ERP solutions for SMBs : Opportunity or Confusion ?
Its action time in the SMB space. Suddenly, the space neglected for so long seems to generate a lot of interest for behemoths of the Information Technology Industry. The turf once ruled by the multitude of small players is being challenged by the likes of SAP, Microsoft, and Oracle etc.
The SMB’s Dilemma :
Should the SMBs feel more excited or confused?
The large ERP companies are now interested in their businesses. Doesn’t it present to them an opportunity, which wasn’t there lately to evaluate more players and evaluate them logically on which one of these veterans of ERP Industry presents them the best, right fit solution for their industry and above all for their specific operations. They do have a reason to smile.
Earlier a mere mention of ERP word triggered a scenario of a very large organisation who can afford huge monetary budgets, dedicate large number of resources and then have the patience for another 3-4 years before the returns exactly start coming back.
The giants of this industry seem to be aware of this SMB dilemma. Everyone is promising rapid implementation, specific industry solutions, integrated, pre-configured and affordable to help the SMBs in achieving quick returns on their investments. This again presents a new challenge. Finding answers to questions - Are these stalwarts presenting us pared down versions of their main product lines? Can they present a real value proposition to my business or do I need to change my business processes to suit the large organisations on which these ERP solutions were historically modeled?
The new Landscape:
SMB’s like any other company have numerous options when it comes to enterprise solutions: Develop their own customized solution (in house development), third-party custom solutions, local ERP vendors, global mid-market providers and global top-tier vendors. The custom solutions developed inhouse or by third parties face many pitfalls: no definite upgrade path with the evolving business requirements rendering their future viability touch nadir, high costs in integrating with future applications, adoption of sub-optimal processes rather than the best practices.
Its high time for a change in the mindset. The SMB’s need to think beyond their cocooned shells. The boom in the internet economy demands businesses to be more globalised and compete with the best in their industry across the world. Your customers or suppliers or even competition can be right next door or across the oceans. ERP system, being the backbone of Information strategy, needs to be world class to enable businesses achieve their competitive advantage.
Traditionally, the local ERP players have been more focused around the SMBs. Majority of them are small home grown players who developed their businesses around the SMB customers. They may understand their SMB’s typical requirements but feel constrained in terms of revenues, market shares, and research and development investments. The important question to ask oneself: Would this vendor survive in the competitive environment? Can they invest to evolve their products in tune with the changing technology and business environments? If the answers are encouraging, SMBs should consider them actively.
The midmarket space has witnessed some of the best action times in the last couple of years. Lots of existing players have been taken over or have become history. Its consolidation time and the top guns of the industry have led to flurry of acquisitions. The turf is flooded by the veterans of Software Industry with their offerings for SMBs. SAP took over TopManage and introduced Business one solution, Microsoft took over Great Plains, Navision and others, SSA Global wrapped up BaaN from its loss making owner Invensys, Oracle has introduced their SMB solution and still vying for Peoplesoft.
With the large enterprises market now stagnant, the SMBs have strong players interested in their businesses. But they need to exercise caution and not be swayed by the marketing gimmicks. Its war out there and each vendor backed by its marketing muscle would present its own value proposition to SMBs. The vendors, which can present the right fit solution with small or negligible content for customizations and at an affordable cost would eventually emerge victorious. The war would not be won by presenting extensive product features but the essential features to support SMBs specific current and future requirements.
SMBs need to be more assertive in negotiating with these vendors. Implementation costs would be a key issue. It is advisable to go for fixed term implementation contracts with definite SLAs. Another vital consideration is the long term support model. ERP is a long term strategic investment for any business. Do these players have a support network of channel partners or VARs in place as the costs of their direct support models may be prohibitive for most of the SMBs. The significant question is to evaluate if the value proposition is real, demonstrable and referencable.
Its your time and make the best out of this opportunity.
Should the SMBs feel more excited or confused?
The large ERP companies are now interested in their businesses. Doesn’t it present to them an opportunity, which wasn’t there lately to evaluate more players and evaluate them logically on which one of these veterans of ERP Industry presents them the best, right fit solution for their industry and above all for their specific operations. They do have a reason to smile.
Earlier a mere mention of ERP word triggered a scenario of a very large organisation who can afford huge monetary budgets, dedicate large number of resources and then have the patience for another 3-4 years before the returns exactly start coming back.
The giants of this industry seem to be aware of this SMB dilemma. Everyone is promising rapid implementation, specific industry solutions, integrated, pre-configured and affordable to help the SMBs in achieving quick returns on their investments. This again presents a new challenge. Finding answers to questions - Are these stalwarts presenting us pared down versions of their main product lines? Can they present a real value proposition to my business or do I need to change my business processes to suit the large organisations on which these ERP solutions were historically modeled?
The new Landscape:
SMB’s like any other company have numerous options when it comes to enterprise solutions: Develop their own customized solution (in house development), third-party custom solutions, local ERP vendors, global mid-market providers and global top-tier vendors. The custom solutions developed inhouse or by third parties face many pitfalls: no definite upgrade path with the evolving business requirements rendering their future viability touch nadir, high costs in integrating with future applications, adoption of sub-optimal processes rather than the best practices.
Its high time for a change in the mindset. The SMB’s need to think beyond their cocooned shells. The boom in the internet economy demands businesses to be more globalised and compete with the best in their industry across the world. Your customers or suppliers or even competition can be right next door or across the oceans. ERP system, being the backbone of Information strategy, needs to be world class to enable businesses achieve their competitive advantage.
Traditionally, the local ERP players have been more focused around the SMBs. Majority of them are small home grown players who developed their businesses around the SMB customers. They may understand their SMB’s typical requirements but feel constrained in terms of revenues, market shares, and research and development investments. The important question to ask oneself: Would this vendor survive in the competitive environment? Can they invest to evolve their products in tune with the changing technology and business environments? If the answers are encouraging, SMBs should consider them actively.
The midmarket space has witnessed some of the best action times in the last couple of years. Lots of existing players have been taken over or have become history. Its consolidation time and the top guns of the industry have led to flurry of acquisitions. The turf is flooded by the veterans of Software Industry with their offerings for SMBs. SAP took over TopManage and introduced Business one solution, Microsoft took over Great Plains, Navision and others, SSA Global wrapped up BaaN from its loss making owner Invensys, Oracle has introduced their SMB solution and still vying for Peoplesoft.
With the large enterprises market now stagnant, the SMBs have strong players interested in their businesses. But they need to exercise caution and not be swayed by the marketing gimmicks. Its war out there and each vendor backed by its marketing muscle would present its own value proposition to SMBs. The vendors, which can present the right fit solution with small or negligible content for customizations and at an affordable cost would eventually emerge victorious. The war would not be won by presenting extensive product features but the essential features to support SMBs specific current and future requirements.
SMBs need to be more assertive in negotiating with these vendors. Implementation costs would be a key issue. It is advisable to go for fixed term implementation contracts with definite SLAs. Another vital consideration is the long term support model. ERP is a long term strategic investment for any business. Do these players have a support network of channel partners or VARs in place as the costs of their direct support models may be prohibitive for most of the SMBs. The significant question is to evaluate if the value proposition is real, demonstrable and referencable.
Its your time and make the best out of this opportunity.
**ÐM
CAclubindia
