Before a decision of acquiring an ERP

Before a decision of acquiring an ERP

Acquiring an ERP falls in CAPEX (Capital Expenditure) as this huge business driving entity is an intangible asset in nature. The huge expenditure and efforts occur in the whole cycle of acquisition or customization, implementation and maintenance of an ERP. In fact, a significant capital expenditure is made to achieve various business objectives which is intended to come from ERP.

These are:
– Expanding production capacity or enhancing operational efficiency,
– Replacing or upgrading outdated equipment and technology,
– Acquiring the ERP as an assets that will generate revenue or cost savings over an extended period
– Assists compliance with the regulatory requirements
– Enhancing product quality or innovation

The expenditure decision for acquiring an ERP for the business subject to a rigorous evaluation and approval process within an organization. This may involve a cost-benefit analysis, risk assessment, and consideration of the asset’s long-term impact on the business. This type of CAPEX typically involves a significant cash outlay, while it may reduce cash in the short term, the asset acquired is expected to provide long-term value, isn’t it?

Definitely, the decisions is broad and risk-prone but, this is often aligned with an organization’s strategic plan and growth objectives. They may be part of a broader capital budgeting process. Managing and Enterprise Resource Planning effectively is crucial for maintaining and improving a company’s infrastructure, competitiveness, and future profitability. It requires a balance between investing in assets that enhance the business’s capabilities and financial prudence to ensure that these investments align with the organization’s long-term goals and financial stability.

An ERP is like the Titanic – I think so. So decision and taking plan is the most crucial part in consideration of two areas:
1) Development from the scratch. It requires huge time, cost, competent software architect and designer, quality assurance staffs, developers, analyst, tester, technical people for operations, experienced staff for deployment and maintenance, change management, training etc. This is massively ambitious process. It is important to remind that ERP fails and it happened even for the giant companies.

2) Acquisition from a time and industry tested ERP vendor – which needs to be customized bit or more to fit the whole functionality to the business or organizational operations requirements. There are significant vendors in the world now ready with stable, time and industry tested ERP solution – and you know them; these are namely: Microsoft Dynamic365 Business Central, Oracle NetSuite or Oracle ERPCloud, SAP, Infor ERP, Sage ERP, Epicor, Workday Financial Management, SYSPRO, IFS ODOO etc. And, there are ERP expert communities in around the world to provide solution.