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Enterprise Resource Planning (ERP) Software
The enterprise resource planning (ERP) software market is large and complex. There are hundreds of vendors offering best-of-breed (i.e. stand alone) ERP applications or integrated ERP software suites. Additionally, many ERP software companies offer vertical market solutions to meet the unique requirements of specific industries, such as manufacturing, distribution, retail and others. We wrote this buyer’s guide to help organizations better understand how to select the best ERP software to suite their business needs.
Here’s what we’ll cover:
What is ERP Software?
Application Categories
What Type of Buyer Are You?
Market Trends You Should Understand
What is ERP Software?
Enterprise resource planning software helps organizations track information across all departments and business functions, from accounting to human resources to sales and beyond. The term took root in the US around 1990 as a growing number of organizations required integration outside of - but not exclusive of - their manufacturing software applications.
They needed to share data from their MRP system with say, their financial accounting software, customer relationship software, supply chain software or others. ERP was introduced to describe a broader system that integrated each of these applications. The top ERP software packages will cover the following application categories.
Application Categories
| Accounting | Accounting software helps organizations manage their financial transactions. At its core, it will have a general ledger, accounts receivable, accounts payable, and payroll. Vendors often develop additional features and functionality to meet unique business and industry needs (e.g. Sage nonprofit software with fund accounting). Example vendors include Sage accounting software and Microsoft Dynamics ERP software. |
| Business Intelligence | Business intelligence, as a term, gained widespread adoption in the late 90’s. However, the technology has existed in some shape or form since the 60’s. It is used to analyze and report business data to help companies make smarter business decisions. Core functions include analytics, data mining, reporting, and more. An example vendor is SAP ERP software. |
| Customer Relationship Management | CRM software is used to manage interactions with prospects, customers, clients, and/or partners. It tracks activity across all departments: marketing, sales and service. Core applications closely align with these departments. They include sales force automation, marketing automation, and service and support. CRM aims to increase customers, revenue, and customer satisfaction. An example vendors is Oracle ERP software. |
| Human Resources | Modern HR software helps organizations manage traditional HR activities such as personnel tracking and benefits administration, as well as new strategic HR initiatives like talent management, employee evaluation, and learning management. Example vendors include Epicor and Lawson software. |
| Inventory Management | Inventory management software helps companies track up-to-date information about their product supply. Its aim is to maintain optimum stock levels so that companies avoid depreciation of inventory and overspending, and ultimately maximize profits. There are different types of inventory software to meet the unique requirements of different industries and companies. For example, a food distributor will have different inventory management software needs than say, an apparel retailer. |
| Manufacturing | We wouldn’t have ERP if it wasn’t for manufacturing resource planning software. ERP is said to be an extension of MRP. Today, it’s at the core of many well-known ERP systems. Other manufacturing applications and/or modules found in an ERP suite often include manufacturing execution systems (MES), bill of materials (BOM), product lifecycle management and more. Example vendors include NetSuite ERP software, Infor ERP software and Sage ERP software. |
| Supply Chain Management | Supply chain management software tracks goods as they move from manufacturing facilities to distribution centers to retail stores. Common applications include: supply chain planning to adjust inventory as demand changes; supplier management to monitor performance of suppliers; warehouse management to track placement of goods within a warehouse, and others. |
What Type of Buyer Are You?
Before evaluating software and performing an ERP software comparison, you’ll need to determine what type of buyer you are. Over 90% of buyers fall into one of these three groups:
- Enterprise resource planning suite buyer. These buyers require integration of data across all departments. They want to have everything in one system and avoid the technical challenges of integrating disparate applications. These buyers favor complete software suites like SAP, Microsoft Dynamics, Infor, Epicor, Oracle, and others.
- Best-of-breed buyers. These buyers require a single component of ERP software, like a standalone CRM system or a HR system. They often need greater functionality and more features than what is offered in an integrated suite.
