Employees working in an ERP system

ERP SYSTEMS – How do you choose the right ERP System for your business

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Choosing the right ERP system for your company is both a big and not least important decision. It can lead to both decreased costs and higher efficiency, which will benefit both you and your employees.

On the other hand, a wrong choice can lead to a big loss, both economically and not least temporally, as it can be a very demanding process.

At Datacon, we have been working with implementations of ERP systems in both small and large companies for more than 30 years. So we know how important it is to choose the right ERP system from the begining.

In this article, we have therefore compared some of the most popular ERP systems and ERP providers on the market, so you can make a good decision on an informed basis.

 

WHAT BENEFITS DOES AN ERP SYSTEM GIVE YOU IN GENERAL?

With an ERP system, you can easily keep an eye on everything that comes in and out of your business and how it’s organized.

Shortly said, you have the opportunity to gather all your important data in one place, which you can use to streamline the day-to-day operation of your business.

Your ERP system will also be of great benefit to you when making important decisions about the future development of your business.

You can for example keep an eye on wages, business transactions, orders and much more.

Your ERP system will basically be a common database for everyone in the company, so that each department does not have its own closed system. With an ERP system, you can therefore communicate much more across departmens and hierarchy in the company.

An ERP system can therefore be a great asset for most companies. Depending on your industry and your needs, you will be able to experience the following benefits:

  • Minimize the proportion of administration and duplication
  • Achieve greater flexibility
  • Get a better overview and insight into your business
  • Create better collaboration across the departments of your business
  • Increase your employees productivity

 

WHAT DISADVANTAGES COULD THERE BE USING AN ERP SYSTEM?

On the other hand, there are very few disadvantages associated with using an ERP system.

In the past, the biggest disadvantage was that a company became more vulnerable if all of its data were collected in one place, as it could technically be more vulnerable to hackers.

However, this argument has been dotted over the last few years, as data security is weighted very heavily today with all ERP solution providers. Most ERP system providers now also offer partial solutions, allowing you to store their data on their own servers, so you should not worry about this.

Another disadvantage of using ERP systems may be that it will have to be updated over time, which can be both very costly and not least time consuming.

However, this is an aspect that can be minimized by choosing an ERP system that makes it easy to implement new changes.

We will return to which ERP systems fall under this category further down in the article.

Man at the office

WHICH ERP SYSTEM SHOULD YOU CHOOSE?

Virtually all companies want to achieve both greater productivity and minimize the amount of duplication and time spent on administration.

But in order for you to reap many of these benefits, it’s crucial that you choose an ERP system that fits your business and not least your employees technical skills.

Some of the things you should look at when comparing different ERP solutions include:

  • What services the ERP system can meet (do they suit your business?)
  • How many services are included automatically and which ones are to be purchased?
  • Is the ERP system developed for small and medium-sized businesses or only large companies?
  • What does the ERP system cost – both in implementation and maintenance?

The biggest mistake we see for many companies is that they choose an ERP system that does not necessarily suit their business needs.

Here it is especially important that early in the process it becomes clear which functions your ERP system should be able to handle.

Although most ERP systems can handle many of the same features, such as accounting management, sales management, inventory optimization, etc., it is very different which features that you get as a standard solution and what features you may need to purchase.

Furthermore, there is a huge difference between what an ERP solution costs. However, prices often reflect the type of company for which the system itself is designed.

Here it is crucial that you think about what the immediate starting costs involves and what additional costs can be linked in the future.

If your ERP system is difficult to update, you can spend a lot of money on developers in the future, which of course affects the overall accounts.

 

WHICH ERP SOLUTION PROVIDER SHOULD I CONSIDER?

There are many different ERP systems and thereby ERP-provider that you can choose from today.

However, most companies choose one of the following systems:

  • Microsoft Dynamics 365 for Finance and Operations
  • Microsoft Dynamics 365 Business Central
  • SAP ERP

NOTE: Do not be fooled; Although two of the most commonly used systems are both called ‘Microsoft Dynamics 365’, it is not the same system (we understand, it may seem confusing!).

Both of these systems are developed by Microsoft. But the main difference is which kind of companies and industries the ERP system is designed for. Besides Microsoft another very important ERP solution provider, is SAP. However SAP differs since this system is designed for very large companies. But we will go into further detail in the next section of the article.

Mand at stock

ABOUT MICROSOFT DYNAMICS 365 FOR FINANCE AND OPERATIONS

Microsoft Dynamics 365 for Finance and Operations, previously known as Microsoft Dynamics AX, is one of the most widely used ERP systems in Denmark. The system is specially developed for medium and large companies.

With this ERP system you have the ability to handle, among other things:

  • Production Management
  • Financial Management
  • Budget Planning
  • Inventory Management
  • Contract Management
  • Business Intelligence
  • Logistics Management
  • Sales Management

This system is particularly relevant for companies working in the manufacturing industry, wholesale or retail and e-commerce.

