Small and medium-sized enterprises often hold back when it comes to using new products and services, and this is reasonable enough; non-Walmarts don’t have billions of dollars with which to experiment, after all. However, a new report suggests that SMEs should definitely embrace ERP solutions.
The report comes from the Aberdeen Group, and its title is “ERP in SME: Fueling Growths and Profits,” which provides a good hint about the exact findings.
A formal statement then explained, “[T]op performing SMEs . . . are 50% more likely to have real-time visibility on the status of all processes from quote to cash. Informed small- and mid-size companies understand that a stable, efficient and versatile infrastructure is essential to meeting the expectation of sustainable future business growth. These companies are finding that the seeds for growth must be planted now in order to remain competitive in the years of prosperity ahead.”
Also, people who appreciate solid figures should know that “top performing ERP implementations slash operating costs by 22%, administrative costs by 20% and inventory by 17%. They also improve complete and on-time shipments by 19% and internal schedule compliance by 17%.”
That’s sure to add up to a lot of money even at a small firm. Maybe especially for a small firm, in fact, if the organization’s got less money to spare than a huge corporation. So the Aberdeen Group’s study counts as a significant win for the ERP industry. SMEs looking to get ahead may speed up their rate of adoption as a result.
ERP software is not cheap. The total cost of an ERP (Enterprise Resource Planning) software solution includes hardware prices, and ERP implementation costs. And, the implementation costs themselves include training, customization, integration, data conversion, analysis, consultancy, and maintenance. Before the ERP software is up and running, a business may have spent anywhere within a range of ten thousand to ten million dollars depending on the vendor, number of users, complexity of the solution, and the implementation locations.
To look at two examples: a commercial ERP Software solution for a large enterprise with 1,000 users that needed customization for certain specific needs as well as training for employees could be as high as $20 million –and that does not include yearly maintenance fees; at the same time, for a small business with twenty-five users or less, the total cost of an ERP solution could be as low as fifty to seventy-five thousand dollars.
With such figures been thrown around as the average, a solution had to be found in order to make an enterprise resource planning software system available to smaller, less wealthy companies. This new solution is an ERP software download for free. In fact, today many ERP vendors provide open source software for free downloading online because they can still make money by providing ongoing support services for these ERP Software Downloads.
There was a time when ‘free’ downloads were looked down upon because they tended to bring along a whole new set of problems along the lines of intrusive spyware and embedded advertising. Critics also complained the actual use of the free downloaded ERP was restricted due to the lack of functionality available. Those complaints have been resolved.
Still, there are a few things for businesses thinking about ERP Software downloads for free to keep in mind. To begin with, although free ERP is capable of providing usable, less costly computer management and accounting solutions for small or medium companies which can be operated efficiently, integrating the free software with any existing management business programs is a concern. To avoid a fiasco, a company should first examine whether the downloaded software will be compatible with what is already there. The second point to keep in mind is that just because the software programs are available for free downloading does not mean the ERP modules and implementation services won’t be as costly as their commercial counterparts.
Recent surveys have found that small and medium businesses (SMB) are increasingly willing to consider open source solutions. Not surprisingly, SMB and large enterprises are predisposed to different categories of open source software.
Survey data suggests that open source ERP is one such OSS category where SMBs are more likely to adopt OSS than their large enterprise peers.
Several open source ERP vendors are vying for a share of the action. Small and medium business owners and/or IT department heads should consider whether an open source ERP package could meet your business needs as your company grows.
Growing adoption of OSS in SMB
Just fifteen months ago, Forrester published survey data that suggested SMBs were much more apprehensive about open source software then large enterprises. In summarizing the Forrester results, I wrote:
The Forrester study also found that more than half of SMBs (57 percent) also expressed concern that open-source software would be complex and hard to adopt, but only 32 percent of enterprises expressed a similar sentiment. In addition, 68 percent of SMBs cited the availability of service and support for open-source software as a concern, compared with 47 percent of enterprises.
More recently however, Jay Layman of The 451 Group reported that a study from CompTIAsuggested SMBs were more willing to consider and invest in open source products. Layman wrote:
In terms of open source, the study indicates nearly 20% of SMBs polled plan to begin using open source software in the next year. We believe that is a significant figure, particularly when we consider all of the open source software – from OS to middleware to applications – that SMBs may already be using, but just are not necessarily aware it is open source (via SIs, resellers, service providers and others that are increasingly using and incorporating open source).