Large companies have long understood the business benefits of modern ERP platforms. Uniting previously siloed processes company-wide into a single system for ‘one version of the truth’ delivers huge efficiency gains. All departments can work in a more connected way, while the company frees up time and cuts by digitizing, streamlining, and automating business processes.
This is great, but there are other reasons to adopt an ERP system. A modern ERP platform by definition can be used across the enterprise, from the main office to branch offices – and even support additional business processes outside of the core company functions.
A real estate transaction in Massachusetts, for example, can use an ERP system to track a counteroffer on a property that was originally listed in New York City. In another example, a global supply chain can use the ERP to track an order placed with a supplier and shipped halfway across the world.
The key benefit is that these use cases require an ERP system that has been architected to resonate beyond its intended core business process. This is why small and mid-market customers also find value in modern ERP platforms, as shown by new research unveiled by SAP at last week’s Sapphire Now event in Orlando, Florida.
This research shows that companies with more than 10,000 employees are the most likely to be considering or adopting a modern ERP platform. While there is a correlation between ERP platform choice and an enterprise’s size, the most interesting insight is that small and mid-market business are the next most likely to be considering a modern ERP system.
Why? This research shows that 54% of these small and mid-market organizations say they are either in the process of implementing a new ERP system or have already done so. The main drivers for this are platform-agnostic – to improve business efficiency, to improve collaboration across divisions, and because their existing systems didn’t meet business requirements. These three factors are equally weighted amongst large enterprises as well as small and mid-market companies.
Other factors affecting vendor selection vary by company size. Small and mid-market customers more frequently cite the importance of integrated business processes across the enterprise. Also, this market segment is much more concerned with ensuring that the system is easy to use, and features a user-friendly interface.
These smaller companies are also significantly more likely to choose an open standards-based ERP system (70% vs. 40%), which they can leverage for additional business