Large Enterprise is adopting Mid-Market solutions
A trend that is gaining speed is the move from the traditional ERP implementation to the current crop of mid-market solutions. A number of factors are contributing to this trend. First, let’s look at why ERPs are falling out of favor and then why mid-market solutions are on the rise.
The first issue with an ERP implementation is actually getting the thing up and running. Statistics have shown that an average ERP implementation takes 23 months to complete. This is a huge investment of time and treasure for any organization. In one study, 33% of ERP implementations were “somewhat longer” than expected and 26% were “significantly longer” which suggests that even with due diligence completed, many very competent executives do not comprehend the undertaking they are getting into.
Cost of this ERP implementation can run into the millions for large enterprise… and since no software is a 100% fit for any organization, customizing and configuring the software to meet the specific business needs of the organization drives the cost up even more. The larger and more complex your organization, the more customization and configuration you will require. Often times, an organization will opt to change their business processes to match the new ERP being adopted and lower the customization costs; however, this can lead to significant changes in the long-established business process that brought success to the organization in the first place and may cause a loss of competitive advantages that the business currently enjoys.
Hidden costs are also a bane to the ERP. These items can cover the spectrum from hardware upgrades to training. Data may need to be migrated onto a new software platform. Maintenance, training, and debugging often are ongoing concerns in large ERP environments.
So how are the mid-market solutions stepping into the traditional ERP role?
The first part of the answer is the evolution of mid-market products of the last decade. Combine the maturity of mid-market solutions with the new stability of the cloud in the last couple years and you begin to understand how mid-market solutions have improved beyond all expectation. Mid-markets products now supply features such a SCM, inventory replenishment, web-based catalogs, and B2B ecommerce just to name a few. Mid-market is also quite agnostic when it comes to technology. Many tier one ERP systems are developed in proprietary or legacy program languages. These ERP systems need to run on mainframes and usually use very expensive databases. Mid-market solutions are almost always on the other side of this coin. They run on PC-compatible servers and workstations. They natively support the most current Windows OS and utilize a very powerful, yet cost effective, SQL Server database environment. PC hardware has also improved over the last decade and now offers scalability, easy upgrades, speed, and many other features that offer the same experience with a much reduced cost in infrastructure.
The second part of the answer to our question is overall cost of mid-market solutions. These solutions are a cost-effective alternative to the expensive and complex ERP tier one application. These savings come through implementation of the software in a shorter period of time, a faster ROI timeframe, and lower cost of ownership. These last two points come through the facts that mid-market products are less complex and require less training. Also, because they are user friendly and built with less specialization of development, smaller IT staffs can managed the product saving the business a significant amount in maintenance. Many mid-market products also offer customization tools for their products. These user-friendly tools allow the IT staff to do most customizations required to meet business needs… again, saving the organization significant budget expenses.
(An interesting side note… most mid-market solutions use industry standard technologies like Windows and SQL Server. These are the same technologies you usually find in today’s colleges. Forward thinking companies will recognize that the potential for finding employees will be easier if they are using the mid-market products rather than esoteric, proprietary software. Also, the future workforce will require less training to use the mid-market products.)
As we can see, moving from large, expensive, complex ERP implementations to mid-market, industry-standard solutions just seems a logical progression as the mid-market solution becomes more robust…. faster ROI, faster implementation, faster user adoption, and lower costs. Tier one ERP applications are simply complex and expansive that are designed for large organizations. They are often inflexible and change is difficult and costly. Many companies looking at these ERPs eventually select the mid-market solution for its ability to lower the total cost of ownership, improved return on investment, and the ability to customize the solutions in-house to meet their business objectives. Even large organizations that are currently using ERPs are abandoning those systems for the more dynamic and flexible mid-market solutions… the cost savings alone often pay for the conversion over time.
Mid-market solutions are easier to adopt, have a higher success rate, run on industry standard processes and platforms, and offer features that can now replace the ERP you were considering.
To learn more, contact us and let’s see if a mid-market solution can solve your business needs.