex and important decision that requires careful consideration. One of the most important things to understand is that an ERP system is not a "one size fits all" solution. Depending on your business, there are specific factors (ex. specific compliance capabilities) that you have to consider.

It's important for companies to be aware of vendor marketing tactics and to thoroughly research any software that may be in consideration for implementation.

Speak with us about Software Selection

To reduce the risk and complexity of selecting the right ERP for your business, give us a call; we would be happy to explain our 4-step framework. Our team members have completed over 300 software selections.

Contact us today.