How to decide on the right ERP, right Vendor, right Investment?

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Why does a business need an ERP?

  • Transform your business process
  • Bring single point of truth with real time data access centralized
  • Streamline work culture internally and externally with suppliers, vendors, tier 2 chain

How the customer should select the right ERP or HRMS solution for payroll, performance management, and recruitment solution?

  • Compare the Modules, Features, Add-ons specific to your business AS-IS or TO-BE needs
  • Compare the License fees for software, infrastructure for 5 years +
  • Compare the time taken for implementation, customization
  • Evaluate the product FITGAP to business needs/requirements
  • Compare the total cost of ownership for 5 to 7 years

How do we select the right IT vendor?

  • Check the reference customers, case studies
  • Check the methodology used for execution
  • Check the domain expertise to your industry/business line
  • Check the pricing model for services

What are the services customers require from the IT vendor for ERP?

  • Consulting Services [to understand your requirements, map it to the product and document the business requirement, system specification and detailed project plan
  • Implementation Services [to install, setup master data, configure the users, workflows, reports]
  • Customization Services [to change or add new business logic, rules, user interface, reports]
  • Support Services [to provide ongoing issue handling, training, change requests, upgrades]

What will be the total cost of ownership for 5 years?

  • License Cost [Perpetual fees one time + AMC annual fees] or Annual Subscription fees
  • Database License Cost
  • Operating System License Cost
  • Cloud Server Cost
  • Network [bandwidth] Cost
  • Backup server/service Cost
  • Report Server Cost
  • Scanner, Printer, Billing Machine, 3rd Party API Integration Costs
  • Cost of Desktops [capacity required for high performance]

How can we choose which is the right HRMS solution for your needs?

  • Watch an expert guided LIVE demo
  • Complete a FITGAP analysis for business requirements matched to Product modules/features
  • Check the ready to use 3rd Party APIs, Device integrations supported
  • Check the compliance, statutory adherence
  • Access a Trial edition with sample data
  • Check reference customers similar to your business using the same solution

Is it safe to use an Open Source ERP for my enterprise?

Yes, is the short answer. The software are getting built using J2EE, Python, PHP, HTML programming languages. Open Source ERP software is supported by a wide community of developers, partners across the globe. Any issue in the product is immediately shared on the global forum out in the open.

The reputation of a good product is transparently known to everyone. The customizations, add-ons are also listed on the APP STORE for reuse by other partners, customers across the globe. The adoption rate is very high compared to typical proprietary software market. The software is tested, widely used by thousands of customers across the globe.

Is it really free license [zero cost] on user license if we use Open Source ERP community edition?

  • Open Source ERP community edition software is totally FREE of charge on user license
  • Open Source ERP enterprise edition software is usually charged per user per month model
  • The main difference between community and enterprise is to have direct OEM support on the enterprise edition and rely on OEM + Community support on the Community edition

Are there any downsides, if we use Open Source ERP community edition?

No, as long as your business needs are met with the community edition and you plan to not convert it to enterprise edition in the next 5 years, it is a total cost saving. Anytime the solution could be moved from Community edition to Enterprise edition, however the changes, improvements in the latest edition need to be carefully applied to new edition. This is the same challenge with any solution commercial or open source.

Is there also a license model for Open Source ERP? What is the Enterprise Edition license for Open Source ERP?

Enterprise Edition Open Source ERP comes with a Per User license fee model, which comes with OEM support for core product level issues and also new upgrades are released by OEM. As a matter of fact, the innovation, changes happen at a faster rate in the community compared to enterprise edition.

Will the product out-of-box cover all the features I need for my business?

YES & NO. Not all the business requirements will FIT to the default product. Sometimes the product might have a better way/approach of doing the tasks or business could demand an unique way of performing the task. Based on requirement study and FITGAP analysis, the requirements from the customer will be met with or without customizations.

What if I need to customize/change certain policies, business rules, user interface, and reports as per business needs?

This is where the CUSTOMIZATION to the core product [community or enterprise edition] will take place by the Vendor. The Customization could be changing the UI/UX, changing/adding reports, changing/adding transaction windows/tabs and applying new business logic, SQL code, etc. Based on each customer requirements, there will be some changes/customizations to each implementation.

Do I choose Cloud or On premise? Why?

Today Cloud infrastructure provided by Amazon AWS, Google, Rackspace are all very popular, stable, high performance, high security and high scalability is offered at a nominal monthly fees.

Leveraging this infrastructure keeps the IT maintenance overheads taken away from the customer headaches. The On Premise server model definitely demands an internal system admin team to monitor and manage the ERP server.

