Enterprise Resource Planning — What to look for

6. Ask about ongoing administration costs. For example, if you buy a new software system do you also need a database administrator?Can it run on a single server or does it need a separate database server, a separate application server and a separate remote office server?

7. In terms of budgeting for business application software, an SME should expect to spend at least 1 percent of their revenue on a completely new system. For software, the cost is usually 'one thirds'—one-third for licenses, one-third for annual maintenance and one-third for implementation.

8. Ask whether there are other models other than just an outright purchase. Some applications are amiable to renting (CRM is a good example) but irrespective; check whether the provider can accommodate your cash flow needs. Keep in mind however, the more complex your business—and typically the larger your business—the less likely it is that a hosted or application service provider (ASP) model will readily fit the bill.

9. Finally, if the application provider is pushing technology that you don't understand— service oriented architecture, for example—and they cannot distil the benefits down to specific advantage for your business, find another provider. Very few SMEs have the luxury of technology for its own sake, yet this is often what larger, international vendors are pushing into the market because their business model requires it.

The decision for an SME to implement an ERP solution can be a major investment that impacts on the whole company. A well-planned and implemented solution can change the way an SME does business and improve profitability, but there can be pitfalls if not prepared properly.

SME's should ensure they do their homework, have a clear objective agreed at the outset, prioritise expected outcomes, and ask the right questions for your business. Lack of ownership by an SME is usually the biggest pitfall. A successful implementation is almost guaranteed when the business takes responsibility for the outcomes.