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ERP for Small Business: The Time is Ripe

Small and mid-size businesses often have unique requirements for enterprise resource planning software that demand full capabilities without complexity. They also want to see a quick return on investment. Vendors now are stepping up.
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The time is ripe for small and mid-size businesses to adopt enterprise resource planning (ERP) applications, according to leading industry analysts.

There are more options than ever among the crowded ERP-vendor field targeting the small and mid-size business sector. Those options are, in turn, growing more affordable. In addition, many small and mid-size businesses are in desperate need of an upgrade to sophisticated software that was once the purview of only larger corporations.

“Many small businesses have not upgraded their infrastructure since the Y2K cycle,” says Albert Pang, research director of enterprise applications research for Framingham-Mass.-based IDC. “Many of their systems need to be replaced.” Companies looking to update their financial, human resources, project management, and procurement applications will find that their needs will be met by ERP offerings, Pang says.

A field crowded with vendors

The good news is that there are many new choices among ERP programs available to small and mid-size businesses, Pang says, with over 30 vendors in the field.  And those vendors are looking to small and mid-size businesses as their primary growth market. An August 2007 Forrester Research report forecast that the small business sector will be “the most dynamic and innovative growth area” for ERP sales over the next three to five years.

If comparison shopping a 30-plus market of vendors seems overwhelming, consider that many vendors offer specialty products to certain sectors or verticals. For example, Activant Solutions specializes in offerings to distributors, Constellation Software Inc. services club-membership-type businesses, and Deltek Inc.’s products target professional services providers.

But ERP’s largest players -- SAP, Sage Software, Oracle, and Microsoft -- have more generic offerings that are increasingly tailored to smaller businesses. For example, Oracle is offering fixed-scope products, such as E-Business Suite and JDEdwards Enterprise One. These can be up and running in days to weeks, not months to years like previous, enterprise-focused ERP applications, says Pang. That timetable is crucial for small businesses, which want and need to see a quick return on their technology investments.

And while costs can vary widely according to a company’s specific needs, the costs for more sophisticated software have really come down. “In the past, many of these products would cost seven figures, but now, they are available for under $100,000,” says Pang. Stiff competition and the emergency of on-demand products available over the Web have contributed to this trend, he says.

Custom, on-demand solutions

Another option for smaller firms is to purchase generic solutions and customize them with help from a value-added reseller or consultant, explains Gary Chen, senior analyst and small and mid-size business specialist at Boston, Mass-based Yankee Group. A wide range of add-on modules is available to develop the perfect custom application for every company.

Still another option is ERP on-demand products for smaller businesses, such as those offered by NetSuite and SAP Business ByDesign. SAP’s product features a unique flat price: $149 per user per month, according to its website.

With all these options, it’s a good time for smaller firms to go ERP shopping, says Chen. “There is so much more available now,” he says. “There’s never been a better time.”




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