SMB (small-to-medium business) manufacturers – and the SMB segment in general – are getting lots of attention in ERP circles. A common theme is the discussion around whether smaller businesses are unique animals, with unique functionality needs relative to larger enterprises. Many assume all SMBs have fewer processes, are less complex, have less stringent customers, fewer regulatory requirements, and simpler organizational structures. But is that assumption accurate?
For any enterprise, regardless of size, ERP system requirements are a choice – a business decision. Requirements should be driven by the types of business processes within the organization, the complexity of the processes, customer needs, and other key attributes of the organization. The choice may also be shaped by spending limitations, how management views the role of information systems, and the company culture.
There is no proven direct relationship between company size and system needs. In many cases, smaller businesses do not have different requirements; they choose to address them differently — sometimes outside the ERP system. It is not unusual for a small-to-medium size business to have robust software requirements that can only be satisfied using advanced modules in a Tier 1 package. And, just like their larger counterparts, SMBs are driven by a demand to better analyze and leverage their enterprise data.
It’s a common misperception that small companies require fewer management controls. In fact, to manage increased regulatory compliance and customer expectations more SMB companies are trading in their small business solutions for ERP packages that manage sophisticated requirements such as FDA compliance, lot tracking, bar coding, and EDI transactions. Certain contracts may require full traceability of all materials, parts or other inputs. The need to track, trace and document the procurement, manufacture, and distribution of every finished product results in many more system transactions.
What does this mean for SMBs?
- Don’t assume SMBs are universally different from other companies – the unique needs of each enterprise are shaped by industry trends, market forces, regulatory climate, customer demands and more.
- An SMB that selects a software package that does not provide certain capabilities that could be used within the business will need to fully understand the implications of performing the tasks manually, outside the system, possibly using elaborate (and un-integrated) spreadsheets
- Select a solution that can scale and adapt with business growth. Just because you can run the business on spreadsheets today, does not mean you can do so five years from now.
ERP software packages designed for the SMB market are delivering tangible return on investment through increased automation, paperless warehouse capabilities, comprehensive cost information, and ad hoc reporting. The increased ease of use in ERP software packages and the adoption of software as a service have made the transition to fully functioning ERP more feasible for the SMB decision maker.