How to choose an ERP system for your Shopify store by Linda Bleijenberg

ERP systems have many benefits, but there are also some disadvantages that make an ERP not necessarily the right choice for every company. Below, we discuss the most important ones.

Implementation is complex

As we already mentioned above, implementing an ERP system takes a lot of time. The entire process can take up to a year. Moreover, it is not uncommon for such projects to exceed their budget and delivery date. Keep in mind that there will also be ongoing maintenance required after implementation.

For all these reasons it is important to do extensive research before choosing an ERP system. For e-commerce companies on Shopify, it is a sensible move to involve a Shopify expert in this process, too. At Code, for instance, we collaborate with a number of trusted implementation partners of various ERP systems, to be able to give the best possible advice to clients who are considering an ERP.

You don’t use all the functionality

An ERP consists of a standardized core with additional modules. It often happens that you pay for modules that you do not necessarily use, which makes things unnecessarily complex and ‘bloated’.

In this case, an alternative solution could be to go for a more modular set-up, where you move functionality to Shopify Plus. Make more effective use of Shopify Flow and Shopify Functions, for instance, and connect a separate WMS or OMS and a separate accounting system (e.g. Exact Online) to Shopify. A flexible tech stack like that has the additional advantage that there is a much lower chance of lock-in, which is another disadvantage of ERP systems.

Chance of lock-in

Choosing an ERP package is a big deal: you will be using it for a long time, most likely. Large companies that have been in business for a while typically have all their business processes brought together in the ERP. They might even have switched ecommerce platforms a few times over the years, which becomes almost a cosmetic procedure if your ERP is the core of your business.

But it also shows how difficult it is to stop using an ERP system. All the data that was in your ERP needs to be migrated to a new ERP, or to a combination of other systems - which will inevitably be a big and time-consuming migration.

When is it advisable to make this move anyway? Based on our experience with clients at Code, we say: if your company finds itself in one of the following situations:

• Your ERP is outdated, still runs on local servers (on-premise) and is therefore difficult to connect with external systems like Shopify. 

• You want to migrate to a cloud-based ERP. (Note: this is a common case, for the German market in particular)

• Your processes are not well-designed within your current ERP.

• You can save a lot of money by streamlining processes.

• You are not satisfied with your ERP, or your ERP cannot do something you need.

• Your business is shrinking and your ERP is becoming too expensive.

• Your business is growing and your ERP cannot keep up.

• You want to remain flexible because your company is still growing rapidly.

At Code, we support not only enterprise brands but also many successful start-ups that are still in full growth mode. Because it is not yet clear whether and when that growth will stop or stabilize, it makes sense for these brands not to commit to systems too early. Flexibility and agility are what they want, to be able to react quickly to future developments.

For those clients, we often choose a different solution. Instead of the all-in-one approach of an ERP system, we advise these companies to put together a flexible tech stack from separate, stand-alone components, and to link them together in an effective way. Depending on the client's situation, we integrate their Shopify webshop with an Inventory Management System, for instance, and/or an accounting program, a PIM (Product Information Manager), a WMS (Warehouse Management System) or a fulfillment partner (3PL).

The advantage of such a modular setup is that each of these separate components can be replaced quite easily if necessary, and that new components can be added relatively fast. This way, start-ups can see what combination works best and quickly switch if something doesn't work, or no longer fits a changed situation. By the time their situation has stabilized, the tech stack they built up until that point can serve as a model when switching to an ERP.