White Paper

ERP: The Buyers Guide

Contents
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Weigh the pros and cons of ERP delivery models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Select a Future-proof Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Create a Contingency Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Change Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Technical Headaches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ROI Realities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Skills Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

About Ziff Davis B2B

Ziff Davis B2B is a leading provider of research to technology buyers and high-quality
leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over
50 million in-market technology buyers every month and supports the companys core
mission of enabling technology buyers to make more informed business decisions.
Copyright 2014 Ziff Davis B2B. All rights reserved.

Contact Ziff Davis B2B

100 California Street, Suite 650
San Francisco, CA 94111
Tel: 415.318.7200 | Fax: 415.318.7219
Email: [email protected]
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Ziff Davis|White Paper| ERP: The Buyers Guide

Introduction
Companies looking to implement an up-to-date, innovative ERP system must be prepared
to sift through a complicated vendor landscape. ERP works by integrating all of a companys
processes and data into a single unified system. Automating and uniting disparate business
processes, from managing inventory records to parsing financial data, can drive significant
improvements in productivity, customer service and interdepartmental collaboration.
At the same time, todays executives must choose from a staggering number of ERP
solutions, ranging from on-premise, feature-rich systems to newer, lesser-known cloud-based
alternatives. The trick is making a purchasing decision that meets an organizations budgetary,
operational and business processing requirements. After all, ERP implementations are known
for carrying a seven-figure price tag and requiring painful multi-year deployments, not to
mention scores of high-priced consultants to keep systems up and running. The wrong move
can easily spell financial disaster.
The right move, though, can deliver a number of key benefits. All the more reason for
organizations to carefully weigh their options when it comes to selecting an ERP system. For
starters, the right ERP solution can deliver:
Better alignment of corporate strategies and business processes
Improved customer service
Streamlined supply chain processes
Better targeted marketing campaigns
The ability to share data across various departments in an organization
Enhanced financial tracking and forecasting
Huge cost savings
Enhanced productivity with self-service capabilities
These benefits apply to a wide range of industries including manufacturing, financial
management, human capital management, supply chain management, project management
and customer relationship management.
So how can a company in the market for an ERP solution make a proper purchasing decision?
This white paper outlines the pros and cons of various delivery models, advises on how to
select a solution for the future and discusses some lesser-known roadblocks to a successful
ERP implementation.

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Weigh the pros and cons of ERP delivery models

Controversy continues to swirl around whether the cost benefits of cloud-based ERP tools
trump on-premise solutions robust feature sets. Heres a breakdown of what you need to
know:
The case for on-premise:
On-premise ERP tools are often a perfect fit for large enterprises with heavily manned IT
departments. With the right on-staff skills, on-premise ERP grants companies enormous
control over their data, immediately eliminating questions of data ownership and control. Whats
more, companies that own their data and manage it on in-house servers often have fewer
concerns about data breaches and security threats. And unlike cloud-based ERP systems
from startups, companies need not worry about what might become of their data if a vendor
goes under, or becomes part of a merger or acquisition.
Another appealing aspect of on-premise ERP is vendor hand-holding. Step-by-step
implementation, employee training, customization theyre all services that are often bundled
with the purchase of an ERP system.
From a specifications standpoint, on-premise ERP systems also tend to be less cookie-cutter
than their cloud-based coutnerparts, allowing for rich feature sets and plenty of customization
to suit a businesss unique requirements.
The case against on-premise:
Costly and time-consuming deployments and aggravating monthly fees are among the chief
complaints regarding on-premise ERP systems. A modest-sized IT staff simply wont be able to
oversee a hefty ERP deployment, nor will it be able to manage weekly maintenance tasks and
repairs. In fact, tackling ERP with limited staff is likely to negatively impact other IT projects
and create an enormous backlog of IT activities.
Organizations should also expect a substantial capital outlay when investing in an on-premise
ERP system. Upfront costs include servers and additional infrastructure. As well, because
on-premise ERP requires upfront investment, its not uncommon for capacity to go unused for
long stretches of time.
The case for cloud:
Theres a strong continuing trend toward more cloud and SaaS ERP solutions. In fact, research
firm Gartner reports that 47% of firms surveyed planned to switch from core ERP systems to
cloud-based alternatives within 5 years, while only 30% said theyd keep their on-premise ERP
systems for the foreseeable future.

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By offering organizations access to business services such as HR, payroll and procurement
using an on-demand platform, cloud ERP provides a number of perks. For one, many experts
argue that third-party providers such as cloud and SaaS vendors tend to offer solutions that
are more secure and reliable than any in-house or proprietary system. In fact, many vendors
stake their very reputation on providing fool-proof ERP tools more than any internal IT group
can promise.
Another advantage is cost. A recent IDC white paper, sponsored by Amazon, reveals that
the primary benefit of switching from on-premise to cloud was reduced costs. The report
demonstrates that migrating from on-premise to cloud replaced $3.66 of capital costs with
$1.00 of operational costs.
Cloud ERPs ability to eliminate pain-staking maintenance tasks is another upside for busy
IT staff. Backup, hardware fixes, system upgrades theyre all feats performed by the cloud
provider, thereby alleviating the burden on in-house IT staff.
And thanks to clouds utility model, organizations need only purchase the licensing and IT
infrastructure they need to support current needs with the option of scaling up or down as
requirements change over time.
The case against cloud:
Not everyone is singing the praises of cloud ERP. For some, todays newer and untested cloud
offerings lack the experience and best practice knowledge built into time-tested on-premise
systems. Less scalability and flexibility are also common complaints of cloud solutions. And
then theres the issue of security. A recent Panorama study reveals the reasons companies
are holding off on the cloud include risk of security breaches (32%), lack of information or
knowledge about market offerings (32%), and risk of data loss (17%).
However, if cost is a primary motivating factor, as it often is, then its easy to understand
why some organizations might be reluctant to embrace the cloud. Despite widespread
marketing buzz and industry hype, some experts argue that the cloud simply isnt delivering
cost savings as advertised. Whats more, even cheaper options are arising with open source
software. Codeless and model-driven, todays open source ERP solutions promise to integrate
accounting, sales, procurement and project management at a fraction of the cost of traditional
and cloud-based ERP systems. Again, in-house expertise will be needed to manage and
monitor an open source ERP system.

