Question

What factors should companies consider when they plan to acquire a new ERP system? Why?

Answer 1

The factors to be considered by the companies before they plan to acquire a new ERP system with the reasons for considering it are as follows:

1. The company before going ahead with their plan to acquire a new ERP system must focus on first studying and getting clarity on individual business functions existing in the company and the value of integrating these existing business functions with the ERP that is to be acquired. This factor is studied because It is necessary that only those functions which contribute to the business gaining a competitive edge are integrated.
2. The company should figure out the benefits that it would reap from the acquisition of the new ERP system. The new system should add value by contributing to the reduction of the costs, increasing the revenues, bringing the risk down and improving the utilization of the various assets. This factor is important because to be able to reap the benefits of advanced scheduling and the planning function of the ERP in order to increase the throughput and reduce the downtime.
3. Technology is changing and growing at a high pace. Companies have to understand the underlying technology of the ERP system, It is a well understood fact that a technology that is the latest one and that which has proved itself will offer greater longetivity. The reason why this factor is important is because if this is considered before acquiring the ERP system then it dispenses with the need to upgrade the system or change it along the way.
4. Companies always have an aim or ambition to expand and therefore the companies should have a vision to choose an ERP system that offers scalability in a smooth manner. This factor is important to study and understand as organizations should make the decision to choose the systems that offer simple alternatives or options for scalability without diluting the output that emanates from the process.