ERP for the SMB: Part Four - Who Are They, and Who Are You?
By Ann Grackin
on Oct 4, 2011
ERP players who specialize in small and mid-sized businesses are an interesting and diverse group of players. Their challenge is . . .
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This ERP for the SMB series is now combined in the FULL REPORT.
In this continuing series on ERP for the SMB, we are exploring the issues specific to SMBs. In other words, we will delve into the world of Marketing, Sales and Channels.
In Part Three, we discussed businesses’ increasingly complex relationships to markets and customers.
In this article we will tackle two issues:
Who are the ERP providers who focus on the SMB?
And, a more challenging question, who are the SMBs?
So who are the ERP providers who focus on the SMBs?
Today, there is quite a range of ERP providers, so we will dissect their positioning. Table 1 shows a list of the providers in this space. Some providers are differentiated by small vs. medium businesses; we will look at how they specialize by industry and other variables. This table covers on-premise and cloud solutions, as well as having a business complexity focus. As we discussed in earlier articles, it’s imperative that you are clear about the most complex and critical aspects to be automated within your business.
Growing into ERP? Then BlueLink might be just the solution provider for you. With its roots in accounting for the emerging enterprise, BlueLink has taken the logical path into inventory management and distribution. BlueLink can support a growth strategy by getting you started with an enterprise financial solution to which you can add modules as you grow.
With a strong suite in the process industries, CDC has a strong globalization focus in their solutions. CDC boasts a global customer base and supports highly regulated processes for industries such as Food and Beverage, Pharmaceuticals, and Chemical production, through their supply chains, to include traceability, importing and distribution.
With a long history of serving the enterprise, Cincom is one of the longest standing independent ERP players out there. Years at the job means lots of code to support business processes. Still, Cincom has invested steadily in their products over the years. Cincom can support the mid-size enterprise, but has many large customers.
Infor is the shopping mall for ERP, but their purchase of Lawson this year gives them a cloud solution, at last, for the SMB. Infor’s portfolio includes Lawson, Baan, SSA, Ask products, Adage, ERP SyteLine, and more, as well as many functional special solutions in asset tracking, supply chain, etc. Infor positions their ERP portfolio according to company function and size, for example: ERP Visual for 25 to 1,000 employees or ERP SyteLine for 75 to 5,000 employees.
A unique approach to the core ERP system, Harris Data’s ERP is customer-centric. Unlike most other ERP that are finance- and accounting-centric, Harris Data has the enterprise data model centered on the customer and has all the connectivity to customer-support processes. Beyond their technology, their own corporate culture reflects this philosophy. They have remarkable customer retention stats and evaluate their own performance based on how successful they are at achieving the customer’s goals. Unlike other on-premise ERPs, they charge extremely low or no annual service fees, and provide perpetual upgrades as new releases come out.
Microsoft Dynamics AX and Dynamics NA. AX has its roots in Great Plains software—strong accounting/distribution-centric, with NAV more focused on manufacturing. With the Microsoft development engine, integration to MS products, and a strong partner network, MS continues to be a lead player in the SMB sector.
Emerging from its CRM roots, NetSuite, a cloud solution, offers strong capabilities for distribution-centric businesses. But beyond the S and M, NetSuite can boast many top tier Fortune 1000 customers in its portfolio. Leveraging their cloud solution, NetSuite has a strong partner network of cloud-based solutions partners in mobility, supply chain, services, etc.
NetSuite was the first cloud ERP, and has learned a lot about supporting real time/uptime across the globe for mid-size businesses. Today, they boast the largest install base of cloud ERP customers.
NetSuite has a global partner implementation and consulting base. (More on NetSuite here.)
Don’t let the SMB category dissuade you if you are a large manufacturer. Plex is a deeply focused manufacturing solution with a stellar cloud offering for L, M, and S players. Strong manufacturing-process-centricity allows Plex to handle multi-stage manufacturing.
Plex also has a strong customer social network and advisory group for peer-to-peer sharing and development of solutions.
