Best ERP systems : The ultimate guide in 2024

Enterprise resource planning (ERP) systems are crucial for businesses across industries, integrating core functions like accounting, customer relationship management (CRM), human resources (HR), and supply chain management into one cohesive platform. These systems enhance efficiency, streamline operations, and boost productivity. Forbes Advisor has identified and ranked the top ERP systems currently available, aiding businesses in selecting the ideal solution to meet their specific needs.

Understanding ERP Systems: Enhancing Business Efficiency and Integration

An ERP system, short for enterprise resource planning, optimizes business functions to boost efficiency and productivity. Traditionally aimed at consolidating internal data, modern ERP software now simplifies and automates operations across different departments. Central to ERP is a unified database that replaces multiple standalone systems, benefiting both large corporations and small businesses like independent retailers and service providers. Industries ranging from manufacturing to healthcare and nonprofits utilize ERP systems for streamlined data management and operational excellence.

How do ERP systems work?

ERP systems leverage a unified database to execute a wide array of management and tracking tasks efficiently. While setup and maintenance often require expertise from ERP providers or internal teams, these systems are significantly simpler for companies compared to older, separate software solutions. Employees typically engage with ERP via a centralized dashboard linked to the core database, facilitating real-time access to comprehensive company data. ERP systems can operate on-site or increasingly in cloud environments, enhancing accessibility and scalability for businesses.

The primary advantages of ERP systems include

1. Enhanced productivity: By automating and streamlining core business functions, ERP systems enable employees to achieve more with fewer resources.
   
2. Simplified reporting: ERP platforms facilitate easy reporting for timely decision-making based on accurate, real-time insights.
   
3. Increased accuracy: Centralizing data management reduces errors in reporting across departments, ensuring consistency and reliability.
   
4. Compliance made easier: ERP systems automate internal compliance tasks and provide accurate real-time reporting, adapting quickly to regulatory changes.
   
5. Improved agility: Access to real-time data and streamlined operations allows businesses to respond swiftly to opportunities and market changes.
   
6. Enhanced collaboration: ERP systems promote better interdepartmental collaboration by providing shared interfaces and data visibility.
   
7. Scalability and integration: ERP systems are scalable and support integration with other systems like MRP, POS, SCM, and CRM, leveraging a unified database to enhance operational efficiency and expand software access across the organization.

Selecting the optimal ERP system

When selecting the right ERP system for your organization, focus on these key considerations:

Core features

• Integrations: Choose an ERP that seamlessly integrates data across HR, IT, accounting/finance, CRM, and other essential areas to streamline workflows.
  
• Shared Database: Opt for a system with a unified database that provides real-time data accessibility across all modules.
  
• Automation: Look for capabilities that automate repetitive tasks across departments, enhancing efficiency.
  
• Analytics and Reporting: Select an ERP that offers robust analytics and reporting tools to derive actionable insights for informed decision-making.
  
• Security: Ensure the ERP system prioritizes data security with features like encryption, automatic backups, multifactor authentication, and proactive system monitoring.

Cost

• Consider upfront costs, ongoing maintenance fees, and potential scalability expenses to align with your budgetary requirements.

Demo and Implementation

• Request demonstrations from ERP providers to assess user interface, functionality, and ease of use.
• Evaluate implementation processes and timelines to ensure minimal disruption to your operations.
• By evaluating these factors comprehensively, you can choose an ERP system that aligns with your business needs and enhances operational efficiency effectively.

Types of ERP systems

• On-premise: On-premise ERP software is installed and operates on computers and servers located within the organization's physical premises. It requires an upfront payment through a perpetual license, with costs varying based on business size. This option is ideal for organizations handling sensitive data, offering in-house data control and customization to fit specific business processes.
• Cloud-based: Cloud-based ERP software runs on remote servers accessed via the internet instead of local servers. It eliminates the need for on-site hardware, software, and dedicated IT management. Cloud ERP systems are cost-effective, easier to maintain, and quicker to deploy compared to on-premise solutions. However, they may offer less customization and rely on a cloud provider for ongoing software access.
• Hybrid: Hybrid ERP combines elements of both cloud-based and on-premise solutions. It typically involves a two-tier system: a primary on-premise ERP for core functions and a secondary system supporting specific business units or locations. This hybrid approach allows organizations to optimize costs while meeting diverse operational requirements.

ERP system costs

The cost of an ERP system can vary significantly, typically ranging from $1,740 per month for small businesses to $9,330 per month for larger enterprises, excluding additional expenses like per-user fees, implementation, training, and maintenance costs.

Factors influencing costs include customization needs, the number of users, and the modules integrated into the ERP system. Pricing models differ based on whether the ERP is on-premise, cloud-based, or hybrid, and can include license fees, flat monthly or annual charges, and per-user fees.

Preparing for demos

Before scheduling demos, provide vendors with sample data and detailed business requirements to ensure personalized demonstrations aligned with your specific needs. Use an ERP scorecard to objectively evaluate each system based on key criteria and request demonstrations that showcase desired functionalities.

Implementation considerations

Consider the time, costs, and resource requirements for ERP implementation, which can span from six months to over two years. Evaluate whether you need external implementation support and the associated costs, as ERP implementation typically costs twice as much as the software itself.

To identify the top ERP systems, Forbes Advisor evaluated over 20 leading providers, ultimately selecting the top 16. These systems were assessed across five main categories using 25 different metrics.

Each category was weighted based on its significance to businesses:

• Pricing (10%): Considered affordability, contract terms, scalability, and availability of trials and guarantees.
  
• Key Features (30%): Emphasized essential features like cloud accessibility, on-premises options, warehouse management, accounting, real-time updates, reporting, analytics, and software integrations.
• Unique Features (20%): Evaluated distinctive offerings such as automation, budgeting, CRM capabilities, forecasting, HR functionalities, and supply chain management tailored for various industries.
• Third-party Ratings and Reviews (10%): Analyzed user feedback from multiple sources to gauge overall user satisfaction and breadth of user base.
• Expert Score (30%): Incorporated qualitative assessments based on firsthand experience, considering factors like value, ease of use, support quality, and market popularity.

This comprehensive methodology ensured a thorough evaluation to determine the best ERP systems available in the market.