ERP for SMBs

Updated: May 05, 2009

Issue

Gone are the days when ERP was only available to large enterprises with expansive order-fulfillment, manufacturing and supply-chain processes. Today, a growing crop of vendors offers scaled-down, lower-priced solutions that specifically target the small-business space.

"The good news for small businesses is they have a lot of options right now," said Eric Kimberling, president of Panorama Consulting Group in Denver. "There are a lot of Tier-2 and niche ERP software providers out there that are focusing on small and midsize companies. So ERP is a lot more doable now than it was five years ago from a functionality, flexibility and a cost perspective."

Analysis

Joining SMB-centric vendors such as Epicor, Infor and Intuit are some industry giants. For example, Oracle and Microsoft have also jumped in the game with more generic ERP solutions.

But vendor variety isn't the only factor fueling the popularity of ERP among today's SMBs. The SaaS (Software as a Service) model, with its low monthly fees and hassle-free deployment, is also driving demand. Although SaaS offerings such as NetSuite and SAP Business ByDesign promise to help shave costs and simplify systems, there are shortcomings that small businesses must consider.

"Small businesses are a lot more likely to look at SaaS offerings," said Kimberling, noting that there are nearly 30 ERP vendors currently catering to SMBs. "But the downside is that SaaS and other small-business solutions might be a little less flexible and a little less scalable than their larger counterparts."

Paul Hamerman, a research analyst with Forrester Research, agreed. "[Small-business offerings] are generally not as comprehensive in terms of breadth and depth of functionality," said Hamerman.

In fact, Gartner analyst Denise Ganly wrote in the "SaaS Impact on ERP" report: "Because of the complexity of ERP suites, SaaS offerings for administrative and operational functions typically have provided functionality that is confined to one domain, such as Sales Force Automation, or one business process, such as payroll. Thus, ERP SaaS suite offerings are still immature."

Another risk small businesses face is surpassing the solution's limited capabilities. "The problem with some small companies is that they grow pretty quickly and have ambitious plans, so they sometimes outgrow the smaller ERP solutions," warned Kimberling.

That's especially true when a small business takes pains to highly customize an ERP solution. By adding layers of unique functionality throughout the deployment process, Hamerman warned that a growing company can compromise a system's upgrade path. "There is often a degree of customization but it has to be done properly," said Hamerman. "You're going to have to upgrade these systems every three to five years to take advantage of the latest capabilities and compliance updates. But if you apply a lot of customization to the system, it becomes more difficult to manage and upgrade."

Recommendations

As illustrated above, SMBs have a variety of options when in comes to ERP these days. Picking the right solution for your company, however, still isn't easy. Fortunately, Focus has developed comprehensive and informative research to help you find the best ERP offering for you. Start with the Market Primer: ERP Systems before consulting the Buyer's Guide: ERP Systems and Comparison Guide: Midmarket ERP Solutions. Also, be sure to read community-contributed research and related research briefs for more on ERP.

Featured Research
  • 2017 Business Intelligence Trends

    It's long been thought that business intelligence (BI) could only be utilized by highly trained analysts and was therefore unattainable for most businesses. However, advancements in BI have made it so that everyone can utilize BI solutions to help shape business decisions and drive companies bottom lines. more

  • Your Phone System and Your Bottom Line

    Businesses have been using phones to drive increases to their bottom lines for almost a century now. Telephony, much like the rest of the business world, has seen drastic changes with the increase in technological advancement. Voice Over Internet Protocol (VoIP), has enabled companies to connect with consumers at levels that have been seen as unheard of before. And trust us when we say this, it is doing wonders for the bottom line. more

  • How to Scale a Contact Center in 2017

    Are you on the fence about scaling your contact center and not sure how or whether or not now is the time? Studies have shown that 93% of executives expect that contact volume will remain constant or increase within the next two years. This means that now more than ever is the time to begin scaling and we are here to help. more

  • Making the Case for a New CRM

    Did you know that having an outdated CRM is just as bad as not having one at all? Do you find yourself working even just a little too hard to make your current CRM work to maintain your contacts and relationships? While it is increasingly more difficult to reduce customer churn, modern CRM tools are much more powerful and provide much more opportunity to develop stronger relationships with your clients that can provide more stability and revenue to your company and bottom line. more

  • 2017 Phone Systems Checklist

    As you are well aware, we are living in an age of extreme technological growth. With this, an understatement might be that phone systems have changed a bit over the last decade. If you are in the market for a new phone system, it is absolutely essential for you to have knowledge of this vast sector and just what exactly you need in order to have your business succeed. more