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
"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.
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.