How to make the right ERP selection: A practical guide

Selecting an enterprise resource planning (ERP) system is an important decision. The right ERP will unify your core processes and support growth for years to come. However, with many options on the market, finding the right solution can feel daunting. Choose poorly, and you risk significant cost and disruption.

Read on as we break down why choosing the right ERP matters and provide steps to help you navigate the selection process with confidence.

Why ERP selection matters

ERP systems integrate core departments — from finance to HR — into a unified platform. Nearly half of organizations report process improvements following ERP implementation, while only a small minority (4%) experience no material improvement.

Selecting a solution poorly-fit for one's needs is the primary cause of organizations failing to realize process improvements. Misaligned solutions notably increase the likelihood of resource waste and short- and long-term operational disruption. On the other hand, an aligned solution supports consistent execution across core functions, providing a stable foundation for ongoing process improvement. 

Core criteria for ERP selection

Below are core ERP selection criteria (and why they matter) to guide your decision-making.

Business fit

Ensure the ERP supports the specific functional needs of your business. Begin by assessing and documenting your software selection criteria to identify a solution that aligns with your operational objectives. The system should enhance and optimize business processes.

Evaluate whether an industry-specific solution is appropriate for your organization. Certain ERP solutions offer specialized modules (for manufacturing, distribution, etc.) with functionality tailored to industry-specific requirements. An industry-aligned ERP can reduce the need for extensive customization. Working with an industry-aligned partner who understands your sector, whether community mental health, family office, or manufacturing, results in smoother projects and solutions that truly fit your organization.

Scalability

Select a modern ERP system that can scale with your business as it grows. It should accommodate expansion (including increasing data volumes, user counts, and transaction loads) without compromising performance. Planning for scalability helps ensure the solution remains viable as organizational needs evolve.

Additionally, evaluate the ERP provider’s development roadmap and commitment to ongoing innovation. A solution with a predictable update cycle and sustained product investment is more likely to remain aligned with evolving organizational needs. 

Customization

Businesses have distinct processes, and the ERP should be flexible enough to accommodate them. Evaluate how easily you can tailor the ERP system to align with your workflows. Rigid systems may require significant process re-engineering, while adaptable solutions can be tailored to meet unique operational needs.

Also assess whether the ERP offers modular add-ons or third-party extensions. This enables the initial implementation of core functionality, with expansion into advanced features — supporting long-term user adoption without requiring a complete platform migration.

Interoperability

The ERP must integrate effectively with the existing technology ecosystem. Verify compatibility with current software applications. Seamless data flow between systems is central to operational efficiency.

Evaluate technical compatibility with the existing infrastructure (i.e., including databases, runtime environments, and API frameworks). An ERP built on open standards facilitates integration with diverse tools and emerging technologies, reducing the cost and complexity of future integration capabilities.

User experience

The ERP should feature an intuitive interface to minimize training requirements and facilitate user adoption. Verify that the vendor provides comprehensive training resources and ongoing support to ensure a successful ERP implementation and utilization.

Total cost of ownership

Look beyond the initial license fee to calculate the total cost of ownership (TCO). TCO includes implementation services, customization, training, and ongoing maintenance over a multi-year period. Given the substantial investment required, ensure the solution aligns with budgetary constraints while meeting critical functional needs. 

Deployment: Cloud vs. on-premises

Evaluate the deployment model that aligns with organizational needs. Cloud ERP solutions typically offer lower upfront costs. They also provide remote accessibility and automated updates, with the vendor managing system upgrades and security. This model may be suitable for organizations seeking to minimize on-premises IT infrastructure.

On-premises ERP provides greater control. Organizations may require this option if they have stringent data security requirements or extensive legacy system integrations. However, it requires notable internal investment (i.e., internal resources for hardware management, maintenance, and system upgrades) and most ERP implementations today are a cloud ERP deployment.

ERP evaluation: Step by step

Consider the following four steps for evaluating and selecting an ERP system.

Step 1: Build an ERP selection team

Put together a cross-functional selection committee to guide the evaluation process. This committee should include stakeholders from key departments (such as finance, operations, and IT) who understand their respective functional requirements.

This ensures comprehensive system evaluation and facilitates organizational buy-in. A dedicated selection committee helps maintain project momentum and alignment with business objectives. If engaging an outside consultant, verify they maintain vendor neutrality and have no financial relationships with ERP providers.

Step 2: Define your requirements

Prior to engaging with vendors, conduct a thorough analysis of current processes and operational challenges. Document existing system limitations and outline essential requirements for the new ERP (such as specific modules, integration capabilities, and reporting functionality). 

Then, establish clear success criteria for the ERP implementation. Well-defined requirements and success metrics will guide vendor selection and facilitate post-implementation evaluation.

Step 3: Shortlist solutions

With your defined requirements in mind, research the ERP marketplace to identify candidates that align with your needs and budget. This typically involves reviewing industry reports, consulting with advisors, and requesting information from vendors. Prioritize solutions with demonstrated success in your industry or with organizations of comparable size.

From the initial pool of options, refine your options to a shortlist of approximately three to five vendors. At this stage, finalize deployment preferences (such as cloud versus on-premises). Issue a Request for Information (RFI) or detailed questionnaire to shortlisted vendors to verify their system capabilities align with your core requirements.

An RFI is typically more appropriate at this stage than a Request for Proposal (RFP). RFIs gather information about vendor capabilities and system features, allowing for flexible dialogue. RFPs, by contrast, require vendors to submit formal proposals with detailed pricing and implementation plans. This process can be time-consuming and may limit meaningful engagement during the evaluation process.

Organizations considering Microsoft Dynamics 365 Business Central should prioritize partners with deep platform experience and relevant industry expertise. A partner familiar with your industry can provide insights into how the platform addresses industry-specific challenges and whether it aligns with your operational model.

Step 4: Select your ERP and implementation partner

Conduct comprehensive evaluations of your shortlisted ERP systems. Schedule product demonstrations where your team can observe each system addressing predefined use cases. During evaluation, utilize a structured scorecard or assessment matrix based on your established criteria to rate each option objectively. 

Following completion of all evaluations, select the ERP solution that achieved the highest score against your criteria and has the strongest team endorsement. The selection process may involve choosing an implementation partner, if the vendor operates through a partner network or if third-party integration services are required.

In these cases, verify that your partner maintains current certification for the selected software and demonstrates a proven track record of successful implementations. The implementation partner's expertise and experience are central to the project success. 

For organizations selecting Microsoft Dynamics 365 Business Central and CRM solutions, working with a partner who maintains current relevant certifications and has extensive implementation experience can markedly impact project outcomes. Platform-specific expertise — particularly in your industry — helps ensure the implementation team understands both the software capabilities and industry-specific requirements.

Negotiate contract terms, finalize licensing and service agreements, and develop a preliminary implementation plan outlining timelines and responsibilities. This completes the ERP selection process.

Turning ERP implementation into a proven methodology

At The TM Group (TMG), we apply a systematic, proven approach to ERP implementation. With over 40 years of experience and thousands of successful implementations, we know how to deliver ERP solutions that align with organizational needs. 

Our team specializes in Microsoft Dynamics 365. We guide organizations through the entire selection process, from requirements analysis to ongoing support. We minimize implementation risk while maximizing return on investment. 

To discuss your ERP selection and implementation needs, contact The TM Group today.