What is an ERP system and when do you need one
An ERP system (Enterprise Resource Planning) is the core business information system that connects key processes in a single database: finance and accounting, procurement, sales, warehouse, production, maintenance and HR. Because every department works with the same data, duplicate entry disappears and reports are available without manual spreadsheet reconciliation.
Companies most often consider a new ERP system when the current one can no longer support growth, when processes are fragmented across several unconnected applications, when the vendor ends support, or when new regulatory requirements such as mandatory e-invoicing demand major changes. The checklist on this page helps you with ERP system selection.
Types of ERP solutions
| Type | Strengths | Limitations | Best for |
|---|---|---|---|
| International cloud ERP (SaaS) | Faster rollout, regular updates, predictable subscription | Less customisation, vendor dependency | Companies with standard processes and growth abroad |
| International ERP, on-premises or private cloud | More control over data and customisation | Own infrastructure, more demanding upgrades | Larger organisations with special requirements |
| Local or regional ERP | Local compliance, support in your language, proximity of the vendor | Fewer international features and integrations | Companies operating mostly in one country |
| Industry-specific solution | Processes tailored to the sector | Narrower market, dependence on a smaller vendor | Companies with specific processes |
There is no universally best ERP system. The right solution is the one that covers your key processes without extensive customisation, integrates with other systems and can be reliably maintained for ten years or more.
Criteria for choosing an ERP system
The checklist groups its criteria into six areas.
- Business requirements. Start with processes, not software. Map how you work today, where the bottlenecks are and what the new solution must deliver.
- Integrations. An ERP rarely works alone. Check connections to production (MES), CRM, business intelligence (BI), the web shop, banks and partner systems. A documented API is essential.
- Localisation and compliance. Statutory accounting, VAT, e-invoicing, fiscalisation and payroll are areas where international solutions often need local add-ons in each country you operate in.
- Architecture. Deployment model, security (SSO, MFA, encryption, backup), performance and total cost of ownership.
- Vendor and implementation. References in your industry, a local partner network, SLAs and clear exit terms.
- Rollout. Change management, data migration, training and testing.
EU requirements: VAT, e-invoicing and fiscalisation
An ERP that operates across the EU must handle VAT correctly, including cross-border rules such as the one-stop shop for B2C sales and EC Sales Lists for intra-EU supplies, and it must keep to the statutory accounting, payroll and reporting rules of each country in which you have entities.
On e-invoicing, the European standard EN 16931 defines a common semantic data model for electronic invoices. Directive 2014/55/EU requires public bodies to be able to receive such invoices, and formats and networks built on it, such as Peppol, XRechnung and Factur-X, are widely used. The EU VAT in the Digital Age (ViDA) package introduces digital reporting and mandatory e-invoicing for cross-border B2B transactions, phased in from 2030, and member states may introduce domestic e-invoicing mandates earlier.
Many countries also run their own fiscalisation or clearance systems, for example mandatory e-invoice platforms or certified cash registers. These differ widely and change often, so check the requirements of each country where you operate and ask the vendor how, and by when, they will be supported.
Beyond tax rules, an ERP processes personal data of employees, customers and suppliers, so it must support the General Data Protection Regulation (GDPR): roles and access rights, an audit trail of changes, retention periods and data deletion. For cloud solutions, check where data is stored and processed, who the sub-processors are and what contractual commitments the vendor makes. For public sector organisations and regulated industries, these requirements can be decisive when choosing the deployment model.
Selection and implementation process
| Phase | Key activities | Outcome |
|---|---|---|
| Analysis | Map processes, requirements and integrations, assess data | Requirements specification and priorities |
| Selection | Shortlist, demonstrations on your scenarios, references, TCO comparison | Selected vendor and a contract with SLA |
| Design | Detailed design of processes, integrations and roles | Approved solution plan |
| Delivery | Configuration, integrations, data migration, testing | A tested system |
| Go-live and support | Training, launch, stabilisation, optimisation | System in productive use |
For mid-sized companies, implementation typically takes six to twelve months. Duration is driven mainly by data quality, the number of integrations and the time key users can give the project.
How to compare proposals
ERP proposals are often hard to compare because vendors define scope, modules and services differently. You improve comparability by sending every vendor the same requirements specification and the same list of scenarios they must demonstrate.
- Demonstration on your scenarios. Instead of a generic presentation, ask to see your key processes, for example from customer order to invoice or from material purchase to work order completion, ideally on a sample of your data.
- A uniform cost structure. Show licences or subscriptions, infrastructure, phased implementation, integrations, migration, training and annual maintenance and support separately. Also ask how prices change as user numbers grow.
- Scope of customisation. For each requirement the vendor should state whether the solution covers it as standard, by configuration or by customisation. Customisations mean extra work on every upgrade.
- References. Talk to at least two companies of similar size and industry. Ask what they would do differently next time.
- The project team. Check who will actually work on your project, how much experience they have and how many other projects they run at the same time.
You can print the checklist on this page or save it as a PDF and use it as a single scoring table for all vendors. Criteria you mark as must-have should be knock-out criteria.
The most common mistakes
- Choosing on licence price. Implementation, integration and maintenance costs often exceed licences. Compare TCO over five to seven years.
- Too much customisation. Every customisation makes upgrades more expensive. First check whether you can adapt the process instead.
- Underestimating data migration. Incomplete master data is one of the most common causes of delay.
- Too little time from key users. Without them the system will not reflect how work is really done.
- Integrations left to the end. Plan connections to MES, CRM and e-commerce from the start.
Humanfrog helps companies digitalise processes, integrate ERP systems with other business and production systems, and run them on reliable infrastructure. To check the criteria against your own environment, talk to us.
