ERP: The New Commodity?

"ERP [enterprise resource planning] is ERP. You have to offer value adds if you want to win business," an ERP vendor said in such a matter-of-fact tone that I almost missed the entire significance of the statement. Here we were, surrounded by exhibitors at National Manufacturing Week, and the most sophisticated of all supply chain software was being relegated to commodity status.

All right, let's get some perspective. No one is claiming that SAP is an out-of-the-box solution or that a Fortune 500 manufacturer can close its eyes and simply choose the best ERP solution for its company.

The SME (small and medium-sized enterprise) space, well, that's a different story altogether. Now, you're talking about manufacturers with less than $250 million in annual revenue. When you shake the CEO's hand at these companies, you're just as likely to be shaking the hand of the COO and CFO embodied in one person. Introductions to IT staffs last as long as it takes to say "hello" to two people. And conversations about IT budgets often include the phrases, "private company," "huge investment," and "how much?"

The sheer size of the SME market attracts big players with scaled down ERP solutions and smaller vendors with software designed specifically for this space. The realities of the SME market, however, dictate that any software must be way more packaged than customized and overall implementation costs must be contained.

SMEs Get More Than "Just ERP"
If you've reached the point where you're ready to write a check - without shaking too much - for between $25,000 and $200,000 for a midmarket ERP solution, you'll want to know what you'll get for your troubles. At a minimum, you'll automate your financial and manufacturing processes. This reduces errors and redundancies and creates significant efficiencies. The right hand will always know what the left hand is doing because your company's two critical systems will now be working hand in glove.

Beyond that, ERP vendors are offering "value adds" to customers that open doors to new business processes and significant savings. For instance, CRM (customer relationship management) is fast becoming a standard offering to SME manufacturers. When turned on, these modules help track everything from customer contacts to sales to marketing. And here's the key: these customer facing applications are all integrated with back end manufacturing and financial systems.

If CRM isn't an exotic enough enticement for the smaller manufacturers, some ERP vendors have integrated still more applications with their core systems. If you need a field service component to track technicians, warranties, and contracts, ask your prospective ERP vendor. How about automating MRO (maintenance, repair, and operations) processes on your shop floor? Once again, your ERP vendor may deliver this functionality. What about the unique needs you face in your particular industry? Don't fret, there's an appropriate ERP solution for almost every vertical market.

As ERP vendors trip over themselves to stand out from one another, the result is more applications/modules that tightly integrate to the core of the overall system. What's significant is that ERP - and a host of complementary applications - is now readily available to SME businesses at a reasonable cost. Granted, ERP for the SME market hasn't reached the stage of two CDs and an install wizard. But, it's certainly not the service-laden, never-ending project that scared off so many companies in the past.