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Posts Tagged ‘Microsoft’

A new month, and a return for a bit to our focus on ERP — Enterprise Resource Planning, the software that keeps business running.  As ERP is what we do, we publish frequent articles about it, and about related topics like warehouse management, manufacturing, accounting and the like.  Dry stuff — unless you live it.  Or rely on being competitive in business.  Then, well… you gotta’ have it.

This month we get off to a running start with six consecutive articles on our Dear Topic.  The first five give you a nice (well, we think…) overview of a study by Inside ERP that presents a Buyer’s Guide to ERP for the mid-size (i.e., $50M to $1B) business.  Our clients tend to run in the lower tier of that group, and that’s our sweet spot.  The Buyer’s Guide, augmented by our own comments and experience, are a good place to get started with your own firm’s search for an effective ERP solution.  After the five articles, we’ll wrap up with A Good ERP Checklist in post 6, due to run on March 17th.

So… welcome to March.  Spring is coming… and here we go.

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According to an ERP Market Buyer’s Guide published a couple years ago by InsideERP, most of the interest and action in ERP systems is occurring in the “mid-market,” broadly defined as companies with revenues between $50 million and $1 billion, where most are looking either to replace outdated systems or jump into the technology of ERP for the first time.

[The complete edition of the Inside ERP Market Buyer’s Guide is available here]

According to a study by AMR Research covering projections for the years 2006-2011, companies do this “in response to customer requirements and the desire to participate in the global market.”  They are driven by a variety of concerns ranging from regulations and reporting requirements to maintaining customer loyalty.  As they deal with complex environments, today’s organizations are driven by aging technology, outdated ERP systems, new supplier requirements, EDI priorities, proliferating software tentacles within their companies (management by spreadsheet, anyone?) and of course, the need to grow revenues.

And according to Aberdeen Group, even five years ago, just 6% of companies from its survey of over 500 didn’t already have an ERP or MRP system.  For these firms, the pressure to move into ERP comes chiefly from the availability of today’s lower cost systems, pressure from a parent company, from ‘explosive growth,’ or from suppliers and customers.  At the same time, over one-third had systems that were older than ten years and another third had systems that were five to ten years old.  25% of all firms plan a replacement of their current system within three years or less.  Nearly half of all companies bemoan the fact that their systems simply do not have the required functionality for their needs.

Meanwhile, hardware, infrastructure and software costs have all decreased the past five years – thus putting what were once ‘epic’ business management packages within reach of any mid-size company.

The “Buyer’s Guide” from Inside ERP mentions the top names in ERP today for the mid-market, including Sage, Microsoft, SAP, Infor and others.  Most of these companies feature offerings with not just a national (U.S.) reach, but a global one.  Several, like Sage and Microsoft, offer multiple ERP solutions.  In both those cases, the companies did now grow their own systems, but rather, did acquisitions in past years that led to their developing a ‘stable’ of ERP products. 

Sage’s offerings include Sage ACCPAC, Sage Pro, Sage MAS 200, Sage MAS 500 and most recently, X3.  Every one of them was the result of the acquisition of previously independent companies (of, respectively: Accpac, SBT, State-of-the-Art, Acuity, and Adonix).  In Microsoft’s case, they “bought the company” for each of their four current solutions in their Dynamics Family: SL from Solomon, GP from Great Plains, AX from Axapta, and NAV from Navision – the latter two of which were a pair of Danish firms who themselves linked up only shortly before their (combined) acquisition by Microsoft.

These very large companies, Sage and Microsoft, have in turn brought economies of scale and pricing to the ERP mid-market space, to the benefit of those firms that may have previously found ERP solutions completely out of their financial reach.

We’ll follow this thread further in our next post.  Stay tuned…

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The folks at Focus Research, formerly Tippit, Inc., a Bay Area IT business research and media company, compiled their list of “Ten Questions to Ask When Choosing a Midmarket ERP Solution.”  Focus specializes in research that helps companies choose appropriate technology solutions. 

We do too, so it’s always good to look at what others are thinking.  Their 10 Tips, summarized below provide a good, common-sense (and no-nonsense) guide to the things business managers should be thinking about when they set about the very critical task of choosing the business management system they will likely run their business on for the next ten, fifteen, maybe twenty years.

Following are a few highlights of their advice that we would certainly reinforce…

  • Do you understand the business problem you are trying to solve with a new ERP system?  Before you can select the right solution, you have to know exactly what the solution can do, and what problem you are trying to solve.
  • Are you locked into a specific vendor based on company policy, or are you free to look around?  Does your current solution leave you feeling locked-in?  Are you dissatisfied with your current provider’s performance?  Is there a ‘legacy’ (i.e, long-time, pre-existing) ERP application to deal with?  Or can you expand your horizons?
  • Is a vertical solution available and viable?  For example, Focus notes, Epicor can do financial services, hospitality, non-profit and retail.  Infor offers solutions for aerospace, janitorial, life-sciences and shipbuilding companies.  Microsoft (through its Dynamics NAV and AX) has established solutions for manufacturing and distribution.
  • What functionality will you actually use?  Aberdeen Research Group published a study a couple years ago that showed that the number one most frequently used ERP applications are in financial and manufacturing modules, including purchasing, inventory, A/P, G/L and A/R — all used by well over 90% of purchasers.  By contrast, applications like Human Capital Management and Asset Management are used by fewer than 10%.  Choose (and pay for) only the functionality you really need.
  • Choose the solution most closely aligned with your business processes.  With today’s modern systems, you should not frequently have to change core source code to match your business processes.  This was not always the case, but is increasingly true today.  Thus, start with a look at the business processes, then work with your ERP provider/consultant to plan and chart just how your business processes match up with the software.
  • Think about the kinds of services, and the associated costs, you will need from your provider or vendor.  Do they have the resources to support, train and (where necessary) modify your solution appropriately?  Have they been around for awhile, do they have a clear, long-term product strategy, or ‘roadmap,’ and will the application be there down the road in ten years… just as you expect your company – and your use of the software — to be there?
  • Finally, what is the true cost of the solution?  Consider planning… aligning the business processes with the software and mapping all that out… the licenses… the maintenance renewals… the implementation costs of training, educating, deploying and supporting your solution.  Services typically cost anywhere from a little under one times software costs, to two or more times, depending on the exact solution and the amount of work you (the customer) are willing (and able) to do for yourself. 

Plan and budget accordingly – but always keep the long-term view uppermost in your mind.

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