Last year we predicted it would be the year of acquisitions. Well, we weren’t wrong. No industry was left untouched and we saw a few surprises along the way.
The most impactful buyout was one in inventory management software systems, between Xero and a platform called LOCATE.
LOCATE was a cloud based inventory management system that filled the mid-market gap in the ecommerce software industry. It allowed businesses exceeding $10M , and under $100M to really find a best-of-breed inventory software solution that was scalable and flexible.
So when XERO acquired them in late 2021, the question for many business owners and even implementation consultants was “What now?”
While we still don’t have a single IMS solution that really “replaces” LOCATE on the market, we have found are mid-market ERP’s. These systems have been a solution for those in the mid-market that are seeking scalability.
So what is a Mid-Market ERP?
A mid-market ERP is an enterprise resource planning software with minimized functionality that allows mid-market companies to onboard, customize, and thrive in a new world of complexity that ignores the old-school monolithic or app-market infrastructure built by the big, traditional ERPs.
The benefits these systems present to clients is the ability to “get their feet wet” in the world of ERP’s as they scale. They allow the users to gain the necessary understanding of workflows and underpinnings of the data structures to be able to appropriately decide next steps when they grow out of those systems with a smaller learning curve.
Here are some examples:
- Xorosoft – is a relatively new ERP that is based in Canada and solving needs for the apparel and consumer goods industries. Clearinity is examining complexity as we speak and assessing fit for our average clientele. Initial reports from clients and prospects are positive; we’re hoping to do a detailed analysis in the near future.
- Odoo – Clearinity has helped several clients offboard mid-market IMS platforms over to Odoo. Overall, Odoo has what it takes to get your business moving forward. The challenge? It’s a very DIY-style platform, not unlike Magento would be for shopping cart technology. If you have your own in-house development team or can find a reputable Odoo consultant, proceed at your own pace.
- Zoho – While Zoho is in the arena of baby ERP systems, this platform we have found is too under-developed on inventory and inventory-accounting for most any client over $1MM ARR to seriously consider. In reality, it’s a CRM platform that attempted to build ERP-like expansions. The cost of development on this platform is incredibly expensive compared to just being on a better ERP to begin with. This would be a Baby ERP that we would not recommend.
There are several more that fit our definition of a mid-market ERP though we don’t have enough experience with the platforms to comment on them at this time. As this space grows, we anticipate seeing many more consultants and operations specialists identify stand out systems and developers around non-traditional ERP softwares.
What are some more traditional ERP examples?
ERP or enterprise resource planning software centeralizes data in one location. These softwares are typically built with a “monolith” development philosophy where you can build one whole complete solution. The trouble with this paradigm is that, though they string multiple applications together, these systems do not have one true core focus under the hood. Additionally, traditional ERP systems often are expensive to not just on board too but maintain as well since any additional functionality one may need is an outsourced additional cost.
As of right now, Clearinity does not implement ERP’s. We focus primarily on Inventory Management System Softwares as we believe the best-of-breed approach allows clients to be as flexible as they need to be. We have gotten under the hood on several of these ERP systems though and can shed some light on what makes these systems painful for mid-size market companies.
Here’s a few we’ve consulted on in the past:
- Netsuite – Is currently owned by Oracle and is going for a very “Salesforce” approach to the market. Clearinity is not aligned with the vision/mission/ideals of Salesforce or Netsuite and has actively avoided engagements past a hand-off to good Netsuite consultants. We wish Netsuite the best and will continue to find solutions that fit our clients best interests.
- SAP – Is a giant in the ERP industry and is even bigger than Netsuite. If a client felt Netsuite would be expensive, SAP can easily run 2-10x more costly. This far outside the capabilities of most any SMB, and especially ecommerce-only SMBs. Keep looking elsewhere if your business is under $100MM ARR.
- Sage – Is a smaller (than Netsuite) team that has been around for years. They have survived by acquiring smaller solutions and presenting a whole environment of Sage products that fit most any client lifecycle needs. Overall, reports from clients are that the technology is lacking the bang-for-buck factor. Sage’s recent acquisitions of BrightPearl and InventoryPlanner suggest a sea-change towards a more ecommerce-friendly environment and Clearinity is cautiously optimistic to see more positive engagement in the future.
- Acumatica – is a platform that several LOCATE clientele have already migrated to. Clearinity has not examined this platform in any detail and cannot comment on past reporting where some old leads and clients ended up!
- Fulfil.io – is a relatively modern ERP that has always suffered from lack of direction in where they want to take the platform. We know from experience that they are happy to work with jewelry businesses of most any size, but that their sales experience is unfocused as well. Given the clients exiting our Step 2 for ERPs, we’ve heard incredibly variable experiences on sales calls (from wildly happy to incredibly disappointing). The most recent reports are that they are competing for $100MM ARR businesses.