7 Steps to Choosing the Right ERP for a Small Manufacturing Company

7 STEPS TO CHOOSING THE
RIGHT ERP FOR A SMALL
MANUFACTURING BUSINESS

1. BUDGET
It is true, that there are solutions which can charge hundreds of thousands for a license and
implementation, but this does not mean, that small and midsize businesses cannot afford an ERP.
However, the chance is high that expensive systems used by big corporations will be useless to SMB’s.
How to define the budget?
The rule of thumb is to calculate all the costs (both direct and indirect) associated with an ERP for two
years of operation.
Number of users
Another variable that defines the budget is the number of expected users, which can be calculated by
taking the number of people in your office and adding one additional user per shift.

2. BUY-OUT (LICENSING) VS SUBSCRIPTION
There are two main pricing options to select from when deciding on the budget:
1. Buying a license, or
2. Sticking with monthly (or annual) subscription plan. Both options have cons and pros.
For example, on-premises software providers usually offer licensing. If selecting this option, one must
be aware, that on-premises vendors often have several fees which are not always obvious at the
beginning (setup, software updates, software maintenance, additional infrastructure, customization,
support, or privileged support, etc.).
Whereas subscription model is popular among Software-as-a-Service solutions where you pay only if
you use the software. Usually in this case the pricing policy is more transparent (also means
predictable) and also flexible.

3. SAAS (CLOUD) VS ON-PREMISES
During the recent years we have witnessed a trend of SaaS solutions reasonably becoming increasingly
popular. The advantages are obvious:
• No need to install anything (and pay for the installation)
• You can access your ERP anywhere, from any device, which allows mobility
• No need to keep the software up-to-date
• No need for additional infrastructure (own servers)
However, there are some scenarios where on-premises software is still the only option since:
• Having the software and database on own servers could be more
• Internet access is still not always available in rural areas

4. FUNCTIONALITY
Apparently, if you are a manufacturer then not every ERP will suite your needs and not every ERP
claiming to have a focus on manufacturing can offer functionality particularly required in
manufacturing, such as production planning and scheduling and equipment load charts, as an
example.
No one knows your business as well as you do, so think of functions which are of primary importance
for you, make a list and start searching for a manufacturing ERP which meets these requirements.
You can also put down some good-to-have features (like integration with the accounting software you
already use) – these will help you out when you already have a list of candidates offering the same
main functionality.

5. PRE-SELECTION PROCESS
When you follow the steps above, then you will get a list of 4-5 ERP vendors which answer your basic
needs in terms of main functionality, platform and pricing model.
Now this list should be brought to 2-3 options at most since this is the most reasonable number in
terms of time resources spent for evaluation.
To filter out the companies that are not worth your time, contact each software provider with questions
regarding functionality or similar and evaluate their speed and quality of response.
Remember, this will be your strategic partner for several years and slow communication already from
the start is not a good sign.

6. FINAL SELECTION
Now that you have a final list of 2-3 candidates for becoming your next new and shiny ERP system, you
should try them out first.
Unfortunately, this is not always possible if we talk about on-premises systems, but the most
cloud/SaaS solutions offer a free demo.
When testing the software try to make a simplified emulation of your product’s production process
which covers the use of features that are crucial to your business (test task).
After having tried to fulfil this task with the remaining ERP software vendors, you should have a clear
winner and your next partner.

7. CUSTOMIZATION
Assuming, that you have selected the software that seems to answer all your requirements and meets
your budget, be prepared that you will have to adapt your business processes to a certain degree.
However, you might still find that some important functionality is missing or is not working the way
you expect, and changing your business workflow is not an option, then make sure that your vendor
offers customization.
Knowing this in advance will help you better understand if the provider is flexible and what is the
software TCO (Total Cost of Ownership).

MRPEasy Cloud ERP/MRP Solution
• Production planning and reporting
• Supply chain management
• Stock management
• CRM
• Managerial statistics, business intelligence
• Integration with online accounting solutions
Easy to deploy and use! Visit us @ www.mrpeasy.com