What criteria are decisive when selecting an ERP system with regard to enterprise architecture (EA)?

Background and relevance

The decision for a new ERP (Enterprise Resource Planning) system is one of the most strategically important IT projects for a company. CIOs, IT managers and management - in all industries - are faced with the challenge of choosing an ERP that not only fits functionally, but also fits seamlessly into the existing IT landscape and matches the future enterprise architecture (EA).

The selection and implementation of an ERP system requires in-depth industry-specific experience, as each industry and different industries have their own individual requirements and processes. In addition, the market for ERP solutions is very diverse, which is why comprehensive market knowledge is crucial in order to identify the right solution and the right provider. The fit with the company's own IT landscape and strategic target architecture is often critical to the success of the project. According to Gartner, over 70% of ERP initiatives fail because they do not achieve their business objectives - often because of strategic architecture considerations. This can be prevented with a clear enterprise architecture (EA) behind you: ERP is planned from the outset as part of the overarching architecture, rather than as an isolated stand-alone solution.

A well thought-out enterprise architecture creates the framework within which new technologies can be introduced in line with the strategy. Without this framework, there is a risk that a new ERP system will simply be "added on top" and opportunities for system harmonization, data integration and process optimization will go unused. ERP projects are particularly challenging due to their complexity and the large number of business processes involved and require careful planning in the context of the enterprise architecture. EA ensures that IT investments support the business objectives and do not miss them. In this white paper, we therefore look at which criteria are decisive when selecting ERP from an architecture perspective. You will find out what is important to ensure that your future ERP system fits perfectly into your IT architecture and contributes to long-term business success.

Decisive criteria from the perspective of enterprise architecture

When evaluating ERP solutions, not only business and functional requirements should count, but also architecture criteria.

No matter how many features and modules an ERP system may offer - if it does not fit into the overall picture of your IT architecture, the joy of using it will be short-lived. In Dreher Consulting's experience, the following criteria are particularly important with regard to enterprise architecture:

1. fit with the target architecture and strategic IT roadmap

Before you evaluate providers, you should define a clear target picture of your enterprise architecture. The focus should be on the optimal support of your architecture goals, not just on individual software functions or specific providers. Ask yourself: Does the software fit into our desired architecture goal?

Your ERP should support the achievement of your strategic IT target architecture, not hinder it. For example: Is your company planning a service-oriented architecture or cloud-first strategy? Then the ERP must share this orientation (e.g. support modern cloud architecture and open interfaces). The new system should fit seamlessly into your future system landscape and respect existing architectural principles. Remember that the ERP selection and enterprise architecture should always be considered together - this way, the ERP becomes part of your holistic future architecture and not a foreign body. A comparison of different ERP solutions with regard to their fit with the target architecture is essential in order to make the best decision for your company.

2. integration capability into the existing IT landscape

A decisive criterion is integration with existing systems and processes. Consider: Can the ERP system be easily integrated into our existing system landscape? An independent ERP consulting project pays particular attention to this. Check whether the ERP provider offers open interfaces (APIs) or modern middleware solutions for data exchange in order to avoid isolated solutions. Software providers play a central role here, as they enable the integration and provision of these open interfaces. It is also important to consider how existing legacy applications can be integrated or replaced: A plan should already be drawn up during the selection process as to which legacy systems will be replaced and how data will be migrated. A good ERP system fits into the IT gears as a cogwheel without having to build extensive manual interfaces.

In our consulting work at dreher-consulting, we have repeatedly found that there are points that are responsible for the success or failure of an extensive ERP project.

It is therefore important for us to outline these points for you: Make sure that third-party software (e.g. CAD, MES, CRM, e-commerce) can be connected without any problems. Close cooperation with providers is crucial here to ensure the smooth integration of third-party systems. AnERP with strong integration minimizes media disruptions, prevents data silos and reduces IT complexity in the long term. In our projects with customers, these points were always important because they were also responsible for the project costs.

Modern software solutions support the seamless integration and optimization of business processes by efficiently connecting different applications and systems.

During integration, individual adjustments are often necessary in order to optimally map specific requirements and processes.

