Loading ...Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider
Competition Intensifies For The Small And Medium Organization’s Software Budget
Software vendors such as Oracle and SAP can no longer rely on their large enterprise customers for double digit year-over-year growth. In fact, their customers have not only reached a saturation point in being able to consume new solutions, but have also faced demands to cut their large maintenance bills. With nowhere to go, enterprise apps vendors now turn to the small and medium sized market to drive their growth plans. Consequently, billion to multi-billion dollar SMB stalwarts such as Infor, Microsoft, Sage, and Lawson are not standing still. In fact, they seek opportunities to take market share from the industry leaders while fending off challenges from sub $500M SMB vendors such as Agresso, CDC Software, Deltek, Epicor, Exact, IFS, NetSuite, QAD, and Syspro.
Small And Medium-Sized Organizations Seek Enterprise Class Solutions Without The Resource Overhead
Globalization, regulatory compliance, and economic demands results in similar market pressures for all sizes of business. Size no longer plays a relevant role in business requirements. In fact, a recent survey of over 100 small and medium sized organizations, shows similar needs as large enterprises. However, small and medium-sized organizations can not afford the resource overhead required to maintain large and complex software systems. The 10 areas that drive vendor selection decisions include (see Figure 1):
Figure 1. Small and medium sized organizations seek enterprise class solutions without the resource overhead
The Bottom Line - Ten Lessons Learned Emerge From Recent Vendor Selection Trends
- Invest in last mile industry focused solutions.Customers expect their vendor to speak their language. Solutions that lack vertical fluency and limited industry customer referencability will be relegated to the ERP graveyard.
Lessons learned: Demonstrate thought leadership in each vertical and lead industry discussions. Focus on a handful of verticals. - Focus on rapid implementation and realization. Gone are the days of 12 to 18 month deployments. Customers seek deployments times with less than 3 months.
Lessons learned: Consider SaaS and OnDemand options. Templates and productized roll-outs improve time to market but can’t compete with SaaS solutions and onDemand offerings in demonstrating value to customers. - Expand the number of trusted partners and vendors. As SMB’s expand across the globe, they expect vendors to invest in trusted partners for both delivery and product footprint. Customers expect partners to assist with localization in new geographies, extend vertical solutions, and integration.
Lessons learned: Build partner ecosystems to geometrically expand reach while meeting customer needs. No vendor can deliver on all customer needs. - Deploy easy to use reporting tools and BI. Value out of the box requires BI and reporting tools to be proactive and pervasive. Users should have access to relevant and timely information along business processes.
Lessons learned: Design reporting tools with the end in mind. Start with the value of information and embed throughout the business process. - Reduce administrative complexity and ownership costs. SMB’s seek enterprise class capabilities sans the resource overhead of traditional large ERP products. Business users need to be able to make changes and extend the system. Ownership costs such as maintenance should deliver value or be reduced.
Lessons learned: Design self-service administration capabilities from the get-go, not an afterthought. Software maintenance needs to deliver value or be offered in tiers based on perceived value. - Apply Web 2.0 style usability. Solutions should not require extensive training. New generations of work expect the simplicity and ease of use from consumer based web applications.
Lessons learned: Invest in user experience and user interaction. Design process flow based on role-based personas. - Improve stakeholder access. Employees, partners, and customers must gain access to key business information. Value should not be locked away from users when disconnected. Mobile remains a future growth area.
Lessons learned: Allow information to be accessed by everyone, everywhere, and at anytime. New stakeholders will need access so apps should be designed with bullet-proof role based security. - Embed Microsoft Office Integration. Ability to use productivity tools should be a given. Customers seek the ability to seamlessly integrate.
Lessons learned. Success requires the design Office integration to be both a user interface and gateway into applications. Clunky interfaces into Microsoft fail in adoption. - Deliver worry free updates. Customers should be able to update and upgrade software without significant time spent testing integrations and taking down the system.
Lessons learned. Design application management into the system design. Consider the business impact of down time. - Provide financing options. Customers now expect vendors to provide financing to facilitate license purchases. In many cases, clients seek financing to preserve cash position and add additional services such as training and implementation.
Lessons learned. Use financing as deal enabler to drive not only license growth, but also larger deal sizes. Financing is a weapon.
Your POV
Prospects and customers - do these requirements ring true? Vendors -where are you with your SMB strategy? Let us know how we can assist. Please post or send on your comments to rwang0 (at) gmail (dot) com or r (at) altimetergroup (dot) com and we’ll keep your anonymity.
Copyright © 2009 R Wang. All rights reserved.
