ERP Evaluation – How Do You Gauge The Need for Complexity

Hi Everyone,

The purpose of this post is to help you choose the right-sized ERP for your company. Window shopping for an ERP is challenging because (1) there are many ERP systems out there, and (2) taking an ERP for a real-life test drive is a big commitment. One of the common criteria in choosing an ERP is complexity. You want an ERP that is capable enough to support the growth and complexity of your business without it creating unnecessary work.

Regarding complexity, there are two extremes you want to avoid:

1. Constantly working outside of your ERP because it cannot support your business.
2. Spending extra on labor to support unnecessary complexity.

The problem: One or two people test driving an ERP does not simulate the real world. If your company has reached the point of needing an ERP, you have reached the point that no one person can do everything. Evaluating ERP as a Super User that can do all activities does not help you gauge the ERP’s ability to support your business. What seems complex to you might be perfect to the organization.

The temptation: Tools like NetSuite and OpenERP have great curb appeal. They hide complexity, and they show the most simple case first. I do not blame them. Doing so makes the product much more enticing. They make it simple for a Super User to move a product or service throughout the system with few barriers. If you are coming from a smaller system like QuickBooks, this simplicity is very appealing. However, this scenario is where your skills as an ERP evaluator will be tested.

In the real world, there are clear distinctions between what activities can be performed by what roles. For example: (1) the person creating the PO might not be the person approving the PO, (2) the person creating the check/payment run probably is not the person approving or signing the checks, and (3) the person picking ground level product might not be person driving the fork lift. This list can get very long, especially for rapidly growing companies.

The example: One of my customers is a great example of choosing a right-sized ERP. They are a wholesale distributor. They are a small-to-medium sized business. They buy from all around the world and sell to multi-billion dollar companies. If you were to read the instructions for buying and selling products through their system, most people would be intimidated by the number of steps. If you are buying from China, the system requires you to route the order to the right role to approve such an order. When you are performing your receiving inspection, you are asked to take pictures and measurements of the product. When you ship the product, the system requires that you review the day-of-shipment email that includes all the inspection pictures. The system helps ensure accountability by putting the right approvals with the right roles.

Company owners and customers love it! They like the business intelligence the system creates. They like that documents are automatically routed based on talent and approval authority. They like that the system performs the routine tasks, and it notifies the user when difficult situations are encountered. They love that processes are efficient and repeatable.

My advice: Do not be afraid of complexity so long as you have a partner that can help you make sense of it. You should include at least one enterprise class ERP in your evaluation to truly understand what is possible. You need to talk to people who have used these enterprise features to automate and enhance their business. It is difficult for an ERP evaluator to envision the above type of automation during the evaluation process, but when you choose the right-sized ERP, your company will thank you many times over.

I hope this helps!! Here is some more information about how I guide people through the ERP evaluation process.

Why consider Open Source ERP

Open source ERP gives you every opportunity to prove or disprove its ability to support your company’s ERP needs on a timeline that satisfies your organizational needs. With open source ERP, you do not face the same financial constraints nor do you face the same conflicts of interest as with commercial ERP. Instead, you invest in the appropriate skills and knowledge for your people and processes. Best of all – if open source ERP cannot solve your company’s needs, you can safely justify spending the additional $2K to $5K per person per year for life of your commercial ERP to help drive your organization’s success.

ADempiere vs iDempiere vs Openbravo vs Compiere

The ADempiere, iDempiere, Openbravo and Compiere environments are amazingly similar. iDempiere came from ADempiere. ADempiere and Openbravo came from Compiere. Compiere came from Jorg Janke. Jorg came from Oracle. As a result, iDempiere and ADempiere have much in common with Oracle’s ERP in terms of the financial feature set.

This is both good and bad. Good because iDempiere and ADempiere are quite capable to help a company grow beyond $500M USD. Bad because they tend to be more complex in that they account for multiple languages, accounting schemas, currencies, calendars, costing types, costing methods, etc…. If you are a growing organization, and you need a system that will grow with you, and you have the right internal talent/resources, iDempiere or ADempiere will be a big asset for you.

The biggest difference between these products is that ADempiere and iDempiere are pure open source. ADempiere and iDempiere make all feature available for free. Compiere and Openbravo hold back features behind a commercial or paid license.

iDempiere and ADempiere vs OpenERP:

iDempiere/ADempiere (iD/AD) and OpenERP approach ERP from two very different directions. OpenERP comes out of the box with very simple options. If you are coming from QuickBooks, and you need a simple ERP system help you manage your business, OpenERP will look and feel comfortable.

iD/AD comes out of the box with every feature installed and configured to run a $200M+ USD business. If your business is growing rapidly, and you are willing to invest the time to learn an enterprise accounting system, then iD/AD will give you confidence.

Which one is best for you depends on your internal talent, growth and business complexity. Here is a post to help you learn more.