The term ERP was essentially coined for large enterprises and perceived as a tool for Fortune 1000 companies. Smaller companies shrugged from the term ‘ERP’ itself because of the preconceived notions of huge costs, high maintenance and large number of resources required to maintain this high end technology. However perceptions are fast changing, and with innovation in the cost structures and application architectures, ERP adoption is on a rise, with the SME segment beginning to see value in these offerings.
Technology giants like SAP, Oracle, Microsoft, and Sage have been dominant in large companies, with virtually every large enterprise having a robust ERP application to integrate its processes. However most mid market companies and SMBs do not have a robust solution in place and are unsure of the economic viability and ROI it would generate.
To cater to these apprehensions and to leverage on this huge opportunity, Enterprise software companies are focussing on developing products which are tailor-made to suit the business needs of these companies. For instance SAP Business One and Microsoft Dynamics NAV are products targeted to suit the operational needs of smaller companies.
They are also aggressively priced, keeping in mind the budgetary constraints of SMEs. The space for ERP providers in the SME segment is becoming highly competitive with local vendors going toe-to-toe to compete with large vendors like Microsoft, Oracle and SAP. This creates additional confusion in the minds of companies to identify the right solution for their businesses. Most of these software companies spend a lot on their marketing expenditure to create targeted campaigns to increase the level of awareness among SMBs with respect to technology adoption and its long terms benefits to business growth.
SMEs would take a call more often based on referrals from existing partners, suppliers and customers. A tried and tested solution in the industry then tends to become the preferred solution in the particular vertical, and most companies then prefer to go ahead with that solution. However some of the key issues for any company to implement an Enterprise solution would be its economic feasibility, time to implement, the Total Cost of Ownership (TCO), scalability, maintenance, ease of use and its long term ROI.
Keeping all these things in mind, Enterprise providers are gearing up to consolidate their shares in the highly growing SMB market which shows large revenue generating potential. SAP has already set a goal to reach 100,000 mid-market customers by 2010. Traditionally an on-premise solution, SAP is also innovating on its technology architecture to enable partners to build more customizations, and it is also planning to roll out a newer version of the Business ByDesign product for midmarket customers, which is essentially based on the on-demand model.
With huge competition from Microsoft and Oracle, the market for SME enterprise solutions has become fiercely competitive, not to forget the ever increasing base of local Enterprise software providers. Which vendor comes out to be a winner in 2010 is still to be seen; yet the SMEs would benefit from innovations and new value additions from these software companies which would increase their operational efficiency and profitability in 2010.
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