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FAQ - Which ERP (enterprise resource planning) system to buy?

I wish there was an easy answer to the question "which software package to buy"? There are good packages and there are cheap packages but I do not yet know of any good cheap packages. At the top end of the price spectrum there is the highly flexible, feature rich (i.e. complicated) SAP R/3 which would cost you literally millions to implement. There are then dozens of full function ERP/MRPII packages which you can implement for one tenth of this (including the cut down or "template" versions of SAP R/3). There are then hundreds of small packages that would cost a few thousands but have limited functionality and support. My suggestion is to start by seeing what the potential benefits are and therefore how much you can afford to spend. I nearly always find that companies with poor planning systems carry too much inventory and work in progress. The saving in inventory and work in progress alone can often justify the expense of a properly implemented full function planning system. Try the cost and benefit analysis example in our ERP Implementation Checklist. Many companies find that an ERP package, when properly implemented with the help of software independent implementation experts, is the most cost effective project they ever undertake so well worth the investment.

Once you know how much you can afford to spend, follow the software selection guide not forgetting to take advantage of any personal experience of packages in the company or with customers and suppliers. The biggest difference between the middle ranking packages is not the functionality but "bugs" and the support. Never forget that the software is not a critical success factor in a successful implementation provided you select a package that is well supported locally (see Popular ERP Packages), it is the understanding of the people using the package. I have seen the same package implemented successfully in one company but disastrously in another company so many times.

ERP software is often divided into "Tiers" - see our ERP software tiers definitions