ERP for small to midsize enterprises

ERP for small to midsize enterprises

The small to midsize enterprise resource planning (ERP) market is predicted to be one of the fastest growing in the years to come.

The small to midsize enterprise resource planning (ERP) market is predicted to be one of the fastest growing in the years to come. Until recently this market has been largely untapped because the major ERP vendors have concentrated their efforts on Fortune 500 companies and other large organizations. This market is now saturated, so ERP vendors have turned their attention to small and midsize enterprises, targeting them with a variety of solutions and packages.

The benefits of ERP

The ultimate aim of any ERP system is to help the organization where it is implemented to gain a competitive advantage. When implemented appropriately, an ERP system can have a tremendous effect on the operational efficiency and cash flows of any organization. The list of what a small to midsize enterprise demands from an ERP system continues to grow - the system must enable the organization to optimize its business process and to shorten customer delivery times. The features and benefits of the ERP system need to be flexible enough to keep up with changing business processes and evolving technologies, such as e-commerce.

Prices have been driven down and implementation cycles have been refined and shortened.

The fact that small to midsize enterprises have become a focus of attention from ERP vendors has resulted in some good news for customers - prices have been driven down and implementation cycles have been refined and shortened. ERP vendors are offering packages to attract organizations in the small to midsize market. SAP for example, is offering risk sharing agreements whereby if implementation costs are lower than expected, SAP will share the proceeds with the customer. If costs are higher, SAP will foot the bill.

A simpler approach for small to midsize enterprises

In large organizations, the typical approach for an ERP installation has been to employ an army of consultants, purchase new hardware that can run the ERP software, and to purchase software licenses for all users in the organization.

ERP vendors have done much to alleviate the installation burden for small to midsize enterprises and there are now a variety of options on offer, including bundled "ready to go" ERP solutions and the possibility of using the services of an Application Service Provider (ASP). Such options represent a more cost-effective way for a small to midsize enterprise to implement an ERP system - as opposed to the considerable investment demanded by the more traditional approach.

ERP options for small to midsize enterprises

Offerings from smaller ERP vendors

There are a range of ERP systems on the market today that are targeted at small to midsize enterprises. These include offerings from smaller ERP vendors. Depending on your organization's needs, it may be worthwhile investigating offerings from smaller ERP vendors as well as from the major vendors (such as SAP and PeopleSoft). Some smaller ERP vendors offer ERP systems targeted at small to midsize enterprises - in particular industry sectors such as small and medium-size manufacturers and distributors.

"Ready to go" ERP packages

Most of the larger ERP vendors offer bundled "ready to go" versions of their software.

Most of the larger ERP vendors offer bundled "ready to go" versions of their software and these can be particularly suited to the needs of small to midsize enterprises. For example, SAP's solutions for smaller customers, Accelerated SAP (ASAP), comprises a preconfigured version of each of the SAP? modules (Financials, Human Resources, and so on). The fact that the modules are preconfigured means implementation cycles can be dramatically reduced.

Preconfigured ERP packages have the advantage that little customization is necessary to get the system up and running. On the other hand, you may find that you are forced to adopt the business rules of the software rather than adapting the software to suit the business rules of your organization. With packaged solutions such as ASAP, the need for a large team of consultants is eliminated. However the customer will still require a business partner, usually a small, local, and less costly consulting company.

Application service providers

Application Service Providers (ASPs) are relative newcomers to the ERP marketplace. ASPs rent access to ERP applications rather than selling them. The applications are accessed over the Internet or over an ISDN line and are usually supplied with a minimal level of customization. The fact that the applications are not typically customized to a high degree is an important factor to bear in mind when considering using the services of an ASP. The customer does not need to install, maintain, or upgrade the ERP software and another advantage is that the cost of investing in software that may become quickly updated is eliminated. ASPs are relative newcomers and the method has not been tried and tested. However, there are many success stories of organizations that have implemented ASP solutions. Most of the larger ERP vendors are now entering the market with an ASP solution and there are also ASP solutions on offer from independent ASPs.

Choosing the best option for your organization

ERP systems handle the backbone of your organization and it can be a false economy to simply select the cheapest vendor or solution.

Before you choose an ERP system for your organization it is a good idea to carefully evaluate the options open to you. ERP systems handle the backbone of your organization and it can be a false economy to simply select the cheapest vendor or solution. The ERP system you select needs to be carefully suited to your business requirements and needs to be flexible enough to keep up with the changes in technology and with the changing needs of your organization.