There are several triggers that cause a company to start exploring a new ERP (many of which are demonstrated in iStart’s library of case studies. They include:

1. Outgrowing a small company book-keeping system: These are companies that have been using QuickBooks (or any one of a multitude of other bookkeeping software packages) and have reached a point where it no longer serves their needs. This usually occurs when they hire their first full-time accountant/controller, who demands a more complex accounting structure. As a business grows you need divisional reporting, segmented P&Ls, cost accounting, asset management and multi-company management. This is a big transition phase as a company grows.
2. Really old software: Over the years there have been some major trigger points that cause solutions to become ‘legacy’ software. If you think back to the switch from DOS to Windows, this was a point where companies eventually decided they needed to upgrade the ERP. You will still find many businesses that still run a green screen ERP and have never changed!

I first sold ERP software in Australia and the introduction of the new GST tax system triggered many companies to upgrade their ERP to meet changing compliance needs. Software that could not support GST calculations had to be replaced.

There needs to be a large technology shift to trigger a company to replace ERP, and I am not seeing anything that would trigger this in the market right now.

3. Can’t get their data: Back in the old days it was hard to access ERP data for reporting needs. Moving to a better reporting solution was often a trigger point for a full ERP upgrade. Despite the adoption of relational databases, SQL Server, advances in OLAP cubes, business intelligence and a myriad of reporting options, the greatest complaint in business is that it is too hard to get reports.  This can be a trigger to upgrade – but there are many generic reporting solutions that will work across any ERP, so an unlikely trigger in 2017.
4. Change of business model:When a company changes direction or changes how it does business, this is a trigger for a change in software. The advent of ecommerce and selling online has been a big trigger for new ERP software. Building recurring revenue streams is the current trend, and this can be one trigger to change software that better supports your new business direction.
5. Bad implementation or poor use of an existing ERP: This is a big reason for people to switch ERP’s. I have met so many companies that hated their existing ERP environment and wanted to change when really, they simply had never given enough time, energy and money to make their existing solution work.  If management is not fully behind business systems, processes and the software that drive them, it does not matter what ERP you choose, management will always be disappointed. It costs money to manage, maintain and grow your business ERP solution. In my experience, these are not the companies I wanted to sell a new solution to, as the project was destined to be a struggle and would never get the attention and funding it deserved.

So, if were a mid-market ERP vendor, I would be focused squarely on how to convert these customers to my solution and use the above trigger points in my marketing.  I would not be trying to steal customers from other vendors.

ABOUT MARTIN OLSEN//

Martin Olsen is owner of eOne Integrated Business Solutions.

The post Mid-market ERP software: who’s buying? appeared first on iStart leading the way to smarter technology investment..

Mid-market companies are often defined as companies that have between 50 and 1000 employees, or sometimes as those with revenues between US$100 million and $3 billion. This is a very large market segment with well over 200,000 USA-based businesses in that category alone. If you add in the top-end of the small market down to companies turning over $50 million, the market gets wildly larger.

This context is necessary to appreciate the size of the mid-market that ERP vendors are addressing. These companies have complex business processes and compliance requirements requiring the purchase of software solutions to manage and keep control of the business.

A couple of interesting observations in the mid-market ERP software space are that:

• NetSuite has been trying to steal GP/NAV customers for at least 7 years with little success.
• Intacct and Acumatica are the relatively new kids on the block and have grown a solid customer base. The growth is attributed to growing businesses, and neither has had much success in stealing their competitors’ customers. Growth has been organic.
• Sage likes to snap up vendors (like Intacct, most recently acquired) to grow their portfolio of offerings. Sage has traditionally played at the smaller end of the market.
• All mid-market players have been trying to infiltrate each other’s’ customer bases for a long time and other than the occasional anecdotal case study, success has been minimal.
• Microsoft dreamed that their massive on-premise base would transition to Dynamics 365, but a year into the experiment, there has been no mass migration and in fact, not even a trickle.

The only conclusion I can come to, one that all those that play in the mid-market ERP industry already know, is that mid-market companies do not switch mid-market ERPs, ever. Any strategy built around converting competitor’s customers is fatally flawed from the start, and can only be the brainchild of an MIT graduate armed with a colourful PowerPoint and an over worked Excel model based on fiction.

Here’s why
There are several reasons why a mid-market company will studiously avoid moving from one mid-market ERP to another mid-market ERP.

1. Functionality is the same: Mid-market ERP provides business solutions to manage the accounting, budgeting, invoicing, inventory management, HR and payroll, sometimes customer relationship management (CRM) and other key business functionality. The reality is that despite huge technology advancements over the last decade, most business practices have not changed. This means that all mid-market ERPs provide almost identical core functionality. Sure, there are things each one does differently, but none of these differences are enough to make you change software once you are already using one of these ERPs.
2. Business interruption:  Anyone that has been involved in a mid-market ERP implementation knows that they are complex and difficult. A new ERP takes hundreds and sometimes thousands of hours of time from employees who already have full-time jobs.  Starting the entire team on new software is a massive undertaking. There is always an impact on your business and customers when changing ERP software. You would not do it unless there were major gains to be achieved.
3. Already defined processes: Mid-market businesses are, by definition, successful; they started small and have grown to be a middle-size company. These companies know what they are doing, have business processes that work, and have people that know and execute the process. Moving all those processes to new software, while fixing and changing some of those processes, is either impossible or challenging at best. Given each ERP performs the same task differently – squeezing that functionality into a new ERP transition will be painful.
4. Cost of transition: Whether you are moving to the cloud and paying monthly via a SAAS offering, or staying with an on-premise ERP, the cost of transition is expensive. Moving all your data, training the team, rewriting the business documents and reworking your BI generally requires external consultants and the costs will build up very quickly.

Personal experience/resistance
There are many more reasons why a company will try NOT to change its ERP software. It was suggested to me recently by one of our staff members that we should change out our ERP and CRM software.

The thought made me shudder.

We sell online via our custom eCommerce website, we have 50+ integration points, we have a detailed CRM process, we have timesheets, we have many daily reports and a full set of management reporting, and we run multiple entities and currencies.  Could we change software? Yes.

Would we? No – unless there was some very major advantage to be gained from the cost, effort and business disruption. Like most businesses we have a process that works and until it is ‘really broken’ we will not be trying to fix it.

This is part one of a two-part article. In the next piece, Olsen examines which companies are buying mid-market ERP solutions.

ABOUT MARTIN OLSEN//

Martin Olsen is owner of eOne Integrated Business Solutions.

The post Combative sales tactics a no-win for ERP vendors appeared first on iStart leading the way to smarter technology investment..