In the early years of import substitution, companies thought about the sustainability and support of current ERP systems. Now the focus has shifted more to architecture, data manageability, change costs, and long-term risks. In May, Axenix conducted a study of the Russian ERP market – they studied business approaches to choosing systems, key criteria and restrictions faced by customers. One of the main conclusions is that large players are not looking for an ideal replacement for SAP, they are gradually moving to a more pragmatic model, answering the question: how to assemble a stable ERP landscape for specific business tasks and level of risk. Based on the study, we have compiled a step-by-step route on how companies can choose a high-quality ERP solution.
1. Make a quick dropout according to mandatory restrictions
First of all, it is worth looking not at the functionality of the system, but at the restrictions that it can create for the company. At this stage, we form a list of criteria that can be checked without in-depth market research.
It is important to check immediately the technological limitations – the closeness of the platform, the ability to work on Linux and in the target infrastructure circuit, supported DBMS, integration mechanisms, security requirements.
At this stage, the task is not to choose a system, but to remove quickly options that are obviously not suitable for the company for legal, infrastructure or organizational reasons.
2. Form a short list of solutions
After the primary dropout, a limited list of systems is formed that should be analyzed deeper.
Formally, the market offers several ERP platforms and related solutions. Official vendor materials describe the products as full-fledged platforms for automating enterprise management. However, this is not enough for the enterprise segment. Large companies need confirmation that the system runs on comparable amounts of data, users and processes.
At the stage of compiling such a list, it is important to look not only at the vendor’s presentations, but also at the maturity of the ecosystem around the product. In the Axenix study, among the selection criteria, companies most often named:
- functional coverage;
- performance;
- scalability;
- integration architecture;
- possibility of improvements;
- quality of documentation;
- vendor team maturity;
- accessibility of implementers;
- cost of ownership;
- compliance with safety requirements;
- availability of a clear roadmap for product development.
An important criterion is the corporate maturity of the vendor itself. A large business looks not only at the presence of a specific function, but also at the supplier’s ability to work with large implementations – manage releases, testing, support, defect correction and critical incidents.
3. Check the maturity of solutions on comparable cases
The next stage is the analysis of real implementations. It is important to evaluate the relevant cases of the systems in question – how they were implemented in similar industries, what was the scale of the business, what was the load, the complexity of the processes, how large was the amount of data. Often companies make the same mistake – they look at the presence of an implementation as such, but do not check its comparability with their contour.
The fact is that ERP, which works in a production company for 500 users, may not be ready for the requirements of a holding with tens of thousands of specialists, a complex technological layer and high requirements for fault tolerance. At this stage, it is useful to connect vendors and integrators who already have practical experience in implementing the selected solutions.
Separately checked are:
- availability of documentation;
- load test results;
- architectural constraints;
- safety;
- integration capabilities;
- working in target environments;
- cost of licenses, implementation and further support.
At this stage, you need to look at ERP as part of the entire application architecture, and not as a separate application.
4. Do not copy the old ERP, but design a new one
One of the most difficult stages is the formation of functional requirements. In practice, many companies start a project with an attempt to literally reproduce the current ERP: save all screens, reports, user scripts and accumulated improvements.
However, this approach usually leads to an increase in the cost and timing of the project. Functional requirements should not describe the structure of the current system, but the key business needs of the company.
They can include both critical functionality that needs to be preserved and new capabilities that are not available now, but that the business needs.
It is important not to dwell on the historical compromises of the old system.
5. Evaluate the scope of improvements in advance
After the requirements are formed, collaboration with vendors and integrators begins. At this stage, it is assessed which requirements are closed by standard functionality and which will require serious development. At the same time, it is important not to repeat blindly the steps of the processes from the old system, but, if possible, to apply a reasonable compromise and use the typical configuration of the new solution. In any case, it will not be possible to repeat completely the previous ERP landscape. It is better to use the implementation as an opportunity to design a system better than the current one.
After that, the real cost of a particular project becomes clear, and this cost can be very different from the initial estimates in the previous stages.
6. Compare not only products, but also risks
For each version of the ERP system, it is necessary to build a full-fledged roadmap:
- stages of implementation of new products, their duration and cost;
- demand for internal resources from business and IT teams;
- impact on related IT systems.
Separately, technological, legal and organizational risks are compared.
7. Compare the implementation of the new system with the “do nothing” option
The scenario of saving the current ERP landscape must be analyzed as strictly as the scenario of implementing a new system. At first glance, the status quo may seem like the cheapest and safest option. But in practice, it often contains hidden costs:
- technical debt growth;
- lack of expertise;
- support risks;
- regulatory constraints;
- accumulation of manual labor.
This is more relevant for companies that continue to use foreign systems without an understandable horizon of support and development.
8. Make a decision at the investment selection level
The final choice of ERP is not a technical solution for the IT department. For large businesses, this is a management and investment solution, where companies, together with the functionality of the system, assess the scale of upcoming changes, timing, budget and the level of acceptable risk.
For some companies, a full-fledged transition to a new ERP platform becomes a rational solution. Others choose a more cautious path – phased migration while preserving part of the current landscape. Still others are building a hybrid architecture where a new ERP core coexists with specialized systems. In some cases, it is more profitable for a company to temporarily maintain the current system if the risks of a quick transition are higher than the potential effect.
By Evgeny Smirnov, ERP expert at Axenix