ERP solutions are here to stay. The economic recoveries of 1995 and 2003 saw a a large increase in demand for ERP system integration services. As we enter the current economic recovery, we are seeing pent up demand for ERP systems that signals the start of the next the natural replacement cycle for ERP and related products. The SMB market is where the action will be at this time around.
As we exit this recession multiple factors in the ERP software industry are in play.
1. Consolidation of the major Tier 2 platform.
2. The emergence of the SAAS ERP offerings.
3. Increased availability of opensource platforms.
4. The maturation of vertical industry products.
Consolidation in the industry has brought increased prices, functionality, standardization, and outsourced support. Allegedly the benefits are reduced costs and better ROI. However, to accomplish the major ERP systems force companies to work their way under the idea of “best practices” They have homogenized their products with the idea of “each package can fit all verticals” in other words they “specialize in everything”, which is why ERP horror stories abound.
The problem with the saas implementations of ERP are that they don’t tend to handle automatic data collection well. The device interfaces aren’t great, especially for manufacturing where the shop floor can’t stop because a WAN connection went down. Also, they don’t customize well to the unique processes that SMB’s tend to have.
Opensource ERP’s have reduced licensing costs and the more mature packages are able to handle the customization that company’s relish. But utilizing opensource packages requires a company to have competent programming resources on staff to fix bugs found in the code and utilize the customization. Finding replacement programmers with the same experience is difficult to find and for the areas of the non-major metro areas of the US it is nearly impossible.
In past, industry vertical specific offerings created by people who actually have experience in the industry tended to be simple, in some cases run as garage software companies. Nowadays, they are multi-million dollar companies with development staffs in all areas of the world utilizing some of the best industry talent. They have created powerful platforms that can flex enough to account for a company’s unique character while not requiring an army to provide ongoing maintenance and support.
As a consulting company we work with the client to understand their issues and review the industry-specific products before we ever look at a general product. This approach was born out of watching companies get burned by thinking a mass market product had to be better for them. In past times this idea was known as “no one ever got fired for buying IBM”. If this mentality continues, then the litany of ERP horror stories will continue to grow.