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| Tags: , best practices, business requirements, business solutions, CDC Software, channel programs, channels, cloud computing, enterprise applications, enterprise apps, Enterprise Business Apps, Enterprise Business Apps Vendors, Enterprise Software, Epicor, ERP, Exact Software, financing options, IFS, Infor, Lawson, market strategy, Microsoft, Microsoft Business Solutions, Microsoft Dynamics, Microsoft Office, NetSuite, Oracle, QAD, R "Ray" Wang;, SaaS, smb, SME, social enterprise apps, Software Ecosystems, software trends, software vendors, Syspro, vendor financing, vendor strategy, VM Ware, Web 2.0, | Categories: CDC Software, ERP, Enterprise Business Apps, Enterprise Business Apps Vendors, Enterprise Software, Epicor, Exact Software, IFS, Infor, Lawson, Microsoft, Microsoft Business Solutions, Microsoft Dynamics, Microsoft Office, NetSuite, Oracle, QAD, R "Ray" Wang;, SME, SaaS, Software Ecosystems, Syspro, VM Ware, Web 2.0, best practices, business requirements, business solutions, channel programs, channels, cloud computing, enterprise applications, enterprise apps, financing options, market strategy, smb, social enterprise apps, software trends, software vendors, vendor financing, vendor strategy
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[...] Last but not least, there is the myth that midsize companies are cheapskates and risk-averse IT laggards. In reality, though, while cutting costs is a must, midsize companies have much less tolerance for error and need to get it right the first time. Ray Wang’s recent blog post talks more about SME enterprise software needs. [...]
Out of over 154 Google Alerts in the past ten days, this is the most refreshing combination of posts and comments I have come across. Ray, Doug, Amit and Richard - I like what you write and the way you think. For too long small businesses have been under served. overcharged and misled by Accounting system and ERP vendors.
The ‘cloud’ is changing everything - new entrants to the ERP market have hindsight, foresight and agility in their favour.
Looking back we see cost and complexity, looking forward we see savvier small business owners wanting easy to afford, use and roll out ERP. Not ‘off the shelf’ accounting, dispirit CRM and mid office systems, high costs and long term commitments. There are thousands of niches all needing a custom (or vertical if you will)solution. A few ‘big’ vendors cannot possibly service this need and one vendor alone certainly cannot.
What’s needed here is the collective thought and actions of a tribe of small business ERP vendors and VARS.
I’ll warmly welcome, debate and work with folks to give this much needed change some momentum.
Cheers
Nick
CEO
http://www.salesorder.com
small business (ERP) heroes
Really?!?
If I were a small- to mid-sized business enterprise, here’s what I’d like from my VAR:
1. Help identifying exactly — not generically — WHAT NEEDS TO CHANGE in my organization (the “system” that goes beyond the software and the hardware) so that I can be assured that I can make more money tomorrow than I’m making today.
2. Help me and my management team determine WHAT THE CHANGE SHOULD LOOK LIKE. Help us determine what elements in the CHANGE actually NEED technology to aid in the change.
3. Tell me HOW TO EFFECT THE CHANGE. Don’t tell me I need traditional ERP — an EVERYTHING REPLACEMENT PROJECT. Give between one and five very specific areas where I can make changes that will INCREASE THROUGHPUT, REDUCE INVENTORIES or the DEMAND FOR NEW INVESTMENT, and/or DRIVE DOWN OR HOLD THE LINE ON OPERATING EXPENSES while I grow my business.
…
Nice learnings Ray. As you have rightly pointed out rapid implementation and quick ROI is the key.
Extending your point about Web 2.0 style usability, application of Web 2.0 is not only about usability – but it’s also about a shift in the thinking – from one way communication (broadcast) towards a more 2 way communication (collaborative approach) – SMB are requesting for ERP solutions with support for online communities. It enables businesses to provide customer service to their customers at a relatively lower cost and increase engagement, participating and apparently trust.
Infact most of the ERP vendors have realized this and are adding the social touch to their products in one or the other way
Hi Ray,
Michael Kringsman recommended me to ask you a question that I have. So, I have one question and may be you can answer.
I worked in SAP in US for 2 years and now I’m working for a local company as a SAP manager. I also have my own ERP company established from where I plan to support local as well as off shore SAP projects. I have a team to do that. I am trying to know how can I have some kind of contract with SAP on any kind of SAP rights in Nepal. For example, licensing agreement or educational partner which will make me SAP’s agent in Nepal to implement SAP, if required. Are you aware of such scenarios?
Looking forward
to hear from you.
Kind Regards
Prabin
Great article and gets to the core of what SME customers are looking for.
Adding to Doug Hadden’s post above [vertical specialization] and with regards to ‘rapid implementation’, this is something we have to address as VARs as not only is it directly related to the ROI, it is also needed to increase trust and confidence. However, to ensure that ‘the last mile of industry solution’ is delivered it does require investment by the VAR (opposed to the software vendor / author) especially in smaller industry groups. Otherwise the ‘last industry mile’ and ‘rapid implementation’ conflict with each other when having to tailor the solution to deliver this last mile of productivity.
In addition to Doug Hadden’s post, the need to be agile is also needed after the solution is live. This allows SMEs to continue to grow efficiently unimpeded by software rigidity and is (in my opinion) an often overlooked aspect of a system when looking to install a solution that will help the organisation now.
Thanks for the continued insights and analysis.
Once again, Ray, you hit the nail on the head. Small business is driving growth around the world, so this is timely advice.
Speed to implementation and ease of use/adminstration are becoming key concerns for small business. It is very much about agility.
Technology markets mature. Vendors in the early market often need to support complex feature sets because their customers are quite large. Therefore, excellent products from market leaders like Oracle and SAP were skewed with larger businesses in mind. Their challenge, today, is to adjust products for this market - not dumb them down - actually smarten them up. Focus on the need rather than “features”. User driven.
Many of the companies that you mention in your tags have been able to achieve faster implementations and lower long-term costs through some vertical specialization.