ERP Software Pricing: Software Tiers [Segments]

September 20, 2011

Continuing the Discussion – previously on the cost of Inventory Management Software

A common problem when searching for a software system is setting a budget. After all, there are so many options and they range greatly in price. In this post we will determine some strategies for setting a budget depending on your needs and what “software tier” you are seeking.

3 Major Software Segments

The first step in setting a budget is determining what major software segment you are considering. At a macro-level there are 3 main segments:

software-tiers-levelsIntroductory/basic systems

  • These systems typically accommodate one business process but on the upper end may accomplish several.
  • They are not true ERP systems and often must be integrated with many other systems to offer solutions across business operations
  • Examples include: QuickBooks, Fishbowl, Simply Accounting
  • Price range: $100-$10,000

Middle-tier

  • These systems offer full ERP functionality across business functions (i.e. inventory management, accounting, CRM, eCommerce etc.)
  • Examples include: Blue Link
  • Price range: $10,000-$100,000

Top-tier (Blue Chip)

  • These systems offer full ERP functionality on a scale necessary for vast organizations with global operations. The complexity of their operations necessitates a significant capital spend
  • Examples include: SAP, Oracle, Infor
  • Price range: $100,000-Many Millions

These tiers offer a basis for determining a budget based on the following factors:

  • Company size
  • Desired level of integration and functionality
  • Goals and objectivesDownload ERP Software Pricing Guide

Introductory systems offer a great solution for many start-up companies or small “mom and pop” businesses. In order to facilitate growth, a proper middle-tier package will be needed at some stage. Middle-tier systems allow a vast amount of growth – allowing a company to transition from an introductory system far into the future. A top tier system may never be required, but if so, it will become readily apparent that it is necessary (multiple global divisions, vast numbers of employees etc.).


What Functionality to Expect from an ERP Software System

September 14, 2011

An ERP software system is by definition an integrated system that facilitates a variety of business process (see What is ERP software?). With that in mind, the question becomes: what functionality can be expected from an ERP system?

Although ERP software varies from vendor to vendor, there are a number of standard features that help define the system as a true ERP system, such as:

          Inventory Management

          Accounting

          Order Entry and Invoicing

          Purchase order processing

          Contact/Customer Relationship Management

A software package that lacks any of the above features would be hard-pressed to justify their classification as a true ERP offering. The idea behind implementing erp-system-software-functionalityERP software is to have a single system that can manage all facets of a business. If any of these core components are missing, multiple pieces of software may be required to accommodate your business operations.

Aside from the basics that most advanced ERP systems will offer, additional modules and functionality should be available to accomplish additional business-specific tasks. These modules should always be taken into consideration as they can allow for powerful functionality and expansion in the future. Some examples of advanced functionality are:

          Lot Tracking

          Landed Cost Tracking

          Commission Processing

          Multi-currency and Multi-location capabilities

Rather than installing numerous disparate systems, it is always beneficial to install a single integrated system to serve as a single access point for your business information. Instead of searching for an accounting system to integrate with your inventory system or vice versa, consider an ERP system to simplify your business.


3 Steps Small & Medium Sized Businesses Can Take to Win!

September 12, 2011

Guest blog post by Bala Deshpande from Simafore.com

Spreadsheet death is a serious malaise that can affect many SMEs! We are of course referring to the “death” of data and the loss of business efficiency that can result from an over reliance on spreadsheets for data management. As SMEs face stiffer competition, effective data management becomes a key differentiator for companies. Data driven decision making is what will keep SMEs competitive in the future. How does an SME inoculate itself against such problems? It turns out to be a three-step process as described below.

As a first step, data silos need to be broken down or at least interconnected. What this means is that information owned and used by various business functions must be made seamlessly available through out the business. For example, the data that inventory management relies upon could be made available for accounting and vice versa (with proper safeguards). An ERP system which integrates accounting software and inventory software, of course makes this task easy.

three-stepsLeveraging data for increasing competitiveness does not stop here, but actually begins with a proper ERP implementation. The good news is that SMEs which have successfully set up ERP systems are now actually sitting on gold mines of information and can leap over competition easily.

Unfortunately, today less than 25% of SME executives (in the manufacturing sector) are fully aware of the possibilities to leverage the data treasures they own. Many are still under the impression that spreadsheets and canned reports constitute Business Intelligence (BI). BI projects can help with identifying Key Performance Indicators (KPI) that affect business and set up processes to measure them. BI dashboards and reports are thus the second step after ERP systems.

According to CIO magazine, BI is not designed to iterate on new scenarios or for immediate response to unanticipated questions. BI has evolved to automate the production and distribution of standardized reports that monitor pre-determined KPIs. BI traditionally stops at delivering the report to the business user and the business user typically takes the data in the report and dumps it into a spreadsheet in order to do their own analysis, in an ironic twist to this battle!

This is where Business Analytics comes in and is the third and final step. SMEs now can harness their ERP investments to wisely leverage the data they are already handling. In today’s hyper connected world, the challenge is being able to quickly respond to a change in the market. Companies should be able to quickly shift resources to where they are needed so that they don’t end up with an overstocked inventory of yesterday’s hot item. Other key areas where analytics can help SMEs are customer profiling, acquisition and retention. Ultimately, with analytics companies can achieve the efficiencies needed to compete in today’s market. The key is to know what data and analytics processes are best suited for a given business.

About our Guest Blogger:

SimaFore helps small and medium businesses deploy the right analytics for the right problems and convert data into information assets. Their vision is to help businesses remove the complexity involved in applying and deploying analytics. To make analytics accessible and affordable to anyone who has data.

Bala Deshpande’s has 20 years of experience in using analytical techniques. He founded SimaFore after 8 years at Ford Motor Co, analyzing data from automobile crash tests and helping to build safer cars. More recently he has been instrumental in promoting information theory based analytical techniques for a range of applications from performance measurement in organizations to predicting patient stability in ICUs.


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