Erp Smb

Topics: Enterprise resource planning, SAP AG, ERP software Pages: 18 (4887 words) Published: August 27, 2013
SMB ERP

Crumley, Fain, McFadden

ERP TREND TOWARD SMALL AND MEDIUM-SIZED BUSINESSES
Sam Crumley, Ezra Fain, Tara McFadden Today, large firms cannot compete without ERP systems. For large firms, ERP systems are recognized as an enabler rather than a differentiator. This distinction is evident in the proportion of large firms utilizing ERP systems. In the U.S., 98 of the Fortune 100 companies use Oracle to some extent.1 Furthermore, over 80% of Fortune 1000 firms have implemented a large ERP solution.2 Given the saturation of the ERP market for large corporations, new customer growth in the large firm market becomes minimal for ERP vendors. ERP software providers and implementation partners can maintain their revenues with support and upgrades but organic growth is only possible with expansion into new markets. With the convergence of ERP software firm’s growth demands, increasingly economical computing and networking, growing importance of information utilization within firms, and an ever growing technically trained workforce, the incumbent ERP solutions providers are now focusing sales growth on the small and middle sized business (SMB) market. Now, increasingly more SMB’s are gaining an efficiency and information advantage over their competition with the installation of ERP systems. Hence, industries dominated by SMB’s must now consider implementing ERP systems as their market landscapes become increasing competitive. For the purpose of our analysis and for the major vendors, SMB’s are firms with less than 1,000 employees or less than $100M in revenue.3 There are approximately 500,000 SMB’s in the U.S. versus only 95,000 firms in the U.S. with revenues over 1 2

www.oracle.com/corporate/story.html Conversation with Shawn Plaster of Accenture in Seattle on Monday, May 23 3 Oracle Presentation, June 2004 – Mid-Market Special Edition Campaign Plan: H1FY05

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SMB ERP

Crumley, Fain, McFadden

$100M. Oracle, SAP, and Microsoft are now fiercely competing for these small and medium sized firms which are much smaller than Oracle or SAP’s traditional customers. Microsoft, traditionally the dominant vendor in the corporate operating system and office software market, has had marginal success dominating the SMB market by acquiring an array of niche ERP vendors. At this point, Microsoft is trying to go upward from its smaller, desktop customer base into ERP solutions and Oracle (PeopleSoft) and SAP are trying to move down from their large package solutions toward the desktop-based business.4 In other words, they are both moving toward the gap between their two products. These large software providers are now competing head-to-head with existing smaller ERP providers. These smaller software providers have an advantage in that they are specifically designed to fulfill the needs of specific industries or functions. Example niche ERP software firms are: Everest Advanced and Cougar Mountain for retail firms; Epicor, NetSuite, MAS 200, and SYSPRO for services with project costing; and Made2Manage and M1 by B&G for light manufacturing.5 The small niche vendors have a distinct advantage since they can work closer with the implementing SMB to tailor to unique business processes. In addition, these smaller firms typically recognize their unique process as a competitive advantage that should not be sacrificed for the implementation of an ERP system. Thus, the SMB’s are sometimes forced to modify their processes to the system or go with a small, niche vendor who can be more responsive to their needs.

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Conversation with Shawn Plaster of Accenture in Seattle on Monday, May 23 www.2020software.com/

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SMB ERP

Crumley, Fain, McFadden

The SMB market may be difficult for the incumbent ERP software providers to capture for additional reasons. In addition to the standardized process adoption vs. ERP package customization conundrum SMB’s must face when implementing an ERP system, other hidden costs exists for SMB’s....
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