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About Got ERP?

Welcome to gotERP?
This is an online forum to share experiences, lessons and learning about the selection, implementation and return on investment for Enterprise Resource Planning (ERP) Systems. We also like to discuss Customer Relationship Management software (CRM) systems, Social CRM (SCRM) & social media, Manufacturing Systems, Supply Chain Management (SCM) systems and Payroll & HR Applications.




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Small ERP

A Middle Ground Between Doing Nothing and Over Taxing Company Resources

As businesses grow they ultimately reach a "Twilight Zone" of enterprise software hell. That's the point where your business is getting big enough that some enterprise applications such as an Enterprise Resource Planning (ERP) systems could make things work a lot easier, but at the same time, management doesn't believe the company is large enough to absorb all of that complexity and added expense.

So what are you left to do? What about taking a middle road and looking at ways to bring in needed ERP software automation without bringing in the big ERP overhead? Maybe you should think about small ERP.

That's just the sort of approach being taken by some cash-strapped state and local governments around the nation, according to a story in Government Technology magazine. For example, the state of Alaska just built a "homegrown alternative" to a vendor supplied ERP application, and has saved millions of dollars in the process. Instead of inflating their IT budget for big ERP systems now, when money is still very tight as the recession continues to slowly recede, Alaska created its own smaller but serviceable system for about $100,000, according to Anand Dubey, the state's director of enterprise technology.

"States can do $200 million ERP implementations and still not know whether they are lowering their total cost of ownership or offering better constituent service," Dubey told Government Technology. "There is a real danger that you have acquired a monster asset that is bleeding you dry. What good does it do to automate if you aren't necessarily providing better service or saving money?"

These are the same types of challenges being faced by many companies of all sizes as well, from small businesses to global enterprises. Big ERP systems may deliver many benefits to businesses, but not every business needs all the bells and whistles. And not every business can afford all of what a big ERP application can potentially deliver.

Big costs and wide footprints aren't the only reasons that governments and businesses hold back from jumping onto the big ERP application bandwagon, according to the Government Technology article. "Even in the private sector, there's a recognition that these implementations often fail to achieve their objectives," the story warned. "A 2010 survey by Panorama Consulting Group found that 57% of ERP implementations take longer than expected; 54% exceed budget; and 41% of companies surveyed failed to realize at least half of the business benefits they expected from their ERP applications. Squeezed by budget cuts, some public-sector officials are looking for cheaper, faster-to-implement and more customizable ERP solutions."

There are alternatives. There are open source ERP systems to review, as well as basic homegrown applications that your IT staff can design to fit your business needs without having to break the bank.

At the same time, it's likely that whatever your business is involved in, there's already a vertically focused ERP system out there that's tailored for what you do. There are customized, industry-focused ERP applications for small manufacturers, the food industry and a myriad of other kinds of businesses. None of these have close to the cost and complexity of the huge ERP systems that run Fortune 500 companies, and they can offer your organization the benefits of ERP automation in a much more digestible way.

The whole idea of small ERP makes me think of "small ball" on the baseball diamond. You can't always bash the big home runs at a critical time in a baseball game, but those singles and doubles add up and mean even more over the course of the game than any monster home runs. I see the same strategy applied to small ERP. You don't necessarily need to swing for the fences, load your company with huge debt to bring in a monster ERP system with its maintenance and complexity, and then be dragged down by it for years. Instead, you can bring in small ERP with its just-as-needed features to make incremental improvements without diving into a mines haft of ERP hassles.

As businesses continue to cautiously watch the economy slowly recover from the recent recession, small ERP may make a lot of sense.

It's time to move ahead, but stressing a company's resources with big ERP may be too much too soon. At the same time, doing nothing can leave your company at a big disadvantage as the economy gets back to health. Small ERP may be a great compromise for today's IT strategy leaders.

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