What is an ERP and how to choose the right one for your business

Understand what an ERP is and how to choose one for your SME or mid-sized company: method, selection criteria, actual costs and common pitfalls to avoid.

Quick answer: an ERP (Enterprise Resource Planning) is software that integrates key business processes — accounting, sales, inventory, production, HR — into a single database. For an SME, the right ERP eliminates double data entry, reduces errors, and saves measurable hours each month on repetitive tasks.

• Basic concepts and prerequisites
• ERP selection criteria
• Comparison of major ERP solutions
• ERP specification brief: step-by-step method
• ERP costs and pricing: what they don't tell you
• Data migration and integration: common pitfalls
• Common mistakes and best practices
• Key takeaways
• FAQ

Basic concepts and prerequisites

Before choosing an ERP, clarify three things: which processes to automate, who will use each function, and how much existing data needs to be migrated. An ERP typically integrates accounting, sales, inventory, production, and human resources. The golden rule: do not roll out a full function until the associated process is stabilized. For example, if invoicing is still done manually in a spreadsheet, an ERP invoicing module is pointless until the process is mapped.

The fundamental concepts to master:

• On-premise ERP: hosted on your servers, requires an IT team.
• Cloud/SaaS ERP: hosted by the vendor, automatic updates.
• Perpetual license: one-time payment, annual maintenance.
• Usage-based SaaS: monthly subscription per active user.
• Open source: modifiable code, active community (e.g. Odoo Community).

An ERP is not a CRM, but it often includes customer relationship management functions. The distinction is crucial: a CRM manages the sales process, while an ERP manages the customer relationship after the sale — invoicing, payment tracking, after-sales service.

Key processes covered by an ERP

Most ERPs cover these functions:

ERP selection criteria

The wrong approach is choosing an ERP because it exists in another country or because a competitor uses it. The right criterion is the workflow: which process needs to be automated first? For an SME in Distribution, the critical flow is often the relationship with suppliers. For a service TPE, it is the relationship with customers.

Priority criteria, in order:

1. Industry fit: an ERP for restaurateurs integrates cash register tickets, not B2B customer relationships.
2. Scalability: can it keep up if you grow from 10 to 100 users?
3. Existing integrations: does it connect to your POS system, your e-commerce site?
4. Total cost: license + maintenance + training + integration + migration.
5. Reversibility: if you switch later, can you retrieve your data?

In an SME ERP comparison, the hidden cost is often training. A SaaS ERP might cost €20/month per user, but if each employee spends one hour per week learning to use it, the cost of learning time adds to the advertised price.

Concrete example: weighted criteria for an SME

For a 20-employee service company, the weight of criteria is: scalability (40%), integration (30%), total cost (20%), industry fit (10%). An open-source ERP like Odoo may seem free, but integration and training costs can double the initial price.

Comparison of major ERP solutions

In an ERP comparison, each solution has a clear profile:

d>200 €/month/user

The choice between an open-source ERP like Odoo and a proprietary solution like SAP Business One depends on three factors: business process complexity, internal ability to handle technical integration, and budget flexibility. An SME without an internal IT department should opt for a SaaS ERP or an integrator like DATALIA.

Open source vs. proprietary ERP: the real debate

The myth says open source is free. In reality, the total cost of ownership (TCO) of an open-source ERP is often higher due to the need for technical expertise. A proprietary ERP like Sage or Microsoft Dynamics 365 offers dedicated support, but at a higher recurring cost.

ERP specification brief: step-by-step method

A well-built ERP specification brief prevents projects from going off track. The DATALIA method is built on five steps:

1. Process mapping: list every business flow, from customer order to payment received.
2. Prioritization: rank processes by impact and usage frequency.
3. Functional specification: describe each requirement with a concrete scenario.
4. Technical specification: require the list of supported API connectors and formats.
5. Deployment plan: break the project into waves, with measurable deliverables.