Though known for the mega-enterprise solution, SAP has invested heavily and is gaining ground with its solutions in the mid-market. SAP Business One (on-premise), Business By Design (cloud/on-demand) and SAP All-In-One, (more targeted at mid-size, but growing enterprises who need complexity w/o complex implementation, i.e. R3). SAP, like Infor, has targeted these solutions based on company size and growth. As you grow, you can add-in without purchasing a totally new ERP.
SAGE Group is one of the largest software firms in the world. A portfolio of several ERP solutions, with focus. Sage Accpac ERP is a multi-industry package targeted at the small to mid-size enterprise; whereas their Sage ERP X3 is for mid- to large-size firms. Sage MAS90, another product, is targeted for more manufacturing-centric businesses.
With global implementation partners, Syspro can handle highly complex business challenges, yet retain the ease of use and implementation required by the SMB market.
Syspro’s customers are in manufacturing—both process and discrete, and Syspro supports their global business management needs with a strong global financial model. (See more on Syspro here.)
With solutions for the mid-market and up, UNIT4 recently announced their cloud solutions One of the major complaints in post-implementation of ERPs is the challenge to grow and change the business. UNIT4 focuses on assuring that their customers can deal with business process change. (See more on UNIT4 here.)
Visibility’s focus is on the build/engineer-to-order business: industries such as Aerospace, Industrial, Engineering and Construction as well as custom manufacturing, for example. These businesses have a strong need to support complex, and often, one-of-a-kind installations that have highly skilled and unique work assignments.
Visibility’s customers are often not small or mid-size. But Visibility can assure ease of growth, as smaller firms need to support more complexity in their business.
Table 1: ERPs for the SMBs—Source ChainLink Research
As you can see in Table 1, we are immediately confronted with a daunting list of players. It’s critical to understand that the larger firms like Sage, SAP, and Infor (multi-product enterprise providers) have multiple products that are either industry or company-size oriented solutions. Some of these also are designed for growth orientation, so as you grow, you don’t have to buy a new package. NetSuite, Plex and SAP’s All-in-One are just some examples of these. So for example, a small, less complex business might adopt SAP BusinessOne; whereas a business destined for growth would purchase All-in-One and add functions as they grew. Plex and NetSuite provide this same concept without the purchasing confusion, we think.1 Highly configurable, multi-tenant architectures allow users to adopt business processes as needed without guessing which software package might be the one they need.
But there are other considerations, so let’s work on narrowing down2 our choices a bit.
Cloud vs. On-Premise
SaaS ERP has been around since the launch of NetSuite in 1998. But in the intervening decade a few things have occurred to lend importance to the cloud. First, although the internet was a ‘hot concept,’ it was considered more a vehicle for trading partner integration and commerce, not for core enterprise management. And that was probably OK then, since we did not have the internet connectivity and global performance that we have today. So, number one is ubiquitous connectivity to assure that critical enterprise functions can run over the internet.
Second are budgets for IT projects of this nature. We have seen a steady decline in IT budgets for certain classes of software. Previously, if mega enterprises with big IT budgets spent ten million or more on software, it did not seem critical. Today, we have continued downward pressure on the budget, and cloud economics are quite compelling. So economics is our second factor. (You can read about cloud economics here.)
Third is the market itself. Software players like to chase the big enterprise deals, especially in their early years. If you spend tens of millions developing your product, naturally, you think about recovering those costs through large deals with the largest companies. As time passes, saturation occurs in the Fortune 10000, so the mid-market is where everyone chases. And that has been the course of ERP’s history for Oracle and SAP, surely. But many of our ERPs for the SMB started out as solutions for this market. Now, they have more competition. However, this competition has challenged the players to think innovatively about how the get SMB up and running. And that brings us back to cloud.
So now we have about a dozen cloud-based solutions on the market.
Table 2: Cloud vs. On-Premise Offering
It is important to understand that not all ‘cloud’ is the same. Many solution providers now host your propriety solution for you, which is a bit different than the multi-tenant/single instance of other providers. (You can read all about cloud benefits in this cloud series and about alternative cloud architectures and approaches in the series As-a-Service Framework). And managed service will take on further IT activities for their customers. In Table 2, we show several approaches for these platforms and who provides them.
