Page 40 - MetalForming September 2012

Emerging Trends in
ERP Software
The acronym ERP (Enterprise Resource Planning) for business software has been around for nearly 20 years. ERP replaced short- lived terms like accounting Software and MRP software, whose definitions were too narrow to allow for technolo- gy evolution. Because ERP includes the word “enterprise,” the concept has evolved during the past two decades, so much so that companies running ERP software purchased in the early or mid 1990s might be stunned by the breadth and depth of features included in mod- ern, state-of-the-art ERP systems.
As business consultants, we first advise our clients to only purchase soft- ware that provides true, usable benefits, and to avoid features solely because they look cool in a software demon- stration. However, in recent years we have identified several trends that new ERP-software buyers should under- stand as they consider alternatives.
Industry Specialization
As the ERP market has consolidated and matured, many observers predict- ed that a handful of large software com- panies would completely dominate the industry, akin to the automotive Big 3 in Detroit. At the high end of the market (manufacturing companies earning $1B or more in annual revenue), that prediction came true. But for small and middle-market manufactures, the number of ERP-software packages has
Scott Holter is director and practice leader, M&M Business Solutions, a Mead- en & Moore Company based in Cleve- land, OH: 216/241-3272; www.meaden- moore.com.
Niche and nimble solutions abound.
BY SCOTT A. HOLTER
actually grown during the past 20 years. To compete against larger compa- nies, many small and nimble software vendors have developed products to meet the unique requirements of spe- cific types of manufacturers. Niche providers, relatively rare as recently as 10 years ago, are abundant today. In just the past two years, for example, we have identified and evaluated ERP software specifically for manufacturers of cast- ings, chemicals, electronics, equipment, food, molded products, primary metals and printed products. We also recent- ly evaluated software for metal-service
centers and equipment distributors. Software buyers are well-advised to consider and compare providers of niche packages with the more generic ERP packages from larger providers. Industry specialization may prove more beneficial than size, substance and
breadth of functionality.
Software-as-a-Service
The 2007 to 2009 recession severely cut into new-license sales of the entire ERP software industry, except for those selling on a software-as-a-service (SaaS) basis. In fact, SAAS vendors did quite well during that period, picking up market share from traditional on- premise providers because of the no/low initial license cost.
Today, virtually all ERP providers offer or plan to offer their software through a SAAS model. Potential buyers are well-advised to compare the strategy of
outsourcing their ERP system with the traditional on-premise model.
Greater Modularity and Options
During the last 20 years, ERP pack- ages have experienced extensive devel- opment in features and functions. Many of the more mature packages now comprise dozens if not hundreds of modules. In the early days of ERP, most packages were sold all inclusive- ly. Today, however, buyers have more flexibility in selecting specific features and modules from their software sup- plier. In some cases, the software com- pany’s offer different grades or ver- sions of modules, a “good-better-best” strategy. This strategy is common in other software specialties, including customer-relationship management (CRM), quality management and sales- order pricing.
Because of the increased number of choices, we advise ERP-software buyers to:
• Carefully match their needs with the vendors’ modules; and
• Time the purchase of modules
38 MetalForming/September 2012
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