It depends on the larger decisions of the enterprise to choose On cloud and On Premise. It is evident today the data is as reliable on the private/shared cloud like on the On Premise.

Is my data protected on the Cloud?

Yes. Any hardware/network infrastructure provider, data center or a cloud provider, provides the option to enable all the secure methods to keep the application and data very well protected. For eg: Amazon AWS provides the best methods to maximum protect the server/application/data from any attacks; however the Customer and or the Vendor should know how to setup the infrastructure highly secure. Managed Services Providers [MSPs] usually do this for many of their customers, so you could rely on their experiences to get better secure setup.

Which cloud infrastructure I should choose and why?

There are plenty of choices including Amazon AWS, Google Cloud, Microsoft Azure, Rackspace Hosted/Dedicated/Private cloud servers, Sify, NextGen, 8miles and so many other players are providing ready to use infrastructure [Hardware as a Service, Infrastructure as a Service]. It is better to choose the cloud provider on which the ERP has been time tested and used by other customers and supported by vendors.

What are the modules/features the customers are looking for in their ERP solution?

  • ERP Back Office [Operations] Modules: Purchase Management, Inventory Management, Production Management, Sales Management, Invoicing, Accounting, Finance, Point of Sale, Warehouse Management, Barcode, Scanner, Billing, Credit Card, Loyalty Card and other compliance related, OEM related integrations and add-ons.
  • ERP Front Office Modules: Human Resources Management, Payroll, Leave, Attendance, Recruitment, Intranet, Project Management, CRM, Website, eCommerce, Document Management, Help Desk, Productivity tools, Collaboration tools, Field Force apps, Mobile apps, Business Intelligence, Business Analytics, Emailing, Survey, IoT integrations and add-ons.

How many users, employees can I use with the solution? Can I add more users in the future? or drop/inactivate users in the future?

Customers can choose to have any number of Users to use the ERP. Usually there will be a minimum of 5 or 10 users purchase, however, at anytime the customer could add more users by purchasing more license on the Enterprise Edition and not have to pay any fees on the Community Edition.

Usually the licenses are given as Named user or Concurrent users’ license. If there is an old employee who has left the company, you could transfer that license to a new user, provided it is on the same name, if it is under Named user license.

What happens, if I need my past enterprise data to be migrated to the new system?

Many customers will move from some homegrown or legacy ERP to a new ERP system. During the Go Live process, the opening balance from the inventory, sales, accounting, are all taken properly along with the master data to the new ERP system. However, if the customer wants to move the history data to the new ERP system, it might require some “Data Migration” programming to match the old ERP system data structure to the new ERP system data structure and this will be a separate exercise which could take time and efforts.

Usually the best approach is to start the new ERP with accurate opening balance at the end of a financial year and start smooth operations on the new ERP. However, due to some compliance, business challenges, some customers might need the data migration work to be done. It gets even more complicated if both the old and new system have to be in operations parallel for some time and so daily data synch has to be done from Old to New or vice versa. Proper planning and clear roadmap will ensure to avoid such complexities.

What if I want the HRMS solution to be integrated/connected to my Attendance device, accounting software, etc?

HR module usually gets connected to attendance [finger print, access card] type devices, accounting systems for payroll compliance or statutory needs and also to 3rd party recruiting databases to access resumes. Based on individual customer needs and feasibility of integrations this could be done. Most of the standard ERPs and popular devices, applications might already have a ready-to-use application for use. Vendor should be able to suggest the best approach.

How long will it take to go live/start using the new system?

The out-of-box ERP AS IS, could go live within a week. However, it is usual that the Vendor will need time to understand the Customer specific business requirements, business process, existing IT systems, existing legacy data, user activities and future needs, current challenges to be overcome with the new solution.

This consulting phase definitely helps the customer to document what are their needs clearly. Further with these business requirements, the Vendor should be able to match [FITGAP] the requirements to the product workflow/modules/features and list the GAPS if any and suggest the best alternative methods to adapt to the ERP solution.

However there will be scenarios where the customer would definitely need to keep their business process the same or different from what the product offers out-of-box and sometimes the product may not have those features, in both cases, there will be a need to customize the product to suit the needs of the customer requirements.

A proper project plan would help to estimate all the work to be done, with approximate cost/time/resources and draw a project roadmap. The maturity of the product, repeated use for that particular industry, the capabilities, subject matter expertise of the Vendor will all add up to a quickest delivery.