Select a Future-proof Solution

Trend 1: Mobile
Because ERP solutions tend to be pricey, its important that organizations purchase solutions
that are relatively future-proof. One trend ushering in a new generation of ERP tools is mobile

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technology. Studies suggest that enterprise mobile workers already make up 73 percent of the
workforce. Thats all the more reason to select an ERP solution that provides remote access to
its database and processes.
By granting this remote access, employees such as field salespeople can enjoy up-to-theminute information on everything from product pricing to shipping updates details that can
significantly enhance customer service and generate on-the-spot upsell opportunities.
But thats not all. Because ERP systems can be integrated with human capital management
modules, employees can update their work schedules, manage benefits packages and submit
expense reports with the push of a button, all from a remote location.
The Internet of Things is also driving a greater need for mobile ERP. These days, a growing
number of manufacturers rely on sensors to send real-time alerts in the event of a machine
breakdown or hardware malfunction. By allowing plant workers to receive alerts via a
smartphone or tablet, mobile ERP helps improve troubleshooting, minimizes production delays
and lets employees respond to emerging issues before they become full-fledged crises.
Trend 2: Data analytics
Big data is impacting all types of technologies and ERP is certainly no exception. Many
companies make the mistake of storing data in disparate silos. Fortunately, an ERP system
with data analytics capabilities can help by integrating data across multiple platforms and
systems. The result is a single, unified snapshot of an organizations entire data repository.
From there, this data can be mined for business-critical insights. For example, a company may
examine the real-time sales data of one product to predict future demand for a similar product
in another region of the country. Or a company may be able to connect payroll system glitches
with poor employee performance insights that can lead to improved sales and lower attrition
rates.
Trend 3: Wearable technology
Gartner has predicted that the wearable technology market will be worth $10 billion by 2016.
And according to a recent study by the University of London, wearable technology can improve
employee productivity by as much as 8.5% while enhancing job satisfaction by 3.5%.
Its no wonder then that vendors are looking to unite the worlds of ERP and wearable
technology. Take, for example, Plex Systems. The cloud ERP vendor recently unveiled its Plex
Labs project a role-based user experience that relies on Google Glass to connect workers
from the shop floor to the top floor with its manufacturing cloud solution. The thinking is
that Plexs wearable solution will connect people, machines, materials, data and systems for
a greater end-user experience. Rather than turn to smartphones and tablets, manufacturing
professionals will be able to see and act on live data and shop floor transactions hands-free for

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faster and more efficient decision-making.

Create a Contingency Plan

No amount of careful selection, planning or research can truly prepare a company for an ERP
deployment. In fact, according to Panorama Consulting Solutions 2013 ERP Report, over the
past four years, the average cost of an ERP implementation has been $7.3 million and the
average duration has been 16.6 months. Over this time, approximately 59% of projects have
exceeded their planned budgets, 53% have exceeded their planned durations and 56% have
received less than 50 percent of the measurable benefits they anticipated form their ERP
software initiatives.
Here are just a handful of variables that can drive up costs, and what companies need to do to
avoid paying them.

Change management
ERP projects impact every aspect of a business, from sales and marketing to inventory and
merchandising. Consequently, companies that neglect to prep their employees for these
enterprise-wide transformations are likely to encounter resistance.
To avoid such gridlock, organizations would be wise to adopt a formal change management
strategy. This includes investing in employee training, systems integration and customization in
order to reap real value from an ERP implementation. Whats more, there are countless change
management tools and OCM (Organization Change Management) methodologies to choose
from. Prosci, IMA, IBM, SAP theyre just a handful of vendors offering tools that enable
companies to prepare for, manage and reinforce change. And finally, gamification can help
make change management fun by giving employees achievement badges and small financial
rewards in exchange for ERP adoption.

Technical headaches
Ensuring an ERP systems various parts are tightly integrated with all other business-critical
applications, including office productivity suites, is critical to deriving real business value from
a solution. Data must also be integrated across multiple systems, especially if an organization
plans to add data analytics capabilities. System maintenance can also either make or break
an ERP system. A study conducted by research firm YouGov reveals that the single most
prevalent reason companies change their ERP system is the time and money spent on system
maintenance, with 36 percent of the polls 531 respondents reporting this choice. For some,
the answer is taking a modular approach to system building. Rather than attempting to tackle
an enterprise-wide, sweeping ERP solution, some experts recommend adding ERP modules
over time for a more manageable system.

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ROI realities
Forget the hype surrounding cloud-based ERP solutions. Like it or not, theres no such thing
as an immediate return on investment when it comes to ERP. While its true that cloud-based
solutions can be a lot less costly at the start, ongoing, recurring SaaS subscription fees can
make it harder to break even as the years go by.

Skills required
Deploying and managing an ERP system takes that rare combination of technical savvy and
business acumen. As a result, many companies are surprised to discover that they lack the
in-house expertise needed to manage an ERP system. A cloud-based tool can certainly ease
the burden but companies should still count on having to configure the software, as well as
train people on the system. In either instance, an IT consultant can help by making sure an
implementation is completed on time and on budget. Just remember that these consultants
tend to command higher rates and will always have the vendors interest top of mind.

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