The selection process for an ERP in a mid-sized Israeli business: the signs you need one, requirements by department, the Israeli reporting files to see running, a comparison table of criteria, demo questions and reference checks.
Key takeaways
- Write requirements per department as tasks and exceptions, not as module names from a brochure.
- In Israel, see the uniform-format files (INI.TXT and BKMVDATA.TXT) and a PCN874 file produced in the demo, not promised.
- Localisation depth is published by the vendor: Microsoft lists Business Central in Israel as a partner localisation marked "no RTL; English only".
- Script the demo yourself, record it, and call two reference customers before signing.
Choosing an ERP for a mid-sized Israeli business comes down to four steps: write down what each department must do in the system, check the Israeli requirements a foreign product may not cover (uniform-format files, PCN874, Hebrew documents, Masav), run demos scripted by you on your own data, and call reference customers before signing anything.
Most selection processes fail in the same place: the vendor runs the demo, the vendor picks the scenarios, and the business discovers after go-live that its own exceptions were never shown. The process below keeps the choice in your hands. It does not repeat how an ERP differs from a CRM, and it does not price the project - both have their own guides, linked where they fit.
What are the signs that a business needs an ERP?
A business needs an ERP when the same data is typed into more than one system and the numbers no longer agree without someone reconciling them by hand. The usual signs in a mid-sized business:
- Stock in the warehouse and stock in the books differ at every count.
- Month-end close depends on one person exporting spreadsheets from three systems.
- Sales promises delivery dates without seeing purchasing or stock.
- Purchase orders, delivery notes and supplier invoices are matched by eye.
- Management asks for gross margin per product or customer and gets the answer a week later.
If the pain sits only in sales follow-up or only in bookkeeping, a CRM or accounting software may be enough. What an ERP, a CRM and accounting software should each hold draws that line.
Requirements by department: what to write down first
An ERP requirement list is written per department, as the tasks each team performs, not as module names from a vendor brochure. "Inventory module" tells a vendor nothing; "receive a partial shipment against a purchase order and return the damaged units to the supplier" tells it exactly what to show.
| Department | What to write down | Example requirement |
|---|---|---|
| Finance and accounting | Documents you issue, reports the accountant needs, bank reconciliation | Issue tax invoices and credit notes, produce the uniform-format files and the monthly PCN874 file |
| Sales | How a quote becomes an order, price lists, discounts, credit limits | Block an order when the customer is over its credit limit |
| Purchasing | Approval rules, supplier price agreements, three-way matching | Match purchase order, goods receipt and supplier invoice before payment |
| Inventory and warehouse | Warehouses, bin locations, serial or batch numbers, counts | Trace a batch number from receipt to shipment |
| Operations or production | Bills of materials, work orders, service calls | Consume components from stock when a work order closes |
| Management | The five reports decisions are made on every month | Gross margin per customer and per product line |
Mark each requirement as must-have or nice-to-have, and list the exceptions: the customer with a special price agreement, the product sold both by the unit and by weight. Exceptions are what separate one system from another, because every ERP handles the standard case.
Which Israeli requirements must an ERP meet?
This section is a technical description of reporting requirements, not tax or legal advice; confirm how they apply to your business with your accountant.
An ERP used in Israel has to produce the files and documents the Tax Authority defines, not just show a Hebrew interface. The items to verify:
- Uniform-format files (מבנה אחיד). According to the Tax Authority's presentation for software houses, an amendment to the bookkeeping instructions published on 2 August 2006 requires software that must be registered to produce files in a uniform structure, in force from 1 January 2008. The export creates two files: INI.TXT, a leading file whose A000 record holds the business and software details, and BKMVDATA.TXT, the data file.
- PCN874. The Tax Authority's instructions to producers of computerised accounting systems describe PCN874 as a file produced every month and transferred electronically, by default covering the calendar month before the month it is produced.
- Allocation numbers. The system has to request an allocation number (מספר הקצאה) from the Tax Authority for the tax invoices that require one, and show clearly what happens when the number does not come back.
- Hebrew and RTL in printed documents and PDFs, not only on screen, including mixed Hebrew and English lines such as a product name with a model number.
- Masav files for supplier payments and for collection by authorisation, or a documented way to hand that data to a service bureau.
- Local support: who answers in Hebrew when the monthly file fails on the day it is due.
Localisation depth differs between products, and the vendors publish it themselves. Microsoft's country availability list for Dynamics 365 Business Central online shows Israel as a partner-provided localisation built on the international (W1) version, marked "no RTL; English only". Odoo's Israel accounting module (l10n_il) describes itself as a basic localisation: a generic Israeli chart of accounts, taxes and a tax report, and fiscal positions. Neither statement means a local partner cannot fill the gap, so ask which partner app or add-on produces the uniform-format files, PCN874 and allocation numbers, and watch each one run.
