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Private Equity Firms - How to Decide on an ERP Software System?

By Johnny Nugent

Many of our customers are managed by private equity firms. The trend of private equity firms seeking out companies in the manufacturing space is not new, but certainly has become more prevalent in recent years. For PE firms breaking into or expanding in the manufacturing sector, ERP software is often a major decision point. Having acquired multiple plants to expand their portfolio, private equity firms face the challenge of each plant running on a different ERP system, some running without an ERP system, and some running a combination of systems that may or may not be integrated. Private equity firms are seeking profitability and growth and need visibility into every aspect of operations in order to drive higher profits. 

When private equity firms seek to consolidate plants onto one ERP system, they typically consider all the vendors currently in use by the businesses they own and perhaps bring one or two outsiders into the mix during their ERP software selection process. Here are a few factors we recommend considering if you are a private equity firm evaluating ERP software vendors:

  1. PE firms need an ERP system that is scalable and can grow with their business so that when new manufacturing operations are added, they can jump onto the existing ERP system quickly.
  2. Financial visibility is also essential to track projects, budgets, costs vs. actuals, labor, profitability, and growth. Therefore, a business intelligence solution, robust report writer, and dashboard capabilities are a must within an ERP system.
  3. PE firms tend to be data driven so metrics and KPI's need to be incorporated during an ERP implementation. A knowledgeable implementation team must be able to conduct a thorough discovery of business operations and analyze current metrics and KPI's and follow up with recommendations on metrics and KPI's to utilize going forward based on their experience and expertise in industry best practices.
  4. Access to historical data to view and assess long term performance is another important consideration. An ERP system must be capable of delivering data that allows executives to review financial and operational performance over a period of years or months. 
  5. Superior support and excellent customer service should drive much of the ERP decision making process for PE firms. You need a support team that is responsive, available, and knowledgeable to assist your users when they need it most. 
  6. ERP systems are successful where users "buy into" the software, implementation, and process. Therefore, having a vendor that is sensitive to the cultural change being experienced by users facing a new ERP implementation is very important. In addition, having a vendor with an easy to use interface that can be customized by end users makes it far more likely that users will "buy into" their new ERP software.
  7. An ERP solution must be accessible from anywhere at anytime through browser access from a variety of devices. 
  8. Since PE firms often acquire a variety of manufacturing organizations in numerous industries, choosing a vendor capable of configuring and customizing their ERP software to meet the needs of each manufacturing plant is necessary. Some ERP vendors refuse to customize their software, charge excess amounts for customizations, or refer their customers to third parties for custom work. PE firms need an ERP partner like VISIBILITY that specializes in tailoring our already powerful ERP software to meet the exact requirements and specifications of our customers. 

If you're a private equity firm evaluating ERP software vendors, take a look at VISIBILITY. We have lots of experience serving the needs of private equity firms that own manufacturing businesses and provide all of the functionality and services discussed in this blog post. 

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Topics: ERP, Manufacturing, Business Intelligence, Private Equity


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