Choosing an ERP in South Africa

ERP stands for enterprise resource planning. It means one system holds your accounts, your stock, your purchases and sales, and in some businesses your production, so that a sale reduces stock and raises an invoice and a purchase order books a cost without anyone typing it twice. For a business with stock in several places, a factory or a team of buyers, that saves a great deal. For a service business it is usually too much.

Do you need an ERP, or better accounting software?

• You hold stock in more than one place, or you make things from parts.
• Purchasing, receiving and invoicing are done by different people who each need to see the same numbers.
• Your accounting software does the books, but stock and orders sit in spreadsheets that disagree with it.
• You need to cost jobs or projects, or to consolidate more than one company.

If none of that applies, accounting software with stock features will cost less and take weeks and not months to set up. See choosing accounting software in South Africa.

Almost all of them are priced on request

ERP vendors price by company size, modules and users, so a published price would mislead, and most of the products on the register give theirs on request: see ERP software priced on request. That is why how to ask for a quote matters most here. Ask for twelve months in rand with VAT on its own line, and ask each vendor and each partner to itemise licences or subscription, modules, implementation, training, support and hosting.

The partner matters as much as the product

An ERP is set up around your business, and the people who do it are usually a local partner and not the vendor. They configure the system, bring your data across and train your staff, and they are who you phone when something breaks. Two partners selling the same product can quote very differently, and the quality of the work differs more than the product does. Ask two partners for the same scope, and ask each for a customer of your size and industry that you can speak to.

South African rules inside the system

• VAT at the standard rate, with codes for zero rated and exempt supplies, and the VAT201 figures from the ledger.
• Payroll or a link to it, with PAYE, UIF and SDL, if you want people costs in the same system.
• Bank files and reconciliation for the South African banks you use.
• Tax invoices that meet the VAT Act. See what a valid tax invoice needs.

The register records which ERP products state VAT201 and EMP201 support on their own pages. See the ERP sector page. A product that does not state it may still handle it, so ask the partner to show it in a demonstration with your data.

Cloud, on premise and the power cut

ERP products can run in the cloud, on a server in your office or in a hosted data centre. Cloud means access from anywhere and no server to look after, with a dependence on your connection. On premise means the system runs inside your building, with a server that needs power, cooling and a backup routine. In South Africa that is not an abstract choice, so read load shedding and business software and ask the partner what happens to a half finished transaction when the link drops.

Implementation: months, not weeks

Expect a project, with a plan, a team on your side and a date to go live. Most of the work is not installing software. It is deciding how your business should run, cleaning your data and training people. Ask what you must provide, who in your business must give time and what happens if the project overruns, and who pays. Start with one module or one site if you can, and add the rest once the first is stable.

Put it in writing

1. The scope: modules, users, sites and companies.
2. The price: subscription or licence, implementation hours and rate, training, support and hosting, in rand, with VAT on its own line.
3. The plan: dates, milestones and what the partner needs from you.
4. The exit: how you take your data out, in what format and what it costs.
5. The data: where it is held, who can see it and how it is protected. See POPIA and your software vendor.