An ERP system is essential for all small firms but finding one that meets their needs and is easy to implement is the challenge.
The size of the SME market is too big for IT companies to ignore, but selling to the sector is notoriously difficult. When it comes to enterprise resource planning (ERP) systems the challenge for vendors like Microsoft, SAP and Sage is to deliver product that is flexible and easy to use because its prospective customers are often too small to justify having an IT department.
According to Datapac’s managing director David Laird, the ability to get the product up and running is arguably more important than the functionality. “The reality is that a major part of the implementation is around things other than product. It’s about restructuring, planning, implementing and commissioning,” he said. “It takes lot of time and you have to have the resources to do it. Large organisations have resources available that they can allocate to projects but SMEs tend not to have that, so their implementations can be much more difficult.”
In small companies someone usually ends up ‘double-jobbing’ to take care of the IT needs, as Laird explains. “The financial controller or accountant will be trying to do his or her regular job on the one hand while attempting to implement a new ERP system on the other. Easy implementation is the real challenge. It’s not what the hardware or software does.”
The vendors have tried to take the pain out of installation with ‘out of the box’ solutions, though Laird is sceptical about how successful they have been. “I’ve been around this industry a long time and I’ve yet to see something that comes out of box, plugs in and goes,” he says. “As an organisation implements a system it discovers it needs a certain amount of flexibility, which usually means ‘not out of the box’. Even if it just needs to be tweaked it still requires time and planning.”
Jayne McCormac, director of management information systems at Sage, agrees that ease of implementation is crucial. “Even if small companies can afford the overhead of an IT department it’s usually functional, tied to desktops,” she says. “They don’t have application specialists so it’s generally the financial people who look after financial solutions.”
She does, however, defend Sage’s ‘out-of-the box credentials’, saying its systems are easy to implement as accounting tools but it’s what a company does next with them that counts. “Every company has its own quirks and reporting requirements. There are a couple decisions made about how you create your chartered accounts and it’s easy to get our SME products up and running, but if you’re looking at different ways of reporting and collecting information you may need some assistance. It will be about configuration rather than customisation.”
There is a growing demand among SMEs for greater business intelligence, according to McCormac, the ability to dig down into customer data to improve efficiencies and grow the business. She says that people in different departments are all looking to ‘slice and dice’ information in different ways, placing new demands on ERP systems.
“The need was always there,” adds McCormac, “but people tended to use Excel to look at the information. The number of companies that have accounts receivable and accounts payable in one application and manage everything else through Excel is amazing. Now, business intelligence can be provided out of the box as a layer on top of the accounting systems. I won’t say it’s idiot-proof but it’s as close as you can get.”
By consolidating its ERP product range under the Dynamics brand, Microsoft is hoping to create product portfolio that is easier for SME customers to understand and use. “A lot of what we’re doing is around productivity, enabling our customers to work through all of our technologies,” says Neil Tanner, Microsoft’s small and medium-sized business director. “We want to give the core product a similar look and feel, and a consistent interface.”
The other selling point is the development of role-based technology to help end users become more productive. “A salesperson does a very different job to the finance or stock person, for example. They can have a view of the software that suits their job and functionality, enabling them to be more productive.”
The ultimate aim is to offer an ‘any time and any place’ work environment for a company’s employees. “What ties it all together is portal technology, one workspace where employees can access everything, internally and externally through different devices. And in that environment collaboration becomes another benefit,” explains Tanner.
Sage and Microsoft are established players in the SME space. The biggest change in the market has seen enterprise players like Oracle and SAP, with its Business One product, start to attack the space. It is a strategy that is already paying off, according to SAP business development manager Fiona Walsh (pictured). Ireland is in the top five of EU countries for Business One sales.
“What our product does well is the back-office function, which every business needs,” says Walsh. “Its usability and implementation time frames make it very attractive, particularly for companies that want to scale up. It leaves the door open for all the opportunities that may come their way in the future.”
She says that old preconceptions about SAP being a better fit for larger enterprise have now gone. “We don’t have to tell people we have products in this area. People are aware of it.” She says that customers in general are a lot more knowledgeable than they used to be. “They understand technology and the longevity of it now. They are taking time to evaluate and research what options are out there,” she says.
Laird agrees that small firms are now more clued in. “There is certainly a lot more computer literacy than there was five to 10 years ago. Small firms are already using an accounting system, the web and email. They know what they want.” As a consequence, he says, their expectations are changing. “SMEs are starting to look for a lot more functionality than they had. A lot of them will on their section or third system — and each time they expect more.”
By Ian Campbell