Why choosing the right ERP system matters

As organisations grow, managing multiple disconnected systems can lead to inefficiencies, data silos, and errors. Whether in local government, education, or the private sector, ERP systems have the power to:

• Automate manual tasks by reducing reliance on spreadsheets and outdated processes.
• Improve operational efficiency by providing real-time data across departments.
• Enhance reporting and compliance, ensuring accurate financial and regulatory reporting.
• Scale with your business and adapt to your organisation’s needs over time.

Research commissioned by TechnologyOne in 2022 revealed that Australia’s economy could save more than $250 billion over the next decade by moving away from redundant IT platforms to software-as-a-service (SaaS) solutions.

Costs of choosing the wrong ERP system

Choosing the wrong ERP system happens more than you might think, given the complexities involved in getting it right. Most of the time, this happens because organisations do not do the thorough research necessary.

Selecting an ERP solution that doesn’t align with your business needs can lead to:

• Budget overruns: Hidden costs related to implementation, customisation, and maintenance.
• Operational disruptions: Incompatibility with existing systems causing workflow breakdowns.
• Low adoption rates: Employees struggle with complex interfaces, leading to inefficiencies.
• Scalability issues: Limited flexibility to support future growth.

In 2023, for example, the Federal Government announced it was scaling back its failed GovERP project. GovERP was a bespoke ERP service for over 100 federal government agencies, with the original business case saying it would lead to billion-dollar savings.

Now, GovERP will be used by just one government agency (Services Australia), with an independent review finding the project did not deliver its intended improvements or cost-savings.

Chris Fechner, CEO, Digital Transformation Agency, said one reason GovERP failed was because it was based on “190,000 people thinking, behaving and doing things in one specific way”.

“With GovERP, the government chose to aggregate scale, standardise processes, and deliver volume-based savings,” Fechner said.

“In 2014 that was a reasonable approach but it’s now clear that the dynamics of government mean that processes cannot be harmonised consistently across government; there isn’t a one size-fits all ERP.”

Even when an ERP implementation eventually works, many of them still end up costing three to four times the original budget.

So then: how do you choose the right ERP system?

How to choose an ERP system: key factors

There are several essential steps you can, and should take to ensure you choose the right ERP system and unlock the cost and time savings they can offer:

1. Determine your business needs
2. Choose: SaaS vs on-premises ERP
3. Does it have upper-management support?
4. Does it have end-user (employee) support?
5. Is it scalable for future growth?
6. Does it integrate with your existing systems?
7. How much does it cost?

Each one of these steps is as important as the last, so don’t skip any!

Determine your business needs

The very first thing to do when choosing ERP software is to figure out:

• Whether your business/organisation actually needs it
• What exactly you need it for.

ERP systems are not one-size-fits-all, so defining your business goals will help you select the right solution. Consider:

• What are your biggest operational pain points? Are you struggling with inefficiencies, manual processes, or data silos?
• Which departments need better integration? Finance, HR, supply chain, customer service—your ERP should centralise these processes.
• Do you need industry-specific functionality? Local governments, educational institutions, and large enterprises have different ERP requirements.

If you’re starting from scratch, conduct a comprehensive business review to figure out which processes and tasks will be integrated into the new ERP system, and which will remain outside of it.

Choose: SaaS vs on-premises ERP

One of the most critical decisions when choosing an ERP system is selecting the deployment model, as there are three main types of ERP solutions:

• On-premises ERP: installed on company-owned servers and requires in-house IT management.
• ‘Cloud-based’ SaaS (Software as a Service): Hosted and maintained remotely by a separate ERP provider, accessible from anywhere with an internet connection.
• Hybrid ERP: A combination of SaaS and on-premises solutions.

In general, on-premises ERPs have higher upfront costs and more ongoing maintenance but offer slightly more control over data and security.

SaaS ERPs, on the other hand, can have faster implementation times and lower IT maintenance costs, with automatic updates depending on the provider.

TechnologyOne’s SaaS+ model offers the best of SaaS ERP, providing a fully managed, scalable, and secure solution with no hidden costs.

Book a SaaS+ demo today to find out more.

Does it have upper-management support?

ERP implementation is a major organisational change that requires executive buy-in. Without upper-management support, securing budget approval, aligning stakeholders, and driving change adoption becomes challenging.

To gain leadership support, make sure you:

• Align ERP benefits with business goals: Know how the ERP system enhances efficiency, cost-saving and decision-making compared to what you’re currently using.
• Highlight the potential ROI: Demonstrate how the new ERP system reduces operational costs, improves accuracy, and enhances productivity.
• Address leadership concerns: Executives may worry about implementation costs, disruption, and adoption challenges. A well-planned roadmap helps mitigate these concerns.

You’ll also need to ensure those actually using the ERP system, the ‘end users’, support and understand it as well.

Does it have end-user (employee) support?

An ERP system is only effective if employees can adopt and use it seamlessly. A complex, non-intuitive ERP system will lead to low adoption rates, resulting in reduced efficiency and wasted investment.

When assessing ERP solutions, ask:

• Is the interface user-friendly? Employees should be able to navigate the system with minimal training.
• Does the vendor offer training resources? Look for onboarding programs, online training modules, and ongoing support.
• Is the system customisable for different roles? Employees should have access to the tools and data they need without unnecessary complexity.

Across many of our customer case studies, a common theme in successful ERP implementations has been a proper onboarding and training of all staff prior to the launch date (and after).

Is it scalable for future growth?

Your ERP system should support your business as it grows. A system that meets today’s needs but lacks scalability will limit long-term success and require costly upgrades later.

Key questions to help choose the right ERP system for your business include:

• Can you add new features or integrations as your business grows?
• Will the ERP handle rising transaction volumes and user activity without slowdowns?
• Does the vendor offer continuous innovation and compliance upgrades?

This is where SaaS ERP providers like TechnologyOne come in. With TechnologyOne’s SaaS+, businesses automatically receive software updates and enhancements, ensuring the ERP system grows alongside your organisation.

Does it integrate with your existing systems?

A seamless ERP integration is crucial for maintaining data accuracy and efficiency across all business functions. An ERP that doesn’t integrate well with existing systems can lead to data silos, workflow inefficiencies, and increased operational complexity.

As an example, you may want an Enterprise Content Management (ECM) platform that can integrate with your existing Microsoft products and files, such as SharePoint.

How much does it cost?

ERP software costs can vary considerably depending on the vendor and the specific requirements of your organisation. These factors can be things like:

• Whether you opt for a SaaS, on-premises, or hybrid ERP model
• The number of products, modules, and integrations
• Whether a third party will implement it
• Implementation costs, such as customisation, training, and migration expenses
• Ongoing maintenance, security, and update fees

According to a 2022 ERP report, the average budget for an ERP implementation over a five-year period is about $9,000 per person. For larger companies, this cost can increase to over $11,000 per person.

Remember, ERP systems are long-term projects, so you should consider the cost over a period of at least 5 - 10 years.

TechnologyOne’s SaaS+ model eliminates financial unpredictability. A single annual fee covers software, implementation, upgrades, security, and support, providing organisations with complete cost transparency.

For more information on how much an ERP implementation with TechnologyOne might cost, get in touch with us.