Specifications are an essential tool for clearly documenting integration requirements and structuring collaboration with all parties involved.

3. compliance with IT standards and technological alignment - experience from our consulting practice at Dreher Consulting

Your new ERP should support the technology standards and architectural principles defined in your IT strategy. The use of best practices in the selection and implementation of ERP systems is critical to ensure compliance with these standards. This includes supporting modern data models, security standards and a clear technology stack.

Check: Does the ERP solution support our defined standards (e.g. open interfaces, microservices, mobile-first, cloud strategy)?  It is important to carefully analyze the details of the technical requirements and standards in order to avoid compatibility problems later on.

Many medium-sized companies are now standardizing on Microsoft Azure or AWS for example - an ERP that has native cloud capabilities in this environment is an advantage here. The topic of security and compliance also plays an important role: the ERP system must match the security concept (e.g. integration into identity management, role and authorization model, GDPR compliance).

When planning the implementation, every detail should be worked out in the work breakdown structure (WBS) to ensure a structured implementation.

The technical architecture of the ERP software itself should be modern, future-proof and scalable . The performance of the system is a key criterion, particularly with regard to compliance with standards and scalability. Criteria here are, for example: cloud-native vs. on-premises, modular service architecture vs. monolith, use of standard technologies and state-of-the-art development frameworks. The better the ERP technology matches your target architecture, the lower the customization effort and the easier it will be to maintain the system. As a consulting company, we support you in defining and requesting these requirements in the specifications.

As an independent consulting company in the requirements triangle of ERP, digitalization and sustainability, we have developed a system in many customer projects that can drastically reduce the risks of an ERP selection with the help of AI.

4. Data Architecture and Single Source of Truth

Our consulting experts and consultants at Dreher ensure that an enterprise architecture defines how business data is managed and exchanged.

An ERP system often takes on the role of the central data platform here. Ensure that the new ERP enables a uniform database ("single source of truth"). This includes ensuring that master data (customers, parts lists, articles, etc.) can be properly managed in the ERP and that there are consistent interfaces to other systems. However, we at Dreher Consulting have also realized projects in which a separate master data management system was implemented in order to manage and distribute the extensive master data.

A tip from our practice: When designing the data architecture, be sure to consider the specific requirements of your industry and the special features in order to achieve optimum results. Consider whether the ERP supports your existing data model or whether there is a risk of significant data migration efforts, and be aware of the risks that can occur during data migration and integration, such as data loss or inconsistencies.

Good data integrity reduces errors and creates the basis for subsequent analyses or AI evaluations. A clear project process and professional project management are crucial for the successful implementation of data architecture in order to manage projects efficiently and ensure that all milestones are met. Data architecture is an often underestimated criterion - but it is central to successful digitalization and digital transformation.

Our experienced Dreher Consulting consultants support you in the introduction and implementation of data architecture to meet your industry-specific requirements.

5. Modularity and Scalability of the Solution

Enterprise architecture also means being able to react flexibly to changes. An ERP system should therefore have a modular structure and be expandable so that it can grow with your company.

Targeted adjustments during the implementation phase are particularly important so that the software solution can be optimally tailored to your specific business processes.
Ask yourself: Does the ERP allow for modular expansion or customization without bending the core?

Modern ERP solutions often offer a modular system or app structure so that new functions can be easily added or replaced. A high degree of modularity goes hand in hand with better upgradeability - important for being able to import future updates without great effort.

Scalability also plays a role: in the manufacturing industry, requirements can change quickly (e.g. disruption of the supply chain or relocation of logistics requirements, new customs regulations as we are currently experiencing through the USA are examples from our current practice with customers). The expansion and scaling of an ERP system should be demonstrated. The chosen ERP must be able to scale to meet your future requirements and to support you in your business processes.

6. Process Excellence and Minimal Customization Efforts

Even if it is primarily about architecture (EA), ultimately business processes must be optimally supported by the ERP.

Targeted adjustments during the implementation phase are crucial to achieving process excellence and efficiently mapping company-specific requirements. From an architecture perspective, this means: find an ERP that fits your processes instead of excessively adapting your processes to the software.

