Supply Chain View

BBC News reports today on the way the big ERP vendors are targeting the SME sector. Another article from the same site asks whether small firms need big software.

If I were feeling cynical I might ask whether small firms need systems that constrain their business processes, will never have core business parameters altered (because nobody is sure what effect that would have), have ropey forecasting methods… You get the picture.

It’s not hard to see why SAP, Oracle and Microsoft are going for this market. Gartner estimate that the global ERP market is worth $17.8bn (£9bn) each year, and that a third of that is accounted for by SMEs. In addition, SME customers tend to be very loyal (perhaps because their needs are simple and they recognise the relatively large costs of purchase and implementation).

In the end for most SMEs, an ERP system is going to be more about the business of invoices, purchase orders, financial books and all the other necessary accounting functions of the firm. But as an enterprise grows, supply chain management elements are going to become more important.

I wonder whether there will be the kind of consolidation of the SME ERP market that is suggested. If there is I can see one advantage, and that is in inter-enterprise integration. A few years ago when I was involved in setting up a web-based, automated spare parts replenishment system for the dealers of a large auto maker, the biggest technical hurdle was interfacing with multiple dealer systems. Fewer, more standard ERP in the SME market would ease that kind of problem.

Links

http://news.bbc.co.uk/2/hi/business/6654739.stm
http://news.bbc.co.uk/2/hi/business/6509943.stm
http://www.gartner.com/