ERPs are the central nervous system of a business. And in a time of AI and technical innovation, they can be a smart move.
ERPs run multiple departments within big businesses, from accounting to supply chain and more
ERPs have the option of different ownership models: on-premise or private cloud.Choosing an ERP – Acuity Magazine
Paying for an ERP
An ERP is often compared to the central nervous system of a business and switching from one ERP to another is a project that every CFO dreads. Along with software costs, such a massive project inevitably impacts operations, productivity and revenue.
Today’s ERPs have the option of different ownership models. You can still buy an ERP licence to run on your own servers, a model often referred to as on-premise. Or you can run the same licence on servers in an outsourced data centre operated by an ERP consultant, called private cloud.
The biggest news in the past decade has been the rise of cloud-based ERPs, where the software runs on servers operated by the software company itself. This is called public cloud, software as a service (SaaS) or multi-tenanted software.
At first glance, the public cloud ERP is the most attractive. A company no longer needs to worry about the capital expense of buying expensive servers or paying for IT administrators and security experts.
Under the public cloud model, the ERP software company is responsible for upgrades, so all public cloud customers are always on the latest version.
Don’t change the suite – add a component
Changing to a new ERP is a massive project. Instead, why not keep your old ERP and add separate tools for your business processes? (A little like adding new cushions to your lounge suite to support your back, rather than buying a whole new lounge.)
Technology constantly swings between recommending a fully featured suite and building your own stack of components. The argument for the suite is less complexity and fewer headaches; components, however, will give you newer features faster.
Salesforce, which started out selling its highly successful cloud-based customer relationship management (CRM) software, has now replaced the sales function in many ERPs. In fact, the term ERP today refers more to finance and inventory rather than customer relationship management or human capital management (an industry term for human resources).
The ERP industry is indeed experiencing a swing from suites to best of breed in separate components, says Gary Katzeff, Sage’s General Manager, ERP, Australia & New Zealand.
“There are absolutely pros and cons (to both approaches). But if a vendor can provide, say, 80% of your requirements out of the box in one solution, then you generally will get a better experience as a customer than if you have to pull together multiple solutions.”
ERP software companies are creating more modules designed for specific industries to hit that 80% threshold. For example, Sage’s cloud-based accounting and finance management software Intacct has enjoyed success in the not-for-profit sector by focusing on multidimensional reporting and faster consolidations.
Intacct has a grants module that tracks government grants and funds management. It also integrates with Salesforce to handle directed donations from individual donors.
If the weakness of suites is slower and lumpy innovation across modules, in components the problems are typically in the complexity and cost of integration. Here again, there is good news. Integrations are getting easier thanks to standardised application programming interfaces (APIs) on public cloud applications.
Extract of Choosing an ERP? – Acuity Magazine – Sept 2020