David Caruso: SMB ERP projects a different view from the CEO's office

From the scores of small and midsize business (SMB) market-related announcements issued recently, you'd think this market just appeared. On the contrary, my experience in helping manufacturers with IT strategy and ERP selections indicates the SMB ERP market has been alive and well for some time. Only now it is changing—or should I say getting smarter—and vendors should expect toughe...

11/01/2007


From the scores of small and midsize business (SMB) market-related announcements issued recently, you'd think this market just appeared. On the contrary, my experience in helping manufacturers with IT strategy and ERP selections indicates the SMB ERP market has been alive and well for some time. Only now it is changing—or should I say getting smarter—and vendors should expect tougher challenges.

I'm reminded of a discussion with the CEO of an SMB manufacturer—an operations guy who cut his chops in a very large company. During that tenure he witnessed how IT became a drag on the business, and how it turned to spreadsheets to manage it. This experience now shapes his company's IT strategy: It too used spreadsheets to grow the business, but now he's ready to circle back to IT. Only this time he knows what he wants and how to get it.

ERP has a proven track record, and SMBs know it is the backbone that can run the whole business and provide the visibility they need. SMBs feel comfortable making the financial and operating investment to gain control of their business in a bigger way.

Statistics coming in from AMR Research corroborate that fact. Recent figures indicate the ERP market will continue to grow at 18 percent. Recent growth came largely from add-on functionality, not core ERP functions. This certainly speaks to the success of ERP vendors in executing their strategies, but doesn't feel right for the SMB market. They are looking for something else.

The watchwords for SMB execs? Business transformation.

The current crop of execs in growing SMBs understand IT's role, and can correlate it to employee productivity and good decision-making—not to mention the speed and global visibility necessary to compete in today's environment. They saw large companies take on best-of-breed and paralyzed custom systems, and they want to leapfrog the IT morass. They're not interested in cobbling together cool applications; they want an IT backbone. The comprehensive ERP systems now available to them seem to be the ticket.

A recurring theme I see? Simplification.

Nearly all the deals I have worked on recently focused on simplification of the business processes and technology infrastructure. At the same time, the concern is accessing and succeeding with best practices. Looming over all of that is ensuring the success of the implementation.

An overarching mandate? Time is of the essence.

Implementation target-date commitments—measured in months, not years—are a must. For vendors, the key is providing industry-specific or localized product out of the box. SMBs won't tolerate lengthy onsite blueprinting and implementation efforts. Some of the key issues SMB execs cite include:

How do I bound my financial exposure and mitigate implementation failure risk?

Can the implementation team manage global issues for me? Local regulations, native languages, education and training, and maintaining a contiguous team across multiple geographies are high priorities.

SMB ERP always fought at the street level and now, in many ways, vendors have achieved functional parity. SMB end users are one savvy bunch and they're looking for more. I think they have some interesting counterpunches that vendors need to prepare for.


Author Information

Dave Caruso has 30 years of manufacturing and technology industry experience. He has worked with Fortune 500 companies and led research on enterprise applications, supply chain, and manufacturing industry best practices. Before starting his own firm, David was a senior VP at AMR Research, and held several senior positions with software vendors. Today, David collaborates with AMR and interacts with numerous clients on AMR's behalf. He can be reached at dj.caruso@comcast.net




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