In this expert response, find the pros and cons of using software from large ERP vendors.
I've heard a lot of negative things about big-box ERP systems like SAP and Oracle. Are the large ERP vendors still worth the price, or should buyers look at smaller vendors?
It is true that many small and medium-sized organizations have purchased expensive tier-one ERP packages that provide a lot more functionality than they can really use. On the other hand, I have seen some smaller companies with very robust software requirements. In this case, the software capabilities provided by a higher-end package were the right answer.
But for companies posting between $50 million and $200 million in sales and requiring most of the traditional ERP modules, I recommend starting the software evaluation with tier two packages. Early on in the evaluation, if it appears these suites will not address important business needs, consider lower-end tier-one packages. If sales are less than $50 million and there is only one company site, tier three may work fine. In either case, you will avoid the much higher total cost of ownership associated with the SAPs of the world.
Steven Phillips is an ERP professional with more than 27 years of implementation experience, and the author of the book Control Your ERP Destiny. His background includes senior management education, software selection, project management, application consulting, process redesign, systems design, testing, training and post-go-live support.
Steven has a degree in production and operations management, with advanced studies in industrial management. Previously certified by the American Production and Inventory Control Society, he has written articles appearing in APICS publications. He also runs the popular blog Street Smart ERP.