It’s not just demand for small ERP software that’s been growing, according to Allied Market Research the ERP market is predicted to be worth £41 billion by 2020. Showing considerable growth, but what’s fuelling the growth of this well-established software sector?
According to an article written by software specialists selecthub, a large contribution to this is the increase I firms developing software for small to medium businesses. With projections that SME’s between 2014 and 2020, will contribute a CAGR of 7.9%.
Why are SME’s increasingly adopting small ERP solutions?
Small to medium businesses are beginning to see the light and are ever more increasingly implementing software solutions of all kinds. The constant improvement of technology has changed the business environment forever, resulting is greater accessibility due to decreasing price, size and complexity.
It wasn’t long ago, especially in historical terms, that IBM (the leader of business computers) thought that Steve Jobs was mad for having a vision of everyone owning a computer device. Now almost everyone in the developed world owns a computer device, from smartphones to large desktop computers.
Primarily the increase in adoption software systems is due to user ‘s ability to use software and the movement of the times. Technology has already been used for years, moving businesses away from pen and paper to using spreadsheets and electronically created documents. Now full software’s have been designed for specific sectors, moving businesses away from manually entering data into workbooks, to letting systems automatically organise information. The ERP market has been around for some time now, but the recent small ERP system surge, indicates the manufacturing industry is beginning to advance.
So why then do many small to medium businesses avoid software solutions?
As the business development manager for Statii Software, I work very closely with small manufacturing business owners on a day to day business, from selling to implementing, I get an insight into the culture surrounding this vast sector.
I truly believe it’s a generational/cultural aspect. Many owners learnt their craft and the systems involved before the computer was made accessible for the public and long before production control solutions (ERP/MRP) were created. Ever heard the expression ‘can’t teach an old dog new tricks’? When comfortable to a specific way of working, change is something heavily avoided and the action of changing a business is a great risk. Despite keeping all their customer and supplier information on paper records and manually creating any document, they read emails on a phone and go home to sit on a tablet or laptop.
This is however a generalisation, after selling software globally in a variety of countries and markets, I can see a cultural difference. For example, in the United States, companies of all sizes are aware of the benefits of software and how ERP solutions can have a positive effect on a small / medium manufacturing business. Even if they are not in the market for a software, they are working towards eventually implementing. On the other hand, in the UK not all businesses are aware of how software can create a positive impact on a business and how it functions.
The other factors of course are barriers that all businesses owners consider regardless, such as price, complexity and risk. However, software solutions targeted at small to medium businesses are designed to reduce these barriers. For example, Statii Software, supplying small ERP software is a pay monthly subscription to spread the cost of the manufacturing solution and make it more affordable. With no contract involved, the risk of investment is severely reduced. The complexity of the software was always aimed at simplicity and usability, to make the change as painless as possible.
With the ERP industry set to grow and the increased demand from small the medium businesses growing, the ERP market can expect a further increase in software start-ups looking to take advantage of the growing market place. This will more than likely overtime, result in software businesses becoming more competitive in their attempts to win businesses. We have already seen the beginning of this with software’s being available on the cloud (SaaS), allowing businesses to reduce the cost of on-site implementation. Additionally, so has the pricing strategies, once ERP was only available with large one off payments, contracted to use their software for multiple years and annual support charges. Companies looking to target small to medium manufacturers, like Statii are a prime example if this market trend shift, offering a cloud ERP/MRP, with monthly payments, no long-term contracts and no support fee’s. As this market develops I believe integration is going to be the key factor to future success, as discussed many companies use multiple solutions, getting these to work simultaneously would be a great worth to customers.