The benefits of this system are that it gives both your business a high level of data security that is compatible with the new GDPR regulation, while the system is incredibly easy to maintain and not least to update.

As something very special, you will get business intelligence software included in your Microsoft Dynamics 365 solution. That way, you have the best opportunities to get as much information out of all your data, which you can convert to new decisions and possible action plans.

Microsoft Dynamics 365 offers a cloud-based solution which means that the framework for your system has already been set.

When upgrading your system, it is done through so-called extensions, which means that your developer does not need to enter and change directly in the code. This ensures that upgrades are done smoothly and without risk to you.

Instead, Microsoft has to make sure that the selected extensions are compatible with your ERP system. Therefore, you can be completely calm when you choose this system.

In addition, their solution is also very flexible, which means you can choose between 3 different solutions depending on whether you want Microsoft to store all your data or if you want to do it.

However, in price terms, Microsoft Dynamics is not in the cheap end of the scale.

You must purchase at least 20 licenses to use this ERP system. This also emphasizes that it should primarily be used by medium-sized enterprises.

Here you can choose from three licensing options, all of which have different applications. These three price models are called a ‘Full User’, ‘Activity User’ and ‘Team Member User’.

A Full User License costs $190 a month, an Activity User costs $50 and a Team Member User costs $10.

A Full User has as its name implies access to all features, while an Activity User has limited rights, but can for example create orders and similar functions. A Team Member User has only read permissions in the system and can not actively register anything.

 

ABOUT MICROSOFT DYNAMICS 365 BUSINESS CENTRAL

Unlike Microsoft Dynamics 365 for Finance and Operations, Microsoft Dynamics 365 Business Central, previously known as Microsoft Dynamics NAV, is an ERP system developed for small businesses.

Here, compared with Microsoft Dynamics for Finance and Operations, you have fewer integration options.

With this ERP system, you only have the ability to handle, among other things:

  • Financial Management
  • Inventory Management
  • Customer Management
  • Contract Management

Additional integration opportunities within for example Production Management and Service Management, can be purchased.

However, Microsoft Dynamics Business Central is a cheaper option than Dynamics 365 for Finance and Operations.

Here you can choose from three licensing options, all of which have different applications. These three price models are called ‘Premium’, ‘Essential’ and ‘Team Member’.

The most expensive solution, Premium, that gives full user access to all features costs $100 a month while the Essential solution with fewer user features costs $70.

The cheapest user license with limited access is called Team Member and costs only $8. Here, however, you will only be able to read and approve documents sent between the departments of your company.

On the other hand, there are no limits on how many licenses to buy and with its limited possibilities, this system is best suited to smaller companies, typically under 20 employees.

 

ABOUT SAP ERP

A third system that applies to the Danish market is SAP ERP.

The solutions from SAP, however, are unlike the other two systems, developed for large international companies with branches in several countries or across several continents. SAP ERP is generally considered the best ERP system for large companies. However in a country such as Denmark, there are not a lot of global companies that can enjoy all the benefits of this system.

With this ERP system you have the ability to control, among other things:

  • Labor costs
  • Accounting Management
  • HR
  • Production Management
  • Sales Management
  • Inventory Management

Since SAP’s ERP systems are developed for international businesses, it also means that the price of a license is at a much higher level than with the other two systems.

A license costs here from $5000.

Compared with the other two systems, SAP’s ERP systems are more advanced and therefore they are also able to process, analyze and handle much larger amounts of data than the other two.

But as we mentioned above, in a country like Denmark, very few companies will benefit from this system, as it requires a great setup to reap many of the benefits that the system can give.

 

SUMMARY OF BENEFITS AND DISADVANTAGES:

ERP systemApplicationsPriceEasy to maintainCloud-basedMost suitable for
Microsoft Dynamics 365 for Finance and Operations
  • Production Management
  • Financial Management
  • Budget Planning
  • Inventory Management
  • Contract Management
  • Business Intelligence
  • Logistics Management
  • Sales Management
$10-190 per licensYesYesMedium-sized companies with +20 employees
Microsoft Dynamics 365 Business Central
  • Financial Management
  • Inventory Management
  • Customer Management
  • Contract Management
$8-100 per licensNoYesSmaller companies with 1-20 employees
SAP ERP
  • Labor costs
  • Accounting Management
  • HR
  • Production Management
  • Sales Management
  • Inventory Management
$5000 per licensNoYesInternational companies with +50 employees
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CONTACT US FOR ADDITIONAL INFORMATION

At Datacon, we are always ready to help you find the right ERP system for your business.

Contact us today by phone or email and let us help you to further streamline your business.

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