Example specification for a distribution SME:

• Process: goods receipt → put away → order preparation → shipping.
• Scenario: a customer places an order online → the system checks stock availability → generates a picking ticket → displays status to the shipper.
• Technical requirement: the ERP must expose a REST API for synchronization with the WooCommerce e-commerce site.

Deliverable: ERP specification template

This template is usable as-is:

Goal: Automate the [PROCESS] flow to achieve [EXPECTED RESULT].
To gather: [LIST OF DOCUMENTS / DATA / PEOPLE].
Method:
- [step 1: map the current flow]
- [step 2: identify friction points]
- [step 3: define the automated business rule]
Output: [FORM OF RESULT, e.g.: Generated PDF picking ticket].
Note: This specification works if the process is stable. If the flow changes every month, defer the project.

ERP costs and pricing: what they don't tell you

The hidden costs rule

The advertised price of an ERP doesn't always include:

• The software license (or subscription).
• Annual maintenance (typically 15 to 25% of the initial price).
• Data integration and migration (often 50 to 100% of the license cost).
• User training (0.5 to 2 days per user).
• Post-deployment adjustments (about 20% of the initial budget in the first year).

In a standard DATALIA audit, the average integration cost of an Odoo ERP for a 20-user SME is €40,000, totaling €70,000 over two years — compared to €48,000 for a Sage 50 Cloud solution. The difference comes from adaptation complexity.

Recurring costs and monthly budget

For an SME, the average monthly budget is:

The trap is underestimating migration. An ERP receives heterogeneous data: old Excel files, Access databases, CSV exports. If migration isn't planned, data quality drops and the ERP becomes another manual data entry tool.

Data migration and integration: common pitfalls

ERP migration is the most critical moment. 60% of ERP projects fail due to poor data quality. The rule is simple: migrate clean data, not all data.

Migration steps

1. Data audit: identify duplicates, inconsistent formats, empty fields.
2. Clean room: create an isolated environment to validate migration rules.
3. Mapping: link each source field to each target field.
4. Test with a subset: 10% of data, no more.
5. Progressive rollout: activate modules one by one, on low-risk flows.

Concrete example: during an ERP deployment for a distribution client via DATALIA.App, customer data migration took three weeks. The testing phase revealed that 12% of phone numbers were incorrectly formatted — a fix applied before go-live avoided unpaid invoice losses.

Common mistakes and best practices

Here are the five most costly mistakes:

• Choosing an ERP because it's cheap: a cheap but unsuitable ERP costs more to customize.
• Neglecting training: a poorly used ERP generates more errors than the old system.
• Starting with all modules: deploy one module, stabilize it, then add the next.
• Ignoring reversibility: negotiate a standardized export format for your data from day one.
• Not mapping processes: automating a fuzzy process makes the fuzz systemic.

Best practices: map processes before purchasing, test the prototype in a real situation, and require a performance-based retractation clause on data quality.

Key takeaways

• An ERP integrates key processes into a single database, but its value depends on process stability.
• For an SME, a cloud ERP (SaaS) is often more suitable than on-premise due to lack of internal IT resources.
• The total cost of an ERP includes license, integration, training, and migration — plan for all.
• Export format and data reversibility must be negotiated before signing the contract.
• A free audit and a well-built specification brief help select a reliable integrator like DATALIA.

FAQ

What is an ERP SaaS?

An ERP SaaS is software hosted by a vendor and accessible via a web browser. Unlike an on-premise ERP, it requires no local infrastructure. Advantages include automatic updates, high availability, but increased dependency on the vendor.

Open source or proprietary ERP, which to choose?

For an SME without an internal IT department, a proprietary ERP (Sage, Dynamics 365) offers more security and support. An open-source ERP like Odoo is powerful but requires technical expertise for integration. The choice depends on your internal capacity and integration budget.

Next step: If you are considering modernizing your information system, start by mapping your critical processes. A well-built specification brief will save you months of trial and error.

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