How to invest for SRP when you are an SMB

Many small and midsize business (SMB) companies are constantly challenged with how to maintain customer satisfaction and support an anticipated growth rate and evolving the business into doing new and innovative ways of transactions. Having to be profitable in today's business environment requires a good information system which can speed up innovation, improve customer communication and attain global visibility.

Investing in an enterprise resource management (ERP) system can be very expensive. In fact even most ERPs designed for small to medium sized business can still reach six figure prices. In a study a few years ago, it was found out that only about 27 percent of small companies (less than 500 employees) use ERP. This survey was done with over 500 companies. Other data gathered showed that 57 percent of large companies or those with 500 to 2500 employees have ERP systems. Of the large companies or those with more than 2500 employees, 70 percent have operational ERP systems.

It will not be surprising to see in the next few months that small and medium sized businesses will all scamper to get ERP systems installed in their companies since today's business environments have leaned towards relying heavily on automating systems like ERP. Also ERP vendors, especially the giants SAP, Oracle and Microsoft, have reached out to SMBs by developing less expensive ERP systems tailored to SMB needs.

But still, SMBs need to consider these investment decisions before finally making the move to implement ERP, regardless of whether they get their ERP from SAP, Oracle, Microsoft and other smaller vendors:

• Productivity – can the company get the most out of the choice of ERP from a particular vendor?

• Connectivity – how does the ERP implementation work collaboratively with the company's key customers and suppliers?

• Business Insights – Does the ERP improve the speed and quality of the company's decision making?

• Total Cost of Ownership – How will the ERP reduce the cost of owning and operating the IT systems in the business organization?

Implementing an ERP needs a regular group of IT professionals who will monitor the operations of the system. ERP is closely linked with a data warehouse of maybe even integrated with a warehouse in one system. So when investing in an ERP, it is not just the software that needs expense in licensing but the staff to maintain the system as well.

Training for ERP management for staff can also be quite expensive. There are relatively few IT professionals specializing in SAP because of the high cost of training. Also, technical support for proprietary software may in some cases be a problem with some vendor. So a company better be ready to have a third party consultant should problems arise.

Despite all these problems, investing in ERP has long term benefits. I know that all businesses will be heading towards a unified IT system for efficient flow of business and to take advantage of the broken geographical boundaries because of the internet. And ERP can do this unification.