## The problem with how most businesses choose ERP
Most ERP selection processes are broken from the start. A business outgrows its accounting software, someone books a demo with a vendor they heard about at a conference, and six months later they are committed to a five-year contract on a system that does not fit.
The reason this happens is not ignorance. It is process. ERP vendors are experienced salespeople. You are not an experienced ERP buyer. The information asymmetry is enormous, and most evaluation frameworks do not correct for it.
This guide is about correcting for it.
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## Step 1: Define your requirements before you talk to a single vendor
The single most valuable thing you can do before any vendor contact is to document your requirements in writing. Not a vague wish list — a structured breakdown of your business processes, the gaps in your current system, and the non-negotiables for the next one.
Organise requirements into categories:
- **Finance** — multi-entity, consolidation, intercompany, reporting standards (IFRS, GAAP)
- **Operations** — inventory management, manufacturing (MRP/MES), purchasing, warehousing
- **Sales** — CRM integration, order management, pricing rules, commissions
- **HR and Payroll** — headcount, payroll localisation, leave management
- **Compliance** — industry regulations, audit trails, data residency
- **Integration** — existing systems that must connect (e-commerce, 3PL, payroll, BI)
- **Technical** — cloud vs on-premise preference, IT capacity for self-hosting
For each requirement, assign a priority: **Must Have**, **Should Have**, or **Nice to Have**. This becomes your evaluation scorecard.
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## Step 2: Understand the real cost
The price a vendor quotes you in a first demo is rarely the price you will pay. ERP total cost of ownership has three components that buyers consistently underestimate.
**Licence cost** is the most visible — the annual subscription or perpetual licence fee. It is also the component vendors are most willing to discount, which means it is the least reliable number in your evaluation.
**Implementation cost** is typically 1–3× the first-year licence cost for mid-market systems, and can reach 5–8× for enterprise platforms like SAP S/4HANA or Oracle Fusion. This covers consulting days, data migration, configuration, training, and go-live support. Get fixed-price quotes in writing — time-and-materials implementations routinely run 40–60% over budget.
**Ongoing cost** includes annual support fees (typically 18–22% of licence for on-premise), upgrade costs, internal IT overhead, and the hidden cost of workarounds when the system does not quite fit your process.
A useful rule of thumb: budget the first-year licence × 3 as your total Year 1 cost. If that number is unacceptable, revisit the shortlist before you get attached to a vendor.
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## Step 3: Build a shortlist of 3–4 vendors, not 8
Evaluating eight ERP systems in parallel is not thorough — it is paralyzing. The vendors know this. A long evaluation exhausts your internal team, and the vendor with the best sales process (not necessarily the best product) tends to win.
A well-constructed shortlist has three to four vendors that genuinely fit your profile. The right shortlist depends on your industry, company size, deployment preference, and budget.
As a starting point:
| Profile | Strong candidates |
|---|---|
| Sub-50 person service business | Xero + integrations, Sage Business Cloud |
| 50–200 person manufacturer | Odoo, SAP Business One, Syspro, Epicor Kinetic |
| 200–1,000 person distributor | NetSuite, Acumatica, Dynamics 365 Business Central |
| 1,000+ person global enterprise | SAP S/4HANA, Oracle Fusion, D365 Finance & Operations |
These are starting points, not verdicts. Your specific industry, integration requirements, and geography will adjust the picture.
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## Step 4: Run a structured demo, not a vendor showcase
A vendor-led demo will show you the system at its best. Your job is to see it under pressure.
Before each demo, send the vendor a **demo script** — a set of specific scenarios drawn directly from your requirements document. Ask them to demonstrate each scenario live in their system, not in a pre-built presentation. Scenarios should include your edge cases: the processes that are slightly unusual for your industry, the integrations you cannot live without, the reports your finance team runs every month-end.
During the demo, watch for:
- **Workarounds** — if the consultant says "we would handle that with a custom field and a report," that is a gap, not a feature
- **Switching context** — if they jump between modules, export to Excel, or open a second system to complete a process, note it
- **Version disclaimers** — "that is coming in the next release" means it does not exist today
Score each demo against your requirements scorecard immediately after — not a week later when the vendor has followed up three times.
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## Step 5: Check references that actually match your profile
Every vendor will provide references. Every reference will be a customer who is happy to talk. This is not useful.
Ask the vendor for references that match your specific profile: same industry, similar headcount, similar complexity. Then ask those references questions the vendor did not prepare them for:
- What went wrong during implementation, and how was it resolved?
- What does the system not do well that you wish you had known before buying?
- How responsive is support when you have a critical issue?
- Knowing what you know now, would you choose the same vendor again?
If the vendor cannot provide references matching your profile, ask why.
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## Step 6: Negotiate the contract, not just the price
Most ERP contract negotiations focus entirely on the licence fee. The more important terms are often elsewhere.
- **Implementation scope** — ensure the statement of work defines deliverables, not just hours. A scope defined in hours will overrun; a scope defined in outcomes has accountability.
- **Data ownership** — confirm you have the right to export all your data at any time, in a portable format, at no additional cost.
- **Price escalation** — SaaS contracts with uncapped annual increases of 5–10% become expensive quickly. Negotiate a cap.
- **Go-live criteria** — define what "go-live" means contractually. Without a definition, a vendor can declare go-live before you are ready and start the support clock.
- **Exit provisions** — understand what happens if you need to leave. Data migration assistance, transition support, and off-boarding terms matter more than you think when you are signing.
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## The questions most businesses forget to ask
**What happens to my data if the vendor is acquired or goes under?** Mid-market ERP is a consolidating industry. Your vendor today may be a different company in three years.
**Who actually implements this — the vendor or a partner?** Many ERP vendors sell through implementation partners. The quality of your implementation depends almost entirely on the specific partner and consultant assigned to your project, not the vendor brand.
**What does the user interface look like for my warehouse staff, not just the CFO?** Adoption failure is the most common cause of ERP project failure. A system your team refuses to use is worse than the spreadsheets it replaced.
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## A final note on objectivity
The ERP industry is built on relationships, referrals, and margin. Analysts are often paid by the vendors they rate. Consultants earn more from larger, more complex implementations. Even well-intentioned advice carries bias.
The most reliable evaluation is one built on your own documented requirements, scored against live demonstrations, validated by reference customers with matching profiles.
That is what ERPLenz is designed to help you do — systematically, without a sales agenda.