Previously, we reviewed 10 enterprise-level general ledger accounting software solutions. And, while financial accounting is certainly a critical component of any company's software suite, many enterprise-rated organizations will have business process needs that warrant moving up to enterprise resource planning (ERP) software. Fortunately, almost all of the accounting vendors we reviewed earlier are also capable of extending their product platforms to full ERP functionality.
These suites are designed in a modular fashion for the most part, which means you can purchase only the features your organization needs. Plus, the suites are squarely aimed at the small to midsize enterprise (SME) market. Typically, we review products that are aimed either at small to midsize businesses (SMBs) or enterprise organizations. The SME designator is less an indication of size than of the complexity of the business. To make an investment in ERP software worthwhile, a business has to have a need for custom business processes, multinational commerce, or fairly complex manufacturing or supply chain requirements. That's where SMEs become the better indicator rather than SMBs. A SME organization can still be roughly the same size as a high-end SMB (figure SMEs will typically grow between 100 and 1,000 employees), but it's a business with enough complexity and high-end requirements as to make ERP a good investment.
What's Enterprise Resource Planning (ERP)?
ERP generally describes a modular software solution that incorporates the financial side of the business and then adds closely integrated app modules that address other areas of the business, including customer relationship management (CRM), supply chain management (logistics), business intelligence (BI), Materials Resource Management (MRP), which includes capabilities such as Just-in-Time (JIT) Inventory, point of sale (POS), fixed asset management, and even project management.
In essence, ERP is a systemic approach to managing the entire enterprise, not just its finances. And, by integrating all of these modules into a single, cohesive whole, customers can gain new insights and create new processes that weren't possible using separate tools.
For example, most ERP systems also enhance accounting and overall management by adding features or capabilities to enhance a basic payroll tool into a more comprehensive human resources (HR) management framework, or to expand inventory management to more closely adapt to the specific type of business the customer operates, such as companies that center around warehousing or distribution.
Sometimes More Is Better
When looking at a company's management information systems portfolio, it's sometimes not obvious that a generic app may not be the best approach. A good example of this is payroll. The payroll for a service organization, for instance, incorporates time and billing and possibly expense management; it's considerably different from the payroll that should be used for a food and hospitality organization, which requires that the company track employee tips. And that's very different from payroll for a construction company, which often requires multiple rates for the same employee depending on what job they're performing (and also has to report to multiple unions).
Inventory is another area in which needed functionality differs depending on the type of business. For example, the inventory for a manufacturing company might require component tracking using bar codes to identify parts bins as well as Bill of Materials Processing (BOMP) that provides a list of all the parts and subassemblies needed to construct a particular product, or even Kitting, which consists of inventorying and tracking subassemblies rather than discrete parts.
The point is, because ERP platforms are (a) modular and (b) so broad in terms of the situations they address and the features they provide, the planning process for choosing the right ERP solution begins at home—long before you actually speak to a vendor. You need to start your selection process by sitting down with the front-line managers of all your key business processes, and mapping out exactly how your company does business. Exactly how do your web customers go from a credit card transaction to a shipping box arriving at their front door? How are payments processed, orders fulfilled, warehouses managed, inventory moved and tracked, and shipping orders picked up and delivered? How is all of this information used to provide ongoing BI for the organization? What kinds of information aren't you getting that you really need? The list of appropriate questions will get much deeper in the real world and extend far beyond the typical IT questions that get asked before installing SMB software (such as servers required, per seat licensing costs, etc.), though those questions still apply to ERP as well.
The reason you need to get a comprehensive understanding of how your company does business is because ERP systems not only run the gamut of business process features (as discussed earlier) but they also provide varying degrees of integration between their various modules. With standard SMB software, it's rare to find direct feature synergies between warehouse management and the HR framework, for example. But with an ERP system, not only can that be possible but you can also tweak that integration to work even more effectively for your organization. For specialty warehouses that store specialized inventory (like dangerous chemicals, for example), your HR system can automatically kick in its shift-management capabilities to make sure that, when such chemicals arrive at a particular warehouse, the right staffers who have the skills necessary to handle those chemicals are there to receive and store them.
That's just one example out of myriad possibilities. What's possible for your organization is entirely dependent on the capabilities of the ERP platform and how well you understand how your business really runs.
Lose Some, Gain Some
In our initial review of the software suites, we looked at the financial side, concentrating on the general ledger and examining overall usability, navigation, and workflow. In this cycle, we went back to each vendor's offering and examined it for overall ERP functionality and the availability of modules that enhance the financial management aspects of the system (and extend it into other areas of enterprise operations).
In doing so, we made some changes in the vendors and products covered. In the initial set of financial accounting reviews, we included both Intacct and Intuit QuickBooks Online Plus. Neither of these has a true ERP edition so we excluded them from this round of reviews.
ERP Pricing and the Cloud
ERP has been around as a software category since the late 1990s. In that time, it's evolved in a number of important ways, most notably that many have become cloud-enabled. The benefit to customers here boils down primarily to cost and scalability.
