Choosing an ERP for a smaller company: how to get it right
The essential criteria for selecting an ERP that fits a smaller company, the classic mistakes to avoid and an overview of the solutions on the market.
Choosing an ERP (enterprise resource planning software) is a commitment of 5 to 10 years. For a smaller company, picking the wrong one can paralyse the business for months. Here are the criteria to settle before you sign anything.
The essential selection criteria
Cloud or on-premise?
The cloud (SaaS) reduces the up-front investment and simplifies maintenance. On-premise offers total control over your data and over customisation. For most smaller companies, the cloud is now the more rational choice – unless you have specific regulatory or business constraints.
Modularity
A good ERP for a smaller company should let you start with the essential modules (accounting, purchasing, sales) and add building blocks as you grow (production, CRM (customer relationship management), HR). Avoid monolithic solutions where everything is delivered in one block.
Integration capabilities
The ERP has to interface with your existing tools: payroll software, e-commerce site, business applications. Check that open APIs (connection interfaces between software) and native connectors are available.
TCO (total cost of ownership)
Do not stop at the licence price. The TCO includes:
- implementation and configuration costs
- user training
- annual maintenance
- data migration costs
- any custom development
The classic mistakes
- Choosing on the strength of a sales demo – insist on a pilot run on your own data.
- Underestimating change management – the best ERP fails if the teams do not adopt it.
- Wanting to customise everything – every piece of custom development makes future updates more complicated.
- Ignoring how durable the vendor is – check its financial health, its roadmap and the size of its community.
A few solutions worth evaluating
| Solution | Type | Key strength |
|---|---|---|
| Odoo | Open source / SaaS | Modularity, large ecosystem |
| Sage X3 | Vendor | Functional coverage for manufacturing |
| Cegid XRP | Vendor | French roots, compliance |
| Dolibarr | Open source | Simplicity, low cost |
| SAP Business One | Vendor | Coverage for smaller companies, international |
In summary
Define your real needs before you approach vendors, involve your key users in the decision, and always calculate the TCO over 5 years. A well-chosen ERP is an accelerator; a badly chosen one is a ball and chain.