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| Choosing an SMB ERP solution |
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| Resource:ittoolbox.com |
| 10-24-2006 |
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| Being a customer looking for accounting and ERP software in the current market environment is not an easy task. Many might feel that the safe choice is to select one of the big vendors, SAP, Microsoft, Oracle or Sage. Many just go with the software they know or have used in the past, even though that system might be outdated. As always, referrals from vendors, customers, partners and friends are strong factors affecting the choice. |
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The SMB ERP and CRM market is a mess; there are too many choices, too many vendors, too many solutions. Being a customer looking for accounting and ERP software in the current market environment is not an easy task. Many might feel that the safe choice is to select one of the big vendors, SAP, Microsoft, Oracle or Sage. Many just go with the software they know or have used in the past, even though that system might be outdated. As always, referrals from vendors, customers, partners and friends are strong factors affecting the choice.
As a buyer you do not want to be sold software, you want to be comfortable with buying, and you want to buy, you sometimes need to buy since the current application is so outdated that it is literally falling apart.
When searching and evaluating options, a buyer have an idea of what they want and need, but since the ERP market environment is very confusing, if the buyer is not incredibly comfortable with the deal, the proposed solution, the software provider and the partner many times the investment is simply postponed since making the wrong choice can be a devastating mistake.
"At least the software we currently use kind of works, there is no guarantee that this new software that costs $200,000 will work better and it might actually be worse or even disrupt our processes and customer relationships having a negative effect on our revenue and profits instead."
Why should they buy, or better said "invest" in new software, is there enough value, is there an ROI??!??
This is the core and to some extent the only question that needs to be answered and explained by the provider.
The Market Place
The ERP solution provider market place is being consolidated, there are very few new solution providers (in the CRM area there are new solution providers every day, but CRM applications are much less complex then an ERP solution). Many solutions on the market place today are arcane in terms of the platform and core application. Functionality wise (at least if you believe the fact sheets) they are many times very rich. The current solutions available are constantly being extended to fill the holes and new "add-ons" (many times external) are developed and integrated with (or simply "linked to") the arcane platform to satisfy the need for specific processes or a vertical industry.
Customers are becoming more technology savvy and they constantly expect and demand more functionality. Pure accounting, which at this point all major players do pretty well, is becoming an assumed functional part of what is expected of an ERP solution and the market place want more extended functionality and solutions that handle and manage their complete business processes, from inbound to outbound logistics and all support processes.
The reason for existing solution provides continuously extending and upgrading their arcane software product lines is that developing a new solution from scratch is such a huge investment that it is not an option. Only the big software providers, Microsoft, SAP and Oracle, have enough capital and resource to undertake a project of that magnitude.
Both Oracle and SAP offer SMB solutions based on scaled down version of their monster applications originally designed for large enterprises. These monster solutions can also be considered arcane, since the core was originally developed and designed many, many years ago. A current strategy approach is to scale down these monster applications by templatization and verticalization in order to make them fit and be affordable to the SMB marketplace. Are these solutions attractive for small and medium sized businesses? From one perspective they are very attractive. The SMB business can take advantage of a solution developed for a very complex marketplace which has already analyzed, defined and implemented industry practices in areas such as warehouse management and manufacturing. The functionality and procedures for handling these processes is already part of the solution and it has been scaled down to fit a smaller, less complex organization. From another perspective consider this, the number of tables requiring configuration in a full SAP implementation is around 10,000 and it is not uncommon for a solution to have 250,000 data columns (fields). Even in a scaled down version, is this manageable for a small to medium sized business with a handful of IT people at the most? Maybe it does not need to be manageable, perhaps the 50,000+ SAP consultants available worldwide should be contracted to assist with setting up, implementing, managing and data mining these monster databases. If the approach is successful this kind of solution could be the winner in the SMB ERP battle since it can then potentially also easily be scaled up again to fit the small to medium size companies growing needs many decades into the future.
Software as a service is the buzz word of the year. NetSuite offers a complete ERP application as a service, at low initial cost (monthly subscription). In this scenario the software is hosted, which means low software investments and low maintenance. Will software as a service be successful? Probably, but not necessarily for ERP applications which needs to be flexible and customizable enough to meet the needs of small and medium sizes businesses, which all have their own idea of what a solution needs to accomplish in order to meet their needs. Integrating third party solutions and in-house developed applications (which is very common) is also a challenge for reasons such as access to data and network traffic. The other question is if the browser is a good enough UI for a application power user, it many times works great for a CRM application that provides an interface for salespeople in the field, but for power users that use the system 6+ hours a day?
Microsoft Dynamics NAV
Microsoft Dynamics NAV is a feature rich, wide and deep ERP solutions platform which can be implemented in almost any industry or business environment because of the unique and powerful business Rapid Application Development (RAD) architecture. The solution is not glued together by independent applications and it does not depend on third party externalized add-ons in order to meet industry or process specific requirements. The solution and the "add-ons", a better name is probably extensions, are completely integrated into the core application. Lesser system enhancements are also completely integrated into the core business logic. Add-ons, or extensions, can be externalized, but does not need to be externalized which makes the environment extremely powerful in comparison to other solutions on the market that lack this integration capability.
These unique and extremely powerful characteristic is what gives the Dynamics NAV solution an edge and advantage in comparison to its competitors. The power of the current environment and architecture is that it is simple but yet powerful, the architecture is consistent and so is the application as a whole. The extensibility of the solution is endless, which to some extent can be said about any solution if you throw enough resources and time on it. The difference is that Dynamics NAV can be extended and enhanced with very little effort. Creating new UIs and business logic using the SDK is simple and efficient, the platform and the SDK is true RAD for business applications.
This is what differentiates Dynamics NAV, what makes it unique and what gives the buyer a long term ROI. The SMB market (and to some extent the higher end market as well) are not looking to implement solutions that limit their capabilities, or defines what and how they should do things. Sure, industry standards should be considered and implemented into the extent they can be but industry standards for a complete Business Application Suite is a dream that will never come true, at least not within the foreseeable future.
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