Because ERP systems are modular, traditional ERP systems often required multiple servers to fully function. There may be one server for the financial module, one for the back-end database, one for the inventory management system, and so on. Now tack on redundant servers for reliability and increased performance and you're soon looking at a hardware and infrastructure price tag that can exceed the cost of the software. To market this technology effectively to SME customers, vendors are using the cloud to power their solutions and the Software-as-a-Service (SaaS) model to deploy it.
That means customers have very little (often zero) upfront hardware costs—all of the servers are in the cloud. That can be a huge reduction in overall total cost of ownership (TCO) of an ERP solution. But, as an added bonus, this deployment model also allows for immediate and highly cost-effective scalability. If your business runs a web retail operation, it might opt for an e-commerce module in its ERP solution. But during the holiday season, traffic through the e-commerce system might spike. In a traditional infrastructure setup, that company would need to purchase extra servers and configure them as redundant clusters to handle that increased traffic. Then, when the holidays are over, those servers would simply be shut off and the company would have to eat the cost of an unused hardware investment. Via the cloud, customers can simply spin up new servers in the cloud to handle this increased load, pay for use only during the holiday period, and then dissolve them once the holidays are over (thus paying only for what they need when they need it).
A final cloud benefit is licensing cost. In an on-premises model, your company would pay for an initial setup fee and the "X" dollars (usually between $1,000 and $5,000) per user or seat. That license would extend and generally last until the software was significantly upgraded. In a cloud model, the initial setup fee either doesn't exist or is typically much smaller, and the licensing costs are assessed at "X" dollars per user per month (typically anywhere from $90 per user per month up to $500 per user per month). For those who carefully do their math, this type of subscription-based licensing can be significantly cheaper than a traditional on-premises, per-seat scheme.
One area in which you likely won't save money over standard on-premises ERP deployment is the third-party partner. Most of the vendors we tested require (or at least strongly suggest) that you purchase and implement their software by using a third-party, value-add partner. This entity will manage the purchase, the initial deployment, and (most importantly) the initial configuration, which, for some of these platforms, can span several months up to a full year. That's because it's the partner who does the hands-on work of customizing these platforms so they work as they need to for your particular business. They interview those front-line business managers (if you haven't already), they do custom coding or scripting to build middleware connections between modules if the right ones don't exist out of the box, they make sure the right features are switched off or locked down; and they handle ongoing maintenance, troubleshooting, and employee training. All of that costs significant additional dollars, which can certainly equal or even exceed the cost of the software, depending on how you're paying for it. So, make sure that (a) you really need a third-party partner to set up your software, and (b) you get an accurate estimate of what their services are going to cost you.
The lesson is clear: Do your homework before attempting to evaluate any ERP system. Chances are you'll work with a reseller to manage the fit between your company and the software. But the better you understand how your company operates and where the potential bottlenecks and problem areas in an implementation will be, the smoother the process will go. The smoother the process, the more effective the final installation will be.
Featured ERP Software Reviews:
Oracle NetSuite OneWorld Review
$999.00 MSRP
%displayPrice% at %seller% Oracle NetSuite OneWorld is an easy-to-use, comprehensive financial application that can be quickly scaled to a full enterprise resource planning (ERP) suite suitable for most any large organization. Read the full review-
Acumatica Review
$1000.00 MSRP
%displayPrice% at %seller% With its easy-to-follow navigation, robust reporting, and unusual pricing model, accounting software Acumatica is a good choice for growing small to midsize enterprises (SMEs). Read the full review -
Syspro Review
$199.00 MSRP
%displayPrice% at %seller% Syspro is a strong contender for the enterprise resource planning (ERP) needs of small, midsize, and large businesses. The system is extremely flexible, comprehensive, and easy to use, offering a plethora of reports and easily scaling from one to several hundred users. Read the full review -
AccountMate Review
$3125.00 MSRP
%displayPrice% at %seller% AccountMate provides a comprehensive modular system that can be configured to almost any business; though users will need to select modules carefully to avoid inflating the price. Read the full review -
Cougar Mountain Denali Summit Review
$275.00 MSRP
%displayPrice% at %seller% Cougar Mountain Denali Summit is a user-friendly system that offers a wide variety of modules and options. Read the full review -
Open Systems Traverse Review
$175.00 MSRP
%displayPrice% at %seller% A solid financial system with a mature history and familiar interface, Open Systems Traverse has what a midrange accounting and enterprise resource planning (ERP) system needs, though working with data is complex. Read the full review -
SAP Business One Professional Review
$82.00 MSRP
%displayPrice% at %seller% SAP Business One Professional has good features and flexibility overall, but is designed as an "old school" enterprise resource planning (ERP) platform. It may be too complex for many users especially small to midsize businesses (SMBs). Read the full review -
Epicor ERP Review
$175.00 MSRP
%displayPrice% at %seller% Epicor ERP is a comprehensive enterprise resource planning (ERP) solution aimed primarily at midsize companies that specialize in manufacturing, distribution, and professional services. It's not as easy to use as some competitors, but comes at a nice price. Read the full review -
Sage 300 Review
$75.00 MSRP
%displayPrice% at %seller% Sage 300 is an easy-to-use, mid-range accounting and enterprise resource planning (ERP) package, but with limited functionality and expansion modules. It lags slightly behind the competition in drill-down and customization features. Read the full review