Several of my customers have an ERP server in place.  I came across this very interesting article from the Business Development Bank of Canada that explains what an ERP system is.I'm a bit confused

Choosing an enterprise resource planning (ERP) system is a big challenge for many entrepreneurs. Even the most basic question is hard to answer: What is ERP?

Entrepreneurs are faced with a baffling array of ERP systems that are tough to compare, even for IT professionals.

Vendors promote their ERP systems as all-knowing software with modules that cleverly manage your key business functions—everything from accounting to customer relationships, human resources, inventory and operations.

Entrepreneurs often frustrated

An ERP system is supposed to be a way to integrate all your information into one system and avoid having a mix of software applications in various departments that don’t talk to each other.

Sounds great on paper. But the reality is often very different. Many entrepreneurs end up frustrated with ERP implementations because the software doesn’t work as expected, is hard to use or costs more than planned.

“The success of ERP implementations is not very high,” says Thammer El-Ramahi, Director of Technology Integration Services at BDC. “Entrepreneurs often say they didn’t get all the benefits they thought they were getting. Usually the reason is they didn’t know what they were buying.”

Vendors have different definitions of ERP

One of the problems is software vendors have different definitions of ERP. “What is ERP? You could search until you’re blue in the face, and you won’t find one definition that makes sense,” El-Ramahi says.

Some ERP systems may have only basic accounting capabilities or no payroll functionality. For customer relationship management, some systems only offer basic contact management; others may include sophisticated tools such as sales force automation, quote and order automation, marketing campaign management and social media integration.

Systems are different

“Marketers say, ‘My system is great.’ But the devil is in the details,” El-Ramahi says. “You’re never going to see that in the marketing brochures or figure that out by watching a demonstration with a vendor.”

Adding to the confusion, ERP systems come in various forms: cloud-based vs. on-premise; off-the-shelf vs. customized; installed by the manufacturer vs. by a reseller.

As if that isn’t enough, the firm that developed your ERP system may be acquired by a larger company. When that happens, software you spent a lot of time and money implementing can suddenly be discontinued, meaning no more support or upgrades.

Here’s what you need to do.

1. Research your needs thoroughly

As with any major technology purchase, investing in an ERP system should serve a clear business purpose and fit your overall business strategy. To make sure it does, you need to create a detailed list of the requirements you need the system to fulfill.

2. Shop around

Make sure you are not just picking up the first product you saw at a trade show or had demonstrated for you. You want to investigate the offerings of a lot of different vendors.

3. Consider outside help to make an informed decision

El-Ramahi’s team works with business owners to go over a list of thousands of possible requirements for ERP systems. Together they hone in on those that are the most important for that business.

4. Score vendors to choose the best fit for your business

As part of the process, El-Ramahi then sends the requirements to vendors as part of a request for proposals. Each vendor is scored based on how well they satisfy the company’s needs. The total cost of each proposal is also compared, including licensing, hardware, implementation and maintenance.

5. Involve employees in the process

Top picks are invited to present their product in detail. Employees should be involved in the entire process to help ensure buy-in and that everyone’s needs are met.

With the right product and good implementation, an ERP system can be a powerful tool for boosting the productivity and profitability of your company, El-Ramahi says.

“But you have to do your homework.”