The fewer special developments are necessary, the easier it is to integrate it into the architecture and migrate or expand it later. An ERP requirements specification (requirements catalog) should therefore contain both functional processes and architecture-related requirements. For example, define which core processes must be supported out-of-the-box, which performance requirements exist and which reporting structures are needed.

The successful implementation and introduction of ERP projects requires experienced project management as well as the support of specialized consultants who accompany you during all project phases.

An independent ERP consultant can help to formulate these requirements neutrally and objectively compare the architecture fit of different solutions. When adapting processes, you should consider possible risks such as budget overruns or implementation errors; careful preparation of specifications and consideration of all relevant details are essential for this. Always remember: the ERP serves the processes - and these processes are part of your overall enterprise architecture.

The software should therefore not only fit into the company technically, but also in terms of processes . The wide range of topics relating to ERP implementations and the comparison of different approaches will help you to find the optimal solution for process optimization and maximum performance of your project.

Change management as a success factor in ERP selection

Successful change management is a central building block for the successful selection and introduction of a new ERP system. The implementation of an ERP system entails far-reaching changes to a company's processes and structures. Professional change management is essential to ensure that these changes are not met with resistance, but are seen as an opportunity for optimization and growth.

An experienced change management team supports the entire ERP selection and implementation process by involving employees at an early stage, communicating transparently and responding specifically to the individual needs of the different areas of the company. This reduces uncertainty and increases acceptance of the new system. It is particularly important to closely support the adaptation of processes to the new ERP system and to clearly highlight the benefits for day-to-day work.

Training and further education are another key to success: they enable employees to use the new functions and processes of the ERP system with confidence and ensure that the full potential of the solution is exploited. Structured change management not only reduces resistance to change, but also maximizes the benefits of the ERP system for the entire company. This turns the ERP selection and implementation into a sustainable success project.

User-friendliness and acceptance in the company

The user-friendliness of an ERP system is a decisive factor for successful implementation and long-term use in the company. A modern ERP system should offer an intuitive user interface that enables users to carry out their daily tasks efficiently and without long training periods. The better the system maps the company's specific processes and requirements, the higher the level of acceptance among employees.

In order to promote acceptance of the new ERP system, it is advisable to involve employees as early as the selection phase. This allows their experiences and needs to flow directly into the system selection and design. Comprehensive training and continuous support during and after implementation are essential to ensure that users make optimum use of the system and that business processes run smoothly.

A user-friendly ERP system that is tailored to the individual needs of the company not only increases efficiency, but also employee satisfaction. This maximizes the benefits of the ERP system for the entire company and lays the foundation for the successful digitalization of business processes.

Costs, investment security and return on investment (ROI)

Investing in an ERP system is a significant step for any company, which is associated with high costs and long-term effects. It is therefore crucial to ensure a high level of investment security and a clear return on investment (ROI) as early as the selection and implementation stages. An ERP system should not only optimize the company's current processes, but also contribute to increasing efficiency and reducing costs in the long term.

In order to evaluate the profitability of an ERP system, all relevant cost factors should be taken into account: from acquisition and implementation to ongoing operating costs, maintenance and support. An independent ERP consultant can help you to realistically estimate the total costs and compare the ROI of different ERP systems. In this way, a solution can be found that best suits the company's requirements and objectives.

Through the targeted selection and implementation of a suitable ERP system, companies can not only make their processes more efficient, but also strengthen their competitiveness in the long term. A careful cost-benefit analysis is therefore an essential part of any successful ERP implementation.

Challenges in the selection and implementation of ERP systems

The selection and implementation of ERP systems presents companies with a variety of challenges. The complexity of modern ERP systems, integration with existing systems and adaptation to individual business processes require careful planning and a structured approach. It is particularly challenging to precisely define the company's specific requirements and transfer them to the ERP specifications.

Another key issue is the integration of the new ERP system into the existing IT landscape. This involves creating interfaces to other systems and ensuring smooth data migrations. Employee training and acceptance of the new system are also crucial success factors that should not be underestimated.

