Costs in ERP system selection – what we mostly overlook

ERP systemknowledgesystem selection

Anyone who wants to work with the system that long must have a fairy on the team. Because a lot can change in 10 years! We know what to pay attention to in order to choose the right one!

During ERP system selection, the various costs and possible benefits are analyzed in considerable detail and then assessed for each vendor. But it’s worth to emphasize that one important factor is often completely missed during this process. Which one? The cost of the next system!

The selection of a new system is never done as a back-of-an-envelope exercise. We know very well that companies want to use their solution for many years. A lot of potential customers says:

“From a bookkeeping standpoint, the investment’s
term of depreciation is 5 years. But ideally, we want
to work with the new solution for 10 years or more”

Costs in ERP system selection – look into the future

Costs in ERP system selection

Anyone who wants to work with a system for that long must have a fortuneteller in the team. Because in 10 years’ time, a lot can change! What will the world look like in the year 2030? Which devices will we be working with then? How far, and how much will the technology be developed and changed? And which parts of our future have yet even to be invented, developed, and marketed? So there are plenty of questions, and from today’s vantage point we can only guess at the answers.

Recall the past

One of the ways you can work with this challenge can be recalling the time 10 years ago. Do you remember what technology looked like? Can you remember the exact state of technology in 2010? Nobody heard or used tablets in those times. Let alone the verb ‘swiping’! Those are times when WhatsApp didn’t exist and Google still was a really small company. Cloud solutions was on the beginning of development.

Costs in ERP system selection – focus on development and vision

Costs in ERP system selection - focus on development and vision

Perhaps this comparison provides you a bit of perspective into what we can expect in terms of new developments in the coming 10 years. But far more importantly – can you comprehend what all this means for your potential suppliers? Consider the required competencies, for example, or the required R&D budgets, the availability of international sales channels or the necessary entrepreneurship and decisiveness, of course.

If you think about the future of ERP technology, you conclude that you are selecting more of an ERP concept these days than an exact ERP solution. A concept you choose will be developing at a furious pace. And you should choose the concept which must develop! Because vendors that are left behind or loses the direction at any time are quickly lost in this market. And the most painful bit: their customers are lost, too!

Bet on development partners

Companies that are considering new solutions would do well to test their vendors’ degree of futureproofing rigorously. Do the vendors on your shortlist have any chance at all surviving this rat race until 2030? Are they (sufficiently) profitable these days, for example? Do they have sufficient international scale? What is the size of their R&D budget? How innovative are they? And is a formal product roadmap available for the solution on offer?

By getting a good understanding of the prospective vendors’ commercial legitimacy during the selection process, you can prevent many unpleasant surprises in the future. However, if you fail to look to the future, then just make sure you include a huge sum in your budget for your next ERP system!

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