- Small business buyers. A year ago analysts predicted that the average company would have 18 employees before adopting an ERP system. Five years ago the average number was 29. Statistics aside, more and more small businesses want to leverage ERP technology for better business performance. In the past, high upfront costs and technical challenges kept many small businesses out of the market. But with a growing number of Software as a service (SaaS) options, small business buyers have a new opportunity to implement ERP software. Of course there are still on-premise or client/server options still available for small businesses.
Market Trends You Should Understand
There are several trends playing out in the ERP software market. ERP software vendors are consolidating, adoption of SaaS is growing, and more. Here we’ll highlight a few you should know about.
- Vendor consolidation. This trend isn’t necessarily new. Mergers and acquisitions have always been a part of ERP software history. However, the rate at which it’s taking place and the implications it has for buyers are worth mentioning. Large vendors continue to acquire niche vendors to round out their product lines, acquire excellent technology, or to expand into new geographic markets. Buyers need to consider this when evaluating software. In a worst-case scenario, their software company gets acquired, the product gets sunsetted and support and updates are no longer available. Avoid this situation by considering a vendor’s financial and strategic viability.
- Adoption of software as a service. SaaS or web-based ERP is an appealing alternative to traditional on-premise ERP systems. The initial investment is lower, the implementation can be quicker, the user interface is familiar (it runs in a web browser), and companies don’t need full-time IT staff to maintain servers and hardware. Most ERP vendors now offer - or have plans to offer - some kind of web-based option.
- Mobile ERP. ERP vendors have responded to rapid growth in smartphone adoption by developing mobile interfaces for their applications. For example, Oracle already has a mobile client, so does SAP and Epicor. Customers are just as active. Surveys by Forester report that companies have already implemented some type of mobile application: 18% of companies polled have used sales force apps; 22% use inventory management applications; 15% use logistics app.
- Social media integration. Although very much in its infancy, many ERP companies are developing social media tools to keep abreast of the bigger trend playing out. Internal tools are being developed to foster greater collaboration among employees, while integration with outside networks such as Facebook and Twitter is also taking place.
Have an opinion on this guide? Email the authors. We appreciate the feedback.
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Intacct Financials and Accounting System
Intacct has a specialization in the accounting market and is a Cloud-based system that has been around since 1999. Their accounting application is sold on a stand-alone basis while business intelligence and others are in the suite
Sage ERP
The Sage ERP product family includes Sage ERP MAS, Sage ERP Accpac, and Sage ERP X3. In addition to common ERP applications such as accounting and CRM, Sage offers deep, industry specific capabilities for several markets.
ICIM ERP by Metasystems
Designed specifically for small to mid-sized discrete manufacturers, ICIM ERP is a flexible, scalable Enterprise Resource Planning solution that offers a suite of fully integrated functions. ICIM ERP can be fully customized.
Made2Manage
Made2Manage, from Consona, is a good fit for small and medium organizations. It's designed primarily for manufacturers and offers unique features to support industrial machinery, metal fabricators, and electronics manufacturers.
Epicor
Epicor’s cloud ERP offering, Epicor Manufacturing Express, is designed for small and medium-sized job shops. However, their web-enabled version can be used by nearly every size and type of organization.
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NetSuite
NetSuite is a 100% web-based ERP system. It's a complete, ERP suite with integrated business intelligence, inventory management, accounting and other applications.
SAP Business All-in-One
SAP Business All-in-One is supported by more than 1,100 SAP partners across 50 countries. The accounting and business intelligence applications are offered on a best-of-breed basis while inventory management is part of the suite.
SAP Business ByDesign
Released in July of 2010, SAP already has more than 500 customers using Business ByDesign to run their operations. The software is offered as a service (i.e SaaS) and pricing is based on a monthly or subscription basis.
Oracle JD Edwards
JD Edwards became a part of the Oracle family of applications in 2005. The system is offered in an on-premise and a web-based version and includes human resources, business intelligence and inventory management functionality.
Microsoft Dynamics GP
Microsoft Dynamics GP supports more than 40,000 customers. It is a feature-rich system with hundreds of industry-specific add-ons from Microsoft partners.
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