A small manufacturing company has been enjoying increased success over the past few years. Until now, business was conducted by use of spreadsheets and word processing software but the business has outgrown the available functionality. It’s time to take business to the next level.  Success presents a surprised owner with an opportunity and a challenge; choosing an enterprise system.  An enterprise system often referred to as an ERP (enterprise resource planning) system will bring together separate functions and allows information to flow smoothly throughout the organization. Making the choice of an enterprise system begins with understanding current business needs and future goals.  Once current needs and future goals are clearly defined, shopping for a software package can begin.

ERP System

Choosing an Enterprise System

The process begins with research.  There are many enterprise systems on the market.  Offerings come in three principle types: traditional, hosted and SaaS (Software as a Service).  Each has its pros and cons.  Traditional systems require extensive and often sophisticated hardware infrastructure.  Bringing in a traditional requires the largest capital investment and cash outlay.  Hosted systems have lower erp implementation costs and are often chosen by organizations with limited budgets.  SaaS systems require some infrastructure investment and would be placed in the middle of the pack with regard to initial investment.   When considering different software packages, Total Cost of Ownership (TCO) cannot be ignored.  TCO is a very real budgetary consideration and will assist decision makers in making the best choice.

SAP and Oracle are examples of traditional enterprise systems.  Traditional systems are housed by servers that are located on the premises, requiring on-site support and systems and network administrators.  TCO is significant and on-going. In addition, the cost of implementation is a part of the formula. It requires a protracted schedule and the services of costly experts.  Licensing structure is often more flexible with a traditional system and the flexibility of purchasing specific modules.  These systems are infinitely configurable and provide a platform of scalability as the business grows.

Hosted systems provide a model whereas the functionality that a business is looking for is “leased.”  Hosted systems limit the initial investment but can also limit customizing possibilities.  In the short term, hosted systems can be a very attractive alternative to a traditional system that may be beyond the reach or more than is necessary for a small business.  For businesses using hosted systems it is often necessary to tailor procedures to fit the system due to limited configurability.  A business goes to its host for software licenses hosted on a network server to which their own system is connected.  This is the easiest to implement.

SaaS (aka cloud-computing) is often viewed as the middle man in terms of cost. Hardware requirements are far lower than those of a traditional system.  The software resides on the SaaS server and is accessed by means of a thin client.  The time that is needed to implement this solution is considerably less than that of a traditional system and more configurable than the hosted option but support and maintenance are often costly and can drive TCO upward.  

When faced with making this decision value should be placed on par with cost.

Written by :

tracey boxer