Small and medium-sized businesses (SMBs) are fully aware of
the benefits of
business applications. | | | | | The midmarket was meaningfully
different in terms of its requirements.
William A. Soward
CEOAdapative Planning
Inc. |
| | | | | |
| |
|
Recent data from Forrester Research shows that 83% of SMBs believe
application software improves the efficiency of their companies'
core operations and business processes; 80% believe software
improves worker productivity, and 75% believe software makes their
products and services better.
But until recently, the market has conspired against the little
guys. Big-company software costs a lot, is complex and often
requires extensive customization to work for SMBs. A new report
from Forrester analyst
Ray Wang provides ample evidence that software makers have
wised up to the unmet demand. Brand-name vendors and challengers
alike have invested significantly in new products and distribution
channels.
"The result is improvement across the spectrum of
industry-specific and last-mile capabilities, usability, rapid
implementation, Microsoft Office integration and mobile solution
support," says Wang, in his report,
"Competition Intensifies For The SMB ERP
Customer."
The headaches you have
It is axiomatic that companies with fewer than 1,000 employees
often face the same complex business issues as large companies but
lack the wherewithal to address those issues with new technology.
According to Wang, many SMBs are making do with legacy
enterprise resource planning (ERP) systems
that fall short on a number of counts. These systems often
require extensive customization, which in turn makes them
difficult, if not impossible to upgrade or scale up.
Integration with other applications is a challenge, and when
changes are made to the system, each integration point requires
extensive and manual testing. The systems were designed originally
for back office internal users, so the larger world of employees,
suppliers and customers doesn't have access to the information,
making collaboration hard. Training new employees on these systems
is no fun. A generation used to "click-and-point" computing isn't
going to take happily to the memorized shortcuts and "green-screen"
environment of legacy systems, Wang said.
The vendors finally feel your pain, Wang said. As competition
for the SMB market heats up, the offerings for SMBs will improve
even more. In the meantime, Wang said, products like Microsoft's
Dynamics are improving usability.
Software as a Service (SaaS) vendors like Workday, offer
applications that integrate Web 2.0 functions like Skype and
LinkedIn with workflows and business processes. Some versions of
Oracle apps use the friendly PeopleSoft Project Swan interface.
Vendors are adopting middleware and service-oriented architecture
to adapt their systems to business processes, and not the other way
around, Wang said. Vendors have gotten serious about integrating
with Microsoft office, and support for mobile workers is also
improving.
In the trenches
 |
| The best and the brightest | | Forrester analyst Ray Wang breaks down the
new-and-improved SMB ERP vendors into three groups: established SMB
vendors that specialize in "last-mile" software for particular
industries; vendors with more than $1 billion in revenue; and SaaS
providers.
Established SMB vendors: Includes Unit 4 Agresso N.V.,
Lawson Software and Syspro Impact Software. These vendors have
taken advantage of middleware platforms such as BEA Systems'
WebLogic and SAP AG's NetWeaver to stop dumping money into tools
and really concentrate on delivering for particular SMB industry
sectors and geographies (e.g., QAD for manufacturing; Epicor
Software for retail). Vendors with more than $1 billion in revenue: Includes
SAP, Oracle, Microsoft and The Sage Group PLC. These vendors add
SMB expertise by acquiring companies and forming partnerships to
improve their distribution channels. SaaS providers: Key providers include Everest
Software, Intacct, Intuit, NetSuite and Workday. These vendors
really put SMB users "in the driver's seat," Wang said. Rapid
deployment means business benefits are realized in days, not weeks,
and pricing by cost, user or the month means companies can consider
licenses an operations expense rather than a capital expense. Wang
pooh-poohs concerns about security and integration with SaaS but
warns SMBs to be mindful of long-term storage costs and usage-based
fees associated with
SaaS. |
|
| |
|
William A. Soward and Chris Dickson are part of the market driving
innovation in SMB business applications. Soward is CEO
of
Adaptive Planning, a four-year-old company
founded expressly to exploit the vacuum in business applications
for SMBs, specifically in budgeting, planning and reporting.
"There were lots of companies selling performance management
solutions to enterprises. But the midmarket was meaningfully
different in terms of its requirements. The existing solutions were
too expensive and complex to work with. There really was an unmet
need," Soward said.
The other option for SMBs was to continue in Excel, which is
better suited to small, static businesses, Soward said. Adaptive's
goal was a product that was easy to use, afford and customize, and
was highly capable. Adaptive has gained some 120 customers since it
went to market in 2005.
Dickson, a business unit controller for a small manufacturing
company, was familiar with enterprise products from Hyperion,
Business Objects, Oracle and other big vendors from his prior jobs
at big companies. But he quickly ruled them out as too complex and
costly for Med-Eng Systems. The company makes bomb protective gear
-- helmets, demining equipment, body-cooling suits -- for the
military and law enforcement agencies. The company, with about $300
million in annual revenue, will soon be part of a publicly traded
competitor. But when Dickson went looking for a budget and
forecasting system he was looking for ease -- easy to use, easy to
implement. And, assuming the CFO signed off -- a hosted system.
"To my delight he did. It meant we needed virtually no IT
resources," Dickson said. That's a consideration when you have a
staff of 11 IT people for 375 employees. Med-Eng has multiple
locations and remote employees. "All people needed was a good
Internet connection."
He researched a number of products, including
Budget
Maestro from Centage and
Microsoft FRx Forecaster He said what he
especially likes about his eventual choice, Adaptive Planning,
besides its mode of delivery, is that the product shares the
look and feel of Excel with more capability. "It has a familiar
way of presenting data. It is taking some of the nasty part of
the Excel out of it and leaving you with the good stuff,"
Dickson said.
Picky customers
Vendors may want to take note: SMBs are clannish, pragmatic,
thrifty and cautious. When it comes to making a software purchase,
Forrester found that SMBs rely on peers and not "vendor hype" for
information. Case studies of companies in their particular
industries and word-of-mouth success carry the most clout. And SMBs
are practical, above all. Topping the shopping list for first-time
purchases, as well as upgrades, is software that supports an
"industry-specific process." In addition, SMBs intend to milk their
prior investments for every penny: 63% told Forrester that
"improving integration between applications" is their top
initiative for 2007.
SMBs also are taking a wait-and-see approach to SaaS, preferring
on-premise delivery. Indeed, 60% of SMBs surveyed by Forrester said
they are "not at all interested" in SaaS because of concerns about
integration, security, total cost, performance and lack of
customization. The 10% that are adopting SaaS deployment look to
NetSuite and Everest Software for end-to-end suites, according to
Forrester. Taleo and SuccessFactors score high among SMBs for human
resources applications, and Intacct and Intuit are popular for
financial accounting.