An independent ERP consultant can help companies overcome these challenges and find a solution that best suits their needs and objectives. It is important to understand ERP selection and implementation as a continuous process that is regularly reviewed and adapted to the company's changing requirements. In this way, the potential of the ERP system can be fully exploited and business processes can be sustainably optimized.

Checklist: ERP selection and enterprise architecture

To ensure that you take all these points into account in your ERP project, we have compiled a checklist of important criteria for you. Go through this list during the ERP selection process to ensure an optimal architecture match:

• Strategic target picture defined: Have you created a clear target enterprise architecture against which you can measure all ERP options (target architecture, future system landscape)? Take into account the specific requirements of your industry and compare different solutions in terms of their performance and adaptability.

• Architecture team involved: Is your enterprise architect or EA team actively involved in the ERP selection process to consider architecture principles and details as the project progresses? If necessary, bring in experienced consultants who have expertise in different industries.

• Integration checked: Does the ERP system fit into your current IT landscape? Can existing systems (PLM, MES, CRM, etc.) be connected without any problems and are legacy replacements and data migration planned? Check compatibility with various software solutions and software providers to ensure a smooth implementation.

• Standard compliance: Does the solution support your IT standards (e.g. interfaces, cloud strategy, security standards, data models) and does it fit into the planned technology ecosystem? Ensure that specifications are adhered to and that all relevant details are taken into account.

• Modularity and expandability: Does the ERP comply with the "modular systems" principle? Can it be adapted to changing requirements by means of modules or configuration without costly adjustments? Check whether the solution is suitable for different industries and supports individual implementations.

• Single source of truth: Does the ERP guarantee a central data source for all important business objects and consistent data storage across departments? Take into account the customer's requirements and the contractual framework conditions.

• Scalability and performance: Can the ERP solution grow with your company (more users, data, transactions) and does it meet your performance requirements even with higher loads (data throughput as an example)? Compare the performance of different providers and assess the risks in the course of the project.

• Use independent advice: Do you consult an independent ERP consultancy when needed to ensure an objective evaluation? External consultants with market and industry knowledge can uncover blind spots and ensure that the architectural fitness of the ERP does not get lost in the selection process. Take advantage of their experience in project management and risk minimization.

• ERP requirements specification with an architecture focus: Have you created a requirements catalog (requirements specification) that includes architecture aspects (integration, interfaces, compliance, cloud, etc.) in addition to technical requirements? This document serves as a guideline when evaluating providers and should contain all details, specifications and necessary adjustments.

• Future-oriented roadmap: Does the ERP provider's product roadmap match your IT strategy? (Example: regular updates, cloud innovations, new technologies). Are the vendor vision and your enterprise architecture roadmap aligned in order to remain in harmony in the long term? Take into account the planned steps for implementation and the integration of relevant topics and projects.

Go through this checklist point by point. If you can put a tick in every box, you are well on the way to choosing an ERP system that fits perfectly into your enterprise architecture in terms of technology, data and processes .

Conclusion

The selection of an ERP system is far more than just a software comparison project - it is an architecture project.

Forward-looking enterprise architecture planning before and during the ERP selection process lays the foundation for ensuring that the new solution is harmoniously integrated into the IT landscape and optimally supports your business strategy. Companies that consistently take these architecture criteria into account reduce project risks and achieve greater long-term benefits from their ERP investment. Minimizing risks, ensuring high performance and comparing different software solutions are crucial to the success of ERP projects.

To summarize: Enterprise architecture and ERP selection must go hand in hand. Investing time in coordinating business and IT strategy at an early stage significantly increases the chances of success for your ERP project.

Experienced project management, competent consultants, sound industry and market knowledge, clear accountability on the part of the customer, contractual security, structured implementation and professional introductions, individual adaptations, cooperation with software providers, integration of suitable software solutions, creation of specifications, consideration of all details, treatment of relevant topics, transparent project progression and support from specialized consulting companies such as MQ result consulting ag are of central importance for successful ERP selection and implementation. System harmonization creates clarity instead of chaos, interface compatibility avoids data silos, and a future-proof architecture turns your IT from a cost factor into a value-adding factor. In times of digital transformation, this is no longer a "nice-to-have", but a must in order to remain competitive.