How to choose an ERP: a 6-step selection method
How to choose an ERP for your SME in six steps: define your must-haves, shortlist, run scripted demos, compare the total cost, check references and exit terms.
By Anass Chabbab · · 6 min read
Your spreadsheets no longer keep up, orders are typed twice and nobody trusts the stock figures. The decision is made: you need an ERP (enterprise resource planning software). Now comes the hard part, because every vendor demo looks convincing and every brochure promises the same things.
This guide explains how to choose an ERP with a method rather than a feeling. Six steps take you from your own processes to a signed contract you can leave if you need to. At the end, you will find a scoring grid to compare the options side by side, and the questions to ask before you sign.
Before you start: who chooses, and on what basis?
An ERP touches sales, purchasing, stock, production, invoicing and accounting. Choosing it alone, from the IT side or from the finance side, is the surest way to buy a tool that half the company works around.
Set up a small selection team: one sponsor from management who decides, one person from each department concerned, and someone who knows your current tools and data. Agree on two things before meeting any vendor: the date by which you want to decide, and who has the final word if the team is split.
How to choose an ERP: the selection process in six steps
1. Map your processes and list your must-haves
Start with how your business really works, not with a list of features. Follow a real order from the first contact to the payment, and write down each step, each document and each person involved. Do the same for your purchasing and your month-end close.
Then sort your needs into three columns:
- Must-haves: without them, the ERP is unusable (for example, invoicing in several currencies, or tracking batches for a product recall).
- Important: they save real time, but a workaround exists.
- Nice to have: comfort features, useful for separating two close options.
This short document is the backbone of the whole selection. If you want to go further, our method for writing a software requirements specification shows how to turn it into a brief that vendors can answer precisely.
2. Shortlist three to five options across three routes
There are three ways to get an ERP, and it is worth looking at all three before narrowing down:
- Off-the-shelf: a standard product, configured to your settings. Fast to start, but you adapt to its way of working.
- Adapted: a standard product, extended with specific modules or connections where your processes differ.
- Custom: software designed around your processes, which you own. It suits companies whose way of working is their advantage.
Our article on off-the-shelf or custom software helps you see which route fits your case. Keep three to five candidates at most: beyond that, the demos blur together and the team tires.
3. Run scripted demos on your own scenarios
A standard demo shows what the product does best. A scripted demo shows whether it does what you need. Send each shortlisted vendor the same two or three scenarios, taken from step 1, with your own sample data: a typical order, an awkward exception (a partial delivery, a return, a credit note) and a monthly report.
During the demo, ask the vendor to perform each scenario live, and let your users take the controls for a few minutes. Note how many screens and clicks each task takes, what needs a workaround and what is only “on the roadmap”. A feature promised for later is not a feature you are buying.
4. Compare the total cost over several years
The licence or subscription price is only one line of the budget. Compare the total cost of ownership (TCO) over the same period, for example five years, and include:
- licences or subscriptions, and how they grow with the number of users or sites;
- set-up, configuration and any specific development;
- integrations with your other tools, through an API (application programming interface) or otherwise;
- data migration, training and the time your own team spends on the project;
- support, hosting and version upgrades.
Ask each vendor to fill in the same table, so that you compare like with like. A route that looks expensive in year one can come out cheaper over five years, and the reverse is just as common.
5. Check references and the implementation partner
Ask each finalist for two or three references from companies close to yours in size and sector, and call them yourself. Useful questions: what took longer than planned? What would you do differently? How does support respond when something breaks?
Look as closely at the people who will implement the ERP as at the product. Who exactly will work on your project? Have they done this with a company like yours? How do they handle a change of scope during the project?
6. Check the exit terms before you sign
The best moment to plan your exit is before you enter. Read the contract with these questions in mind:
- Who owns your data, and in what format can you export all of it, at any time?
- What notice is required to terminate, and what happens to your data afterwards?
- How are price increases at renewal handled?
- For a custom ERP: who owns the source code, and is it handed over with its documentation?
These points depend on the contract and on the law of the country that governs it. This article gives practical pointers only: have the contract reviewed by your lawyer before signing.
ERP selection criteria: a scoring grid
Once the demos are done, score each option from 1 (poor) to 5 (excellent) on each criterion, then multiply by its weight. Adjust the weights to your priorities before scoring, not after.
Illustrative example (fictitious figures)
| Criterion | Weight | Option A | Option B | Option C |
|---|---|---|---|---|
| Fit with your must-have processes | 30% | 4 | 3 | 5 |
| Ease of use in the scripted demos | 20% | 3 | 4 | 4 |
| Total cost over five years | 20% | 4 | 3 | 2 |
| Integrations with your tools | 10% | 3 | 4 | 4 |
| Partner and references | 10% | 4 | 3 | 3 |
| Exit terms and data ownership | 10% | 2 | 4 | 5 |
| Weighted score | 100% | 3.5 | 3.4 | 3.9 |
In this example, option C wins on fit and exit terms despite a higher cost. The grid supports the decision; it does not make it. When two scores are close, go back to the notes from the scripted demos and to what the references told you.
What a good choice looks like in practice
At Innova Home, in Morocco, orders were handled on paper and in Excel. The project, led by our founder in a previous role, replaced them with a single tool, and saved more than 50% of the time spent on each order. The lesson for your own selection: judge every option on how your real orders flow, as in step 1, rather than on a list of features. You can read the details in the Innova Home case study, and see how we approach these projects on our ERP expertise page.
Choosing is only half the work. Once the decision is made, our guide on implementing an ERP in an SME without disrupting the business takes over, from data migration to switching over in stages.
Frequently asked questions
What are the most important ERP selection criteria?
Fit with your must-have processes comes first: an ERP that cannot handle your core order or production flow will be worked around, whatever its other qualities. Then come ease of use, total cost over several years, integrations with your existing tools, the quality of the implementation partner and the exit terms. Weight them according to your priorities before the demos, so that the scores are not bent to a favourite afterwards.
Is there an ERP for small businesses?
Yes. Many ERP products are designed for small and medium-sized enterprises (SMEs), often sold as monthly subscriptions with modules you add as you grow. For a small business, the risk is less the size of the product than its complexity: choose one your team can use without a consultant at each step. Sometimes a well-chosen CRM and accounting software, properly connected, are enough for now.
How many vendors should we compare?
Three to five at the shortlist stage, and two or three in the scripted demos. Fewer, and you have nothing to compare against; more, and the team loses the thread. Make sure the shortlist covers the routes that make sense for you: off-the-shelf, adapted or custom.
In short
Choosing an ERP starts with your processes, not with the products. List your must-haves, shortlist a few options across the three routes, test them on your own scenarios, and compare the total cost over several years. Check references, the implementation team and the exit terms before you sign, and use a weighted grid to make the choice clear to everyone.
Comparing ERP options and want a second opinion before you commit? Book a free 30-minute discovery call: we look at your processes together and help you decide which route, off-the-shelf, adapted or custom, fits your business.
Let’s talk about it on a 30-minute discovery call, free and with no obligation.
