ERP considerations for midsize businesses
“In today’s business world, if one
were to ask what is the most popularly
referenced term, the answer would be
‘ERP’. Be it a desktop solution vendor,
a half-baked back-office functional
developer, or a multi-national solutions
vendor - they all refer to their
solution being an ERP. So what is an ERP, really? Enterprise resource
planning (ERP) is an enterprise-wide information system designed to
co-ordinate all the resources, information, and activities needed to
complete business processes such as order fulfillment or billing. It is
in this context that the insights provided by Oracle Group Vice
President and General Manager of Oracle’s JD Edwards EnterpriseOne and
Oracle’s JD Edwards World, Lenley
Hensarling, in this article becomes
consultative and informative to the business world”, said Country
Manager for Sri Lanka and Maldives of Oracle
Corp. Dr. Vickum Senanayake.
Regardless of language, culture and industry, the business needs,
goals and challenges of midsize organizations are remarkably similar.
Dr. Vickum Senanayake
Every day midsize companies strive for a solid financial foundation,
high customer satisfaction and positive business growth. It doesn’t
matter if the company is focused on a local market or competing across
oceans - the fundamental components of midsize business success are
How decisions are made regarding cash flow and resources
access/utilization will determine if a midsize business will thrive,
just survive or die. When these decisions are coupled with global
economic and environmental challenges, the selection of a firm’s
business data, information and process infrastructure is significant.
Over the past four decades, ERP systems have evolved from isolated
back office accounting systems to enterprise-wide solutions which today
touch not only every employee, process and asset in a company, but reach
outside the firewall to customers, prospects, suppliers and partners.
With the right ERP system as the backbone for a midsize company,
operational, manufacturing, distribution and engineering systems can be
integrated into one cohesive and productive environment across complete
When businesses are first formed, they often start with simple
financial and process systems which typically utilize a combination of
paper documents and electronic spreadsheets. At the next phase of their
business growth these firms typically incorporate an off-the-shelf
software with features to handle accounting, payroll and some asset
Growing companies rapidly exceed the capabilities of these simple
packages and find themselves with a haphazard mixture of data and
processes managed with paper filled file cabinets, spreadsheet and one
central, but disconnected, general ledger solution. The only point of
integration is casual email used to pass around spreadsheets and
seemingly random orders, inquiries and reports.
(Contd. below left)
When companies realize that this type of disparate infrastructure is
inhibiting growth and causing costs to spiral out-of-control, they
consider implementing an ERP system.
The transition to ERP for midsize companies is often the catalyst for
faster growth and improved profits. The key to making this transition
successful is careful ERP consideration.
There are hundreds of ERP systems available today, and midsize
companies often only have one chance to make a good decision - the wrong
decision can potentially sink a company. During a selection process,
midsize companies should carefully consider additional factors in
addition to checking functionality and reference lists:
1) Vendor strength - ERP software providers need financial and human
resource functionality to not only support current releases but to
invest in new technologies and capabilities through research and
development, craft new releases and develop next generation products.
2) Vendor growth - When companies gain new ERP customers they also
increase their annual maintenance revenues. This generates an annuity
for product development and support. ERP companies with little or no
customer growth are risky for long-term viability.
Besides the vendors stated commitment to the product, continued
marketplace success for a product provides insurance for midsize
companies invested in ERP.
3) Partner strength - Even though many ERP solutions are very robust
with extensive features and capabilities, no ERP vendor can do
everything. Take a close look at their partner ecosystem - from
resellers and system implementers to independent software/solution
vendors and process/business consultants.
The strength of this ecosystem is a good indicator of the independent
commitment to the ERP solution since partners have to make their own
judgments about the value and viability of a particular software
4) Globalization capability - Even if a midsize business is not
competing globally today, it is comforting to know an ERP system has
language and country localization capabilities with dedicated resources
working to stay current. If a business expands beyond its borders, an
ERP solution in place with globalization features simplifies
5) Technology pace - Even when economies struggle, technology moves
Since ERP systems were first rolled out, computing has evolved from
mainframes to client-server to the web.
Midsize businesses need an ERP vendor with a track record of
aggressively embracing new technologies with pathways for moving
6) Technology choice - Midsize businesses need flexibility not only
in their daily operations, but in meeting their technology needs. ERP
vendors should support a broad range of platforms, so any midsize firm
can optimize their infrastructure selection.
7) Technology standards - Standards lower long-term ownership costs.
ERP vendors should embrace open standards wherever possible.
8) Product investment - The ERP vendor should document the investment
they have made in their product since the first release. Vendors should
provide documents that list added and improved features and functions
between their first and current releases. Stagnant products and lack of
functionality completeness highlight vendor weakness.
9) Industry capability - Some industries need specific functionality
to supplement core ERP capabilities. Awareness of how an ERP vendor
addresses your industry’s specific needs is crucial.
10) Integration approach - Other software can compliment ERP
solutions. Understanding how an ERP solution integrates to a diverse
range of products not only helps midsize firms with current
infrastructure needs but provides insight into how a vendor is looking
forward to address application directions. A vendor may also provide
some of these complimentary solutions; this strengthens consideration of
their ERP package.
11) Ownership costs - Understanding the total cost of ownership, from
initial deployment to ongoing maintenance, training, staffing and
hardware needs, helps midsize firms make a cost-effective selection
12) User organization - Strong, functioning independent user groups
are important for an ERP product line’s health and future. With user
groups, customers provide a collective voice to a vendor which helps
drive product futures and improvements to current code.
Choosing an ERP system is a great opportunity for any midsize company
to deploy a new platform for growth and success. Midsize firms need to
make their ERP selection with careful consideration, taking into account
where they are today, where they want to be in the future, and the
changing landscape of technology.
A well-developed ERP decision brings enormous opportunity to any
midsize business interested in growth and profitability, regardless of
location and industry.