How to Choose an ERP System for Australian SMEs
Choosing an Enterprise Resource Planning (ERP) system is one of the most significant technology decisions an Australian SME will make. The right system becomes the operational backbone of your business, integrating finance, inventory, sales, and operations into a unified platform. The wrong system becomes an expensive liability that your team works around rather than with.
This guide walks through the key considerations for Australian businesses evaluating ERP options, from understanding when you're ready for ERP through to making the final selection.
Signs Your Business Is Ready for ERP
Not every business needs ERP, and not every business that needs ERP is ready to implement it successfully. Before diving into vendor evaluation, it's worth honestly assessing whether the timing is right.
Indicators that ERP might be the right move:
Outgrowing your current systems: If you're running critical business processes in spreadsheets, or if your accounting software can't keep pace with transaction volumes, you're likely hitting system limits
Data silos causing problems: When sales, operations, and finance are working from different versions of the truth, decisions suffer and reconciliation consumes hours of staff time
Manual processes creating bottlenecks: If you're re-keying data between systems, manually generating reports, or relying on institutional knowledge to bridge system gaps, ERP can deliver significant efficiency gains
Growth is constrained by systems: When you can't add new products, locations, or business lines without major manual workarounds, your systems are limiting rather than enabling growth
Warning signs that you might not be ready:
Undefined processes: ERP codifies your business processes. If you don't have clear processes to codify, you'll end up with a system that mirrors your current chaos
Poor data quality: Migrating dirty data into a new system just moves the problem. Data cleansing should happen before or during implementation, not after
Lack of executive sponsorship: ERP implementations require sustained attention from senior leadership. Without it, projects stall when they hit inevitable obstacles
Unrealistic expectations: If the expectation is that ERP will solve all problems with minimal effort, disappointment is guaranteed
The Australian ERP Market
Australian SMEs have more ERP options than ever, but this abundance can make selection overwhelming. Understanding the market landscape helps narrow the field to a manageable shortlist.
Global enterprise vendors like SAP and Oracle offer powerful systems but typically target larger organisations with correspondingly large budgets and implementation timelines. Their SME offerings (SAP Business One, Oracle NetSuite) are more accessible but still represent significant investments.
Mid-market specialists like MYOB Acumatica (formerly MYOB Advanced), Microsoft Dynamics 365 Business Central, and Sage Intacct are purpose-built for growing businesses. These systems offer robust functionality with more proportionate implementation costs.
Industry-specific solutions exist for sectors like manufacturing (SYSPRO, Infor), distribution (Pronto Xi, DEAR), and professional services (various PSA tools). These can offer faster implementation and better fit but may limit flexibility as your business evolves.
Cloud-native platforms have largely displaced on-premise solutions for SMEs. The benefits of cloud deployment (lower upfront cost, automatic updates, accessibility) outweigh the drawbacks for most small and medium businesses.
Key Evaluation Criteria
When comparing ERP options, structure your evaluation around these core dimensions:
Functional Fit
Does the system support your core business processes out of the box? Every ERP requires some configuration, but heavy customisation is expensive to implement and maintain. Prioritise systems that align with your industry and operational model. Create a requirements matrix that documents your must-have, should-have, and nice-to-have functionality, then score each vendor against it.
Total Cost of Ownership
License or subscription fees are just the starting point. Implementation services typically cost two to five times the software cost. Ongoing support, maintenance, and periodic upgrades add continuing expense. Factor in internal costs: staff time for requirements, testing, training, and change management. Build a five-year total cost model for each option to enable genuine comparison.
Implementation Partner Quality
The implementation partner matters as much as the software. A mediocre system well-implemented will outperform an excellent system poorly implemented. Evaluate partners on their experience with businesses like yours, their methodology, their team's expertise, and critically, their references. Speak to clients who have completed implementations, not just those currently in progress.
Scalability and Roadmap
Your business will change over the next five to ten years. Will the system grow with you? Evaluate the vendor's product roadmap, their investment in research and development, and their track record of innovation. A system that meets today's needs but has a stagnant roadmap may become a liability as your requirements evolve.
Australian Localisation
Global systems don't always handle Australian requirements well out of the box. Check for native support of GST/BAS reporting, Single Touch Payroll, superannuation calculations, and Australian date and currency formats. Systems with strong Australian customer bases typically have better localisation than those with limited local presence.
Common ERP Selection Mistakes
Having supported dozens of ERP selections, I see the same mistakes repeated across organisations. Awareness of these pitfalls helps you avoid them.
Buying the demo: Vendor demonstrations are carefully orchestrated to show systems in their best light. Insist on seeing how the system handles your specific scenarios, not just the vendor's polished scripts. Better yet, request hands-on access to a trial environment.
Underestimating change management: ERP changes how people work. Without deliberate attention to training, communication, and stakeholder engagement, you'll face resistance that undermines adoption and benefits realisation.
Skipping reference checks: Vendors provide references they know will be positive. Dig deeper. Ask for references from your industry and of similar size. Ask specifically about what went wrong and how it was resolved.
Focusing only on software: The implementation partner, the project governance, the data migration approach, and the training programme all matter as much as the software itself. Evaluate the whole solution, not just the system.
Rushing the decision: ERP selections typically take three to six months when done properly. Compressing this timeline usually means cutting corners on requirements or evaluation, leading to poor decisions.
A Practical Selection Process
While every selection is different, a sound process typically follows these phases:
1. Define requirements (4-6 weeks): Document your current processes, pain points, and future requirements. Involve stakeholders from across the business. Prioritise requirements into must-have and nice-to-have categories.
2. Market scan and shortlist (2-3 weeks): Research the market and create a shortlist of three to five viable options. Use your requirements to filter out systems that clearly don't fit.
3. Formal evaluation (6-8 weeks): Issue RFPs to shortlisted vendors. Conduct structured demonstrations. Check references. Evaluate total cost of ownership.
4. Negotiate and select (2-4 weeks): Negotiate terms with the preferred vendor. Finalise contracts. Develop implementation timeline.
If you're considering an ERP project, our ERP consulting services can guide you through requirements definition, vendor selection, and implementation support.
Getting Help with ERP Selection
ERP selection is a significant undertaking that benefits from experienced guidance. An independent consultant can help you define requirements, navigate the vendor landscape, and avoid common pitfalls, ultimately increasing your chances of a successful outcome.
For manufacturing businesses specifically, choosing the right ERP is critical. See how we help manufacturing companies select and implement systems that support their operations.
At Climb Business Consulting, I provide vendor-neutral ERP advisory services to Melbourne businesses and SMEs across Australia. If you're considering an ERP investment, I'd welcome the opportunity to discuss your situation.