The best approach is to keep a 90 days GO LIVE plan for Phase 1 and further do Phase 2, 3, 4, etc. Without interrupting the current business, the plan should be carefully done to pick the most important items needed to move to new system. Experienced project managers and business analyst would do a good job on this.

Continuous users/key stakeholders’ involvement from the customer side is another major factor for quick adoption and goes live of the new ERP solution.

Will my users be given proper training to start using the new system?

User Training is one of the most important activities for a successful ERP implementation and go live. From the beginning of the project, key stakeholders committee should be formed at the customer end and all the important users from all departments should be constantly engaged in explaining their requirements to the vendor and also hands on look at the new ERP solution.

Do I need ongoing support? What if I need changes, improvements, enhancements in the future?

Ongoing Support is another important aspect to ensure the business continues to leverage the power of using ERP. Any business continues to change, and especially when you add new customers, vendors, products, markets, promotions, payment terms, these are bound to impact the business process workflow.

Customer should exercise care to choose the standard support which guarantees the regular operation and support needed to handle issues, bugs, fixes, clarifications, and administration for a fixed fees. However the change requests, enhancements/improvements, new integrations will be considered a new project [or sub-project] by the Vendor and gets charged separately.

How much will be the HRMS license fees?

  • Open Source Community Edition ERP license fee is free
  • Enterprise Edition ERP license fee is $8 per user in India for Odoo ERP and for additional Apps [Add-ons] the fees are based on each App.

How much will be the Cloud cost?

A cloud subscription fee is charged monthly by the providers. Usually it is based on usage [storage, volume of transactions, users, etc]. A bare minimum of $150/month is to be budgeted for a 50 user customer with all the security features enabled.

However, the benefit of choosing a metered cloud provider like AWS is to have the fees charged based on usage only. They also provide additional support to reduce your expenses on the cloud ongoing basis.

How much will be the Database license fees?

  • Customers can choose to use Oracle, MS SQL and other license fee based database
  • Open Source ERP supports MySQL, Postgres database which are again open source database and require no license fee to be paid

How much will be the Operating system license fees?

  • Customers can choose to use Windows, Unix, Solaris other license fee based Operating Systems [OS]
  • Open Source ERP supports Linux [Ubuntu, Redhat] and they could be used in the open source edition without any fees

What will be the Consulting Services fees charged by the ERP Vendor?

The usual answer is it depends. Typically it takes a minimum of 3 weeks to 6 weeks for a quality consulting services to be done well. A part time project manager and a full time business analyst, product technical expert are required for completing the Consulting Services. A per man day charge for a consulting service could be as low as $100 to $1000 depending on the size complexities involved in the business.

What will be the Implementation fees charged by the ERP Vendor?

The usual answer is it depends or sometimes module wise fees will be charged. It typically takes anywhere from 3 weeks to 9 weeks to take the out-of-box ERP solution to just implement, train users, put real data and confirm if everything looks alright. This process requires involvement from both sides and the Vendor has to deploy people to get this job done, for which they would charge the customer a fixed fee or an hourly fee.

The best approach would be to follow the specification and as per business workflows engage the key stakeholders working with 1 or 2 experts from the vendor side and clearly plan the activities at the micro level to ensure there are no budget overruns, delays and surprises.

What will be the Customization fees charged by the ERP Vendor?

Each customization will be different and so the best method to cover the risk for the Vendor is to ask for an hourly rate charges. However the customer would be looking for all inclusive fixed fees to have all the customization done as per their needs.

The required customizations must be carefully evaluated and accepted/signed by all key stakeholders from the customer side and investing the $$ for customization should be budgeted for each department’s needs. Thus it brings ownership; responsibility to ask for only MUST have changes/customizations to the product. Too much customization is also dangerous as it will make the upgrade to a newer edition of the ERP much more complex and again it would require investment.

The best approach is to learn what does the product offer and how can the business adopt the product. However in many cases there would be valid reasons why the business would ask for more or different ways of doing things. This has to be done well discussed, documented, planned, estimated, signed and then executed to avoid surprises.

What will be the Support fees charged by the ERP Vendor?

  • Standard Support: There will be a monthly or yearly fixed fees or hours fixed monthly for providing ongoing support to handle any issues reports, fixes, bugs, clarifications required, data fixes, training and regular operational issues.
  • Extended Support: The additional changes, enhancements, integrations, will be provided on an extended support contract and again these would be considered additional billable work charged on a fixed or hourly mode by the vendor.
  • As the business changes, processes change, compliance change, market change all impact the need for both the Standard Support and Extended Support and make them necessary.

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