The term ERP used to be scary. For many, it invoked financial fear and the burden of managing a server room. As the ERP market has grown and in turn, its marketability has grown, we at Clearinity have begun to notice most of the platforms don’t actually fit into a true, traditional ERP definition.
And while we explore Mid Market ERPs and those that are more cloud-based, we note that fear around ERPs is starting to dissipate. Now on billboards on the highways, we are watching Odoo push phrases like “ Move over SAP Cloud ERP is here to stay.” you may be even wondering if an ERP is right for your company.
Deciding the inventory solution technology your company will invest in and which ones it should avoid can be overwhelming at best and downright expensive at worst. Read on to discover what ERPs are, what they are not, and if they are right for you.
What are ERPs
In the most general terms, an ERP is an enterprise resource planning software that manages day-to-day business activities ranging from accounting to procurement to customer relationship management. ERP strings together multiple applications under one “hood” and allows an organization to house data in one centralized location.
Its vague and oversimplified definition has led to confusion about what an ERP truly is. Traditionally, ERPs were defined as being onsite, server-based, and monolithically developed. As technology and the world has advanced, there have been more and more ERPs becoming cloud-based and flexible in their feature sets.
The discovery of cloud-based ERP systems first led the Clearinity team to discover where these ERPs were being accessed and seek out the platforms that were filling the mid-market. Here is where we defined mid-market ERPs [link].
While we see the validity in these platforms, we also are seeing some convolution around who gets to consider themselves a mid-market ERP because of its loose perimeters.
Through our 5 years of business and almost 15 years of direct experience inside of 30 different IMS and ERPs, we feel confident in our mastery of defining what an ERP isn’t.
What an ERP is not
If we begin to call every technology that services business organizations in multiple departments an ERP, we begin to over-generalize and lose the core focus of what an ERP was built to solve for businesses.
An ERP should serve enterprise-level businesses and offer the development environment to solve wicked problem sets that enterprise-level businesses encounter. Thus, an ERP should not only be built in one paradigm.
Likewise, an ERP is not a single service platform. Because an ERP serves multiple functions in a business and should solve wicked problem sets, it can not be a platform that only caters to customer relationship management as its core focus. And it can not be a platform that caters to production management without looking at the intricacies of accounting that parlay into production management.
Lastly, an ERP should not suggest for an organization to unite multiple SaaS applications to it in order to complete a single workflow. In its functionality, an ERP should unite those applications under the hood and make a seamless UI. When we begin to introduce other SaaS applications as standard solutions, we begin to encroach on “best of breed” development methodologies and thus are not an ERP any longer.
Why an ERP may not be the best solution for your company
ERPs can be great solutions for large enterprise organizations, or companies that need a unified platform. However, even in mid-market, many organizations are too quick to implement an ERP without considering these factors.
- Increased implementation price
- To implement a mid-market ERP the anticipated onboarding cost is above $35,000 for most companies. In larger organizations that are looking towards less dynamic flexible ERP software like Netsuite, companies usually spend over $75,000 for onboarding alone. This is single handily the biggest barrier of entry for most companies to leveraging ERP software.
- The wide range of functions and applications that ERP serves means more complexity and level of difficulty in learning and using the software platform. We spend a great deal of time training here at Clearinity, but many implementation firms do not. When you can’t use the full range of functionality with ease on these systems, there are considerations if you are truly benefitting from it.
- Maintenance & Resource Costs
- ERPs are costly to maintain and run. They require more hands to do daily work smoothly and as the company evolves, often their are maintenance costs for upgrading seats or unlocking certain workflows.
- Customization for evolution
- As mentioned above the customization on these platforms can be wildly expensive and time-consuming. As ERPs are built, they often follow a narrow subset of business practices. The platform’s preferred paradigm may not align with yours and you may have to consider additional development to make the workflows match your business model.
Overall ERPs are becoming more and more sought after for many companies as the wave of mid-market IMS systems seem to dwindle. While these systems do provide an elevated performance, they come with a hefty cost. Many companies do not consider these potential hurdles until they are faced with spending more money or migrating away from them.
Having a dedicated business consultant by your side when making technology decisions is always the safest bet. You prevent a lot of blind spots from being overlooked, save time, and save money in the long run.