Evaluation criteria: a comparison table to fill in
Score every ERP on the shortlist against the same criteria, using evidence you saw rather than claims you heard. Systems evaluated in the Israeli market include Priority, SAP Business One, Hashavshevet, Odoo and Business Central.
| Criterion | What counts as evidence | Warning sign |
|---|---|---|
| Fit to your exceptions | Your exception list run on screen with your data | "That takes a small customisation" |
| Israeli reporting | A uniform-format export and a PCN874 file produced in the demo environment | Offered "in the next version" or by a third party nobody names |
| Hebrew documents | A printed invoice and a PDF with mixed Hebrew and English | Only the screens are shown in Hebrew |
| Integration | A documented API, and who is allowed to call it | The API is available only through the vendor's own services |
| Reporting | Your five management reports built during the evaluation | Reports are "exported to Excel and adjusted" |
| Implementation partner | Named consultants and their projects in your industry | The salesperson cannot say who will implement |
| Upgrade path | How customisations survive a version upgrade | Customisations "carry over automatically", with no process |
| Total cost | A breakdown of licences, implementation, interfaces and support | One number with no breakdown |
How two Israeli-market systems differ at the integration layer - authentication, schema discovery and events - is covered in Priority vs SAP Business One from an integrator's view.
What to ask for in the vendor demo
A useful ERP demo is scripted by the buyer. Send the scenarios a week ahead, attach sample data, and ask the vendor to run them live:
- One of your real orders from quote to invoice, including a partial delivery and a return.
- The uniform-format files and a PCN874 file produced from the demo company, then opened.
- A printed tax invoice with a Hebrew customer name and an English product code on the same line.
- Your hardest exception, showing where it is configured rather than where it would be developed.
- One management report built while you watch.
- What a user sees when a required field is missing or a document is rejected.
- How data leaves the system: export, API, and the format of a full backup.
Ask for the demo to be recorded, and compare the recordings side by side when you score.
How do you check references, plan the migration and see the total cost?
Reference calls are the only way to learn how an ERP implementation actually went, not just how the software looks. Ask each vendor for two customers of similar size and industry who have been live for at least a year, and ask them:
- How long did the project take compared with the original plan?
- What did the implementer not know about their business, and who paid for the gap?
- How many customisations do they maintain, and what happened at the last upgrade?
- Who do they call when the monthly file fails, and how fast does an answer come?
Data migration is planned before the contract, because it sets the go-live date: which master data moves, how many years of transactions come across, and who cleans the duplicates. The order of work and the failures that recur are in moving from Excel to an Israeli ERP.
The licence is rarely the largest cost of an ERP project; implementation, interfaces and data usually are. What actually makes an ERP project expensive explains how to compare two quotations line by line. If you need interfaces built between the ERP and your other systems, the ranges are on the pricing page.
Sources
Frequently asked questions
What is the first step in choosing an ERP system?
The first step is a written requirement list per department - finance, sales, purchasing, inventory, operations and management - phrased as tasks, with every exception marked. Without it the vendor chooses the demo scenarios, shows the standard case every ERP handles, and your real exceptions only surface after go-live, when changing them costs the most.
Which Israeli files must an ERP be able to produce?
At minimum, the uniform-format export defined by the Tax Authority - the INI.TXT leading file and the BKMVDATA.TXT data file - and the monthly PCN874 file. Ask to see both produced in the demo company. Check allocation number requests for tax invoices and Masav files too. This is a technical description; confirm what applies to you with your accountant.
Can an international ERP work for an Israeli business?
It can, but the Israeli layer often comes from a local partner rather than the vendor. Microsoft, for example, lists Business Central in Israel as a partner localisation on the W1 version, marked "no RTL; English only". Ask which partner app produces the uniform-format files, PCN874 and allocation numbers, and see each one run before signing.
What should an ERP demo include?
An ERP demo should run scenarios you sent in advance, on your sample data: a real order from quote to invoice with a partial delivery and a return, the Israeli reporting files, a Hebrew-English tax invoice, your hardest exception, one management report built live, and a full data export. Record it so vendors can be compared fairly.
Should data migration be planned before choosing an ERP?
Yes. Data migration decides the go-live date and a large part of the implementation effort, so the scope belongs in the quotation: which master data moves, how many years of transactions, who cleans duplicates and how the migrated balances are checked. A vendor who cannot describe its migration method before the contract is unlikely to have one after.
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About the author
Yehonatan Saadia
Freelance automation, web & MVP developer
I'm Yehonatan Saadia, a senior developer who builds business automation, custom websites, and MVPs for small and mid-sized companies across the US, Europe, and Israel. These guides come from real client work, not theory.
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