With over 63 million MSMEs operating across India, ERP systems have become an important part of supporting efficient and compliant business operations. As more software options enter the market, having a clear approach to evaluating ERP solutions helps MSMEs make well-informed technology decisions.
An ERP software evaluation scorecard offers a structured way to compare vendors on key factors such as usability, compliance readiness, scalability, and overall value. This approach helps businesses select ERP solutions that align well with their operational needs and growth plans.
Why do MSMEs require systematic ERP software & vendor evaluation scorecard?
Unlike large enterprises, most Indian MSMEs work with lean teams and limited IT support. This makes selecting the right ERP system a critical decision. Businesses need software that is easy to use, affordable, and quick to implement, without adding unnecessary complexity to daily operations.
Regulatory requirements also play a major role. For example, an ERP system meant to handle Indian businesses must be able to meet India-specific needs such as GST compliance, e-invoicing, e-way bills, and audit-ready reports. Choosing software based solely on a sales pitch or a long feature list often leads to challenges during implementation.
A structured ERP evaluation scorecard helps MSMEs make clearer, more informed decisions. It turns subjective opinions into measurable parameters, allowing businesses to compare vendors fairly on factors like compliance readiness, usability, scalability, support quality, and total cost of ownership. While many MSMEs begin by comparing options using simple Excel sheets, growing operations benefit from a more organised evaluation approach that ensures the ERP software supports long-term growth instead of creating operational roadblocks.
Mandatory elements of an ERP software scorecard
To evaluate ERP solutions effectively, MSMEs need to look beyond surface-level features and focus on practical criteria that influence implementation success, compliance, and long-term usability. The following elements form the foundation of a reliable ERP software scorecard.
Localisation and compliance
Compliance plays a very critical role in ensuring smooth business operations and regulatory readiness. For Indian MSMEs, ERP software should offer built-in configurations and compliance modules that support local requirements such as GST filings, e-invoicing, TDS management, and e-way bill generation.
Equally important is the vendor’s track record of providing timely updates to reflect changes in tax laws and regulatory norms. Regular localisation updates help businesses stay compliant without manual workarounds.
Software efficiency
Software efficiency refers to how effectively the ERP system manages processes, resources, and time across operations. This can be assessed by tracking indicators such as:
- Cycle time from order to delivery
- Resource utilisation levels
- Reduction in manual errors
- Accuracy and consistency of process execution
An efficient ERP system helps minimise delays, reduce operational waste, and improve overall cost management through automation and streamlined workflows.
Cost of ownership
The total cost of ownership becomes more than the initial purchase price of the ERP software. It includes implementation costs, licensing or subscription fees, customisation, training, and long-term maintenance.
While some vendors follow a per-user pricing model, others offer flat pricing for a fixed number of users or transactions. Evaluating these cost structures alongside expected operational benefits helps MSMEs understand the long-term value of the ERP investment.
On-time implementation and delivery
Assessing the vendor’s ability to deliver the ERP solution within agreed timelines is an important evaluation factor. This includes meeting implementation milestones, completing customisations as planned, and supporting a timely go-live.
Clear communication and consistent delivery help ensure a smooth implementation and dependable vendor performance.
Training requirements and flexibility
The ease with which teams can learn and use the ERP system directly impacts adoption and day-to-day usage. ERP solutions should offer intuitive interfaces, role-based access, and structured training support.
Flexibility is equally important, as the system should be able to support higher transaction volumes, business expansion, and additional users as the organisation grows.
Data security and backup
With increasing cyber risks and evolving data protection regulations, securing business data is a key consideration during ERP evaluation. Vendors should demonstrate strong data security practices, reliable backup processes, and disaster recovery capabilities.
Clear policies around data access, audit readiness, and incident management help ensure data protection and business continuity.
Along with these elements, factors such as the vendor’s past performance, market presence, industry experience, and customer reputation are also evaluated. Assigning weights to each criterion as well as calculating an overall score helps MSMEs compare vendors objectively and select an ERP solution that aligns with their operational needs.
Calculating the weighted average of the ERP vendor scorecard
Not all evaluation criteria carry the same level of importance when selecting an ERP vendor. In a weighted scorecard, a higher weight is assigned to critical factors based on business priorities, while less critical aspects receive a lower weight.
Typically, the scorecard is structured with evaluation criteria listed as rows and ERP vendors as columns, using a Likert scale (for example, 1 to 10) to rate each parameter. The weighted average is then calculated to arrive at an overall score for each vendor.
This quantitative approach helps MSMEs compare ERP options objectively, reduce personal bias, and make clearer, more confident decisions aligned with operational and compliance needs.
Conclusion
Choosing an ERP solution that truly aligns with local business needs, regulatory requirements, and operational realities is vital for Indian MSMEs. A methodical evaluation helps businesses move beyond feature lists and vendor claims, guiding them toward software that supports compliance, efficiency, and long-term growth.
For many MSMEs in India, TallyPrime reflects what a well-evaluated ERP solution looks like in practice. Built around Indian accounting practices and GST requirements, it brings together core functions such as accounting, inventory management, statutory reporting, and compliance within a single platform. If you are exploring ERP options that fit Indian business workflows, TallyPrime is worth considering as a starting point.
