ERP software survey 2015

Our annual vendor survey on enterprise resource planning software will help you analyze whether your system is a good fit for your business.

Welcome to our annual vendor survey on enterprise resource planning (ERP) software. We have been publishing this survey since 1999 and every year, it just gets bigger. This instalment includes no less than 99 systems. ERP technology has proven remarkably resilient, adapting to advances such as cloud computing and computing and mobile access. The technology is here to stay – so much so, that companies across every industry are wondering whether it’s time to invest in a new ERP system.

ERP BUSINESS CASE

When companies go for a new system, one of the main reasons is that the existing one is no longer supported or the business has changed significantly. However, organizations will be hard pressed to justify an ERP investment because of ROI.

ROI is elusive in ERP investments, partly because many of the benefits are not easily quantifiable. Some organizations fall prey to biased business cases prepared by people who have something to gain from the investment. These business cases can also be prepared without the rigour one would expect from a CPA who has been trained to validate numbers based on evidence, not wishful thinking. As well, when a new system is being implemented in an organization, many of the best people are assigned to the task and the cost of having them out of commission is often underestimated.

ERP VENDORS

Despite the downsides, organizations continue to invest in ERP and vendors fight for their share of the market. There are three types: well-known vendors that provide solutions spanning multiple industries; smaller vendors that focus on specific industries; and hybrid vendors that have extended a base system from a primary vendor to a specific industry. The hybrid vendors are motivated to work with the primary vendors not just for the technology they receive but also because their extensions will be marketed worldwide.

There is no shortage of ERP vendors, but some are a well-kept secret. Our survey includes some good small companies that have specialized in a specific industry. Purchasers of ERP systems are naturally concerned about the longevity of small vendors that could go out of business or be acquired. But when they find out that the vendors have a good client base and are using recent technology, they are usually reassured.

TECHNOLOGY

What should you look for when it comes to technology?

You should first check whether the system is running on an older database or built with an old programming/development tool. For example, you would not want to invest in a system built with Visual Foxpro (database and programming tool) as Microsoft stopped developing this product many years ago. You should also check the extent to which the system is adapting to new technology. For example, if there are no plans to release a web-based version or support mobile devices, you should be concerned that the system will eventually be phased out.

You should also expect to see a hosted cloud-based deployment option often called Software as a Service (SaaS). A recent article by PwC said: “We expect that by 2016, investment in SaaS solutions will more than double, to US$78 billion or more, while investment in traditional ERP systems will decline by more than 30%, to less than $15 billion.” There is no question that adoption of cloud-based/SaaS solutions is on the rise and that vendors need to move to the clouds to compete. However, vendors do it in different ways. Some offer what I call a public cloud, where multiple customers share one instance of the software on the same server(s). Others offer a private cloud, whereby only one customer is supported. There are advantages and disadvantages to both public and private clouds, and some very good ERP systems are only available in a private cloud or on the premises.

Finally, make sure to check the technology roadmap of the vendor. There should be plans to improve the product’s functionality. You should also see evidence of the roadmap in beta versions or functional specifications.

THE CHARTS

Our attached vendor list contains hundreds of questions about target customers, cost and ERP features. The results are available both in pdf form and in the form of a handy chart that allows you to compare up to four products at a time. You can also complete an online survey and then view the 10 best ERP systems for your needs based on percentage fit calculations available at http://www.180systems.com/tools/systems-analysis-tool/erp/. As with all our surveys, we were unable to validate the information supplied to us by the vendors. However, we don’t think there will be that many intentional mistakes, partly because the vendors will lose credibility if they are caught making false claims.

TIERS

The ERP systems have been segregated into tiers based on customer revenue and employees and product cost. This is a convenient, albeit not perfect, means of differentiation. Be cautious if you’re trying to calculate the costs for a system, since these numbers are just averages.

Criteria


Tier 1

Tier 2

Tier 3

Customer revenue

>$200M

$10M-$200M

<$10M

Customer employees

>500

50-500

<50

Licence fees

>$300K

$50K-$300K

<$50K

Implementation fees: Licence fees

>2:1

1:1-2:1

<1:1

 

MORE THAN FEATURES

Our survey will help you analyze whether the system is a good fit and whether the vendor is using current technology. But you shouldn’t spend all of your time evaluating features. Take a hard look at the people who develop, support and implement the system. In the sales cycle, you will meet capable and articulate salespeople who won’t be around much once the system is sold. You need to interview and check the references of the implementers assigned to your project and also get a sense of the people who are allocated to developing and supporting the system, especially for the smaller vendors.