SMB Manufacturing Arena Ripe For New ERP Solutions

In the past, many manufacturing companies with up to $100 million in revenue were ignored because solution providers and vendors didn't want to deal with poor network infrastructures and semi-skilled IT managers, but in today's economy, the sector is a gold mine.

Given the recent consolidation in the ERP space, it's going to be tough for smaller ERP vendors to compete with bigger players that have reduced product pricing. SAP estimates there is still room for growth even in the $100 million to $500 million market, and Microsoft, a key ERP player there, plans to play an even bigger role than it does today once its Business Solutions offering migrates to .Net.

Many ERP vendors are filling the midmarket gap between basic accounting packages and pricey, customized applications with light manufacturing modules that use business rules to help users streamline inventory, automate the tracking of manufacturing processes and track labor- or process-related costs.

Solution providers new to the ERP space should select solutions that are highly modular and that integrate with CRM systems. Vendors such as Icode and Best Software, for example, play better in the midmarket because their product offerings are diverse and can be learned quickly.

Rapidly growing companies, such as small manufacturers discovering that their accounting packages are limited, can be approached quite easily with an ERP solution. In most cases, the pain of migrating to an ERP solution is outweighed by the pain of maintaining a Peachtree or Intuit's QuickBooks accounting solution.

Solution providers are in the best position to evaluate and recommend solutions to their customers, so it's important for them to approach a potential account with an array of solutions and choose the best one based on the customer's needs. Marrying a business workflow architecture to a specific product is one of the toughest decisions companies face when upgrading their systems, and an ERP offering is probably the hardest to choose because of the multitude of features it includes.

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ERP is often a company's most business-critical application, and it usually becomes the nerve center of every department's operation. Today, small ERP vendors are expanding their solutions by absorbing other applications such as e-commerce, marketing and point-of-sale. Integrating many applications into one package is the best way to sell a solution to midmarket companies, and it's here that ERP excels.

The Test Center recommends that solution providers not do demos of ERP products at presales meetings until all of the business requirements are understood. Once that happens, most ERP products can be be configured easily based on what the customer wants.

Best Software's MAS 90, for example, can be customized for a variety of small manufacturing businesses. Icode's Everest goes well beyond accounting and inventory control to offer e-commerce and sales force automation. CRM is another important function for small and midsize businesses to consider because it's often a necessary capability for an expanding business. In that area, Best Software's MAS 90 has a leg up on smaller competitors because it integrates with its own ACT offering and SalesLogix's CRM software.

Integration with shipping systems, bar coding and card processing is also critical when selecting an ERP solution, and it's important that a system have the ability to import and export data among different applications automatically. ERP often creates the foundation of all IT expenditures in manufacturing plants, so integration features are critical for a successful implementation.

The workflow of most ERP packages is complex, so usability must play an important role in product selection. Uncluttered screens and customizable fields where users can add edit boxes to an account or a product pane are helpful. Also, features that help users predict cash flow or capture productivity information associated with a cost center make a better sale and provide a faster learning curve.

Once installed, ERP solutions provide ample financial opportunities for solution providers.

Businesses often invest in a solution for the long haul and, given the far-reaching impact ERP packages have on an organization and the frequent need for upgrades, the solution provider generally will be rewarded with a long and profitable relationship. In addition, ERP deployments usually give solution providers an opportunity to flex their training muscles by getting a staff up to speed on the new software.

But because of the complexity of many ERP integrations and the multitude of features the solutions contain, it's important for solution providers to look for vendors that will offer partner training and work closely with them on presale and post-sale support. Also, these deployments tend to be expensive, often with high costs per module, so volume discounts, rebates and high margins are important considerations.