How Small is Too Small When Purchasing ERP Software?

A friend recently came to me and asked for assistance in selecting an ERP software package. Since I do work for an ERP software company, this in itself is not strange. What you may find strange is the fact that my friend is the owner of a small company that employees a total of three people. Now let me add two additional points of information. He is a developer of residential custom homes and that he lives and works in Michigan.

Now I have your attention. What on earth would a small builder, in Detroit of all places, want with an ERP package? Everyone has heard how troubled Detroit’s local economy is right now and we’ve all been warned of Detroit’s bleak economical outlook. My friend wanted growth, process sophistication, and the opportunity to succeed. He wanted to be able to understand his true costs, to be able to customize quotes and building material options, all while responding to his customers quickly. He wanted what virtually every business owner wants for their own company. Being the smart man that he is and having a great since of vision, he knew a quality ERP package could help him achieve his long-term goals.

Since I work for an ERP software supplier he hoped I could provide some guidance. Building materials is a vertical of my company, but we do not focus on the actual building of homes, so I had to do some research. While I was reviewing my sources, my friend was off performing his own due diligence and research. Surprisingly enough, we both came back with relatively the same short list of software packages. After multiple remote demonstrations, proposals, and rounds of negotiations, my friend purchased his new ERP software. Much to his wife’s dismay, he jumped into the vendor’s training program and was very entrenched in his new project. He wanted to learn how to define tables, run transactions, build reports, and so on. He wanted to know his new software inside and out. He embraced this opportunity will all the bravado and gusto he could muster.

I have known this friend for well over ten years. He and his wife are literally two of my all time favorite people in this world. One of the reasons for this is his ability to see today and look into tomorrow. He focuses on what is important. Since I’ve know him, he has always had a five year and ten year plan for both his personal and professional lives. He has always been objective and clearly reviewed and planned for what lay ahead.

In all actuality, my friend is not the lone visionary. As a small to mid-market ERP provider, we are seeing more and more companies move from packages like QuickBooks and Peachtree to a full ERP systems. This is especially true for companies that need additional assistance with such requirements as FDA compliance, bar-coding, or EDI transactions. The packages designed for start-up or small companies do not typically have enough functional breadth to manage a food or pharmaceutical based recall. It is these companies that we see move the quickest from say QuickBooks to a tier II ERP software package.

Ten years ago only the most tech savvy small business owners would consider purchasing and installing an ERP system. Now the small business segment is embracing ERP software and seeing significant benefits. Increased automation, paperless environments, complete audit trails, online graphical reports, and detailed cost information are just a tip of the benefits small businesses are receiving from their newly installed ERP systems. As ERP developers, we are becoming more focused on the small business segment. Whether it be an ASP, SaaS, or onsite models they adopt, companies from small builders to growing food manufacturers are learning that ERP can help foster growth and secure a profitable future. And as ERP developers, we are taking note of this paradigm shift.