Business process outsourcing will go further, assuming basic business functions and participating in team work, often at the client site. (You can read about managed and co-managed processes here.) As you can see, few technology companies have ventured into this business process realm, though these services are frequently available from consultant and data analytics companies.
No Enterprise is an Island
Besides handling basic critical business functions such as Manufacturing (see Part Two) and Sales and Marketing (see Part Three in this series on ERP), machine-to-machine/enterprise-to-enterprise communication must be fluid and seamless.
So communication such as device integration to mobile and RFID, or business-to-business communication in workflow management and EDI (Secure File Transfers) must be well integrated with the basic enterprise processes. Though, often, these features are developed by partners of the ERP companies, they should be seamless and easily deployable.
In addition, users are often forced to buy separate analytics and reporting packages and bolt these into the enterprise. There may be a good reason for a standalone reporting system in organizations that have multiple software packages, but many SMBs rely on one ERP provider. In this case, reporting and analytics should be included in the solution, rather than driving users to be Excel specialists along with their other job.
Table 3: Workflow and Integration—Source ChainLink Research
As mentioned in the abstract, picking an ERP is as much about who you are, as who the providers are. The technology market is very much focused on serving particular industries, and companies build their market share by being experts with deeper functionality in these verticals.
You can see in Table 4, industry focus is clearly important. Take CDC software vs. Visibility as an example. CDC is strong in process areas such as chemical and pharmaceuticals; whereas Visibility’s strength is in Aerospace, Engineering and Construction—very different processes, products, and financial models. Therefore, the software has to look very different. One of the most important elements in selecting a solution is this industry focus. Before you proceed with a provider, you should be clear about their industry expertise.
Table 4: Industry Focus—Source ChainLink Research
Architecture Makes It All Scale
It is important to note that in spite of the marketing hype(which is designed to impress you with what these solution provideers understand about your business and use cases), these companies fundamentally define themselves as technology providers. The core principle by which they develop the code, databases, and connectivity makes a huge difference in their ability keep up with industry changes. If they make poor choices in the foundation, the price will be paid later with lack of flexibility in change management. Poor design limits the ability for cross-functional and inter-enterprise communication, as well as data management. Over time this affects the cost of development and, therefore, the service charges or other costs such as major, disruptive upgrades of the software package.
Conclusion: Who Are You?
To answer that question, several fundamental questions need to be answered. Before thinking about that ERP purchase, think about how you would characterize your business. For instance:
Industry—What industry are you in?
Regulation and Compliance—Is your business part of a regulated industry such as Aerospace, Life Sciences, etc?
Business Maturity—Where are you in your business maturity? Start-up, growth, going global?
Globalization—If you are going global, what is your need for multi-currency accounting, global trade document/import export management?
Suppliers—Are they global? How do they get financed? Do you have a direct and critical, consistent need for information sharing and visibility?
Growth rate—What is the pace of your growth? Some firms want to stick to a modest IT budget, but many high-growth businesses will allocate more funding to IT and look to scale as they grow.
Automation of Business Processes—What business processes will be automated? How central are they to business success? How complex are those processes?
Workforce Management—Is your work force centralized or mobile? What kind of skills management is required to support the work?
Outsourcing—What will be outsourced and, therefore, operated by others? What kind of integration and data sharing is required between your firm and your service provider?
Channel management—Do you distribute, sell, or service through channel partners? If so, how reliant are you on your partner for shared data? What kind of financial and sales activities do you share? Inventory, transportation, trade promotion management, sales agreements and commissions, and other agreements can all be part of the complex set of relationships.
And so much more….
This “who am I?” is fundamental to a successful ERP choice. These systems are designed for your business operations—your policies, processes and industry. Answering these questions well will take you half way to selecting your ERP wisely.
This ERP for the SMB series is now combined in the FULL REPORT. At the conclusion of the report we discuss ERP solutions and selection in more depth.
1And, I am sure, have more efficient development teams at lower cost.
2In fairness to the reader, we included a complete market listing. But, since some providers declined to participate in our research, we will just cover the ones who submitted briefings and analytics for this report. For more on ERP providers you can go to SupplyTech’s ERP section.
To view other articles from this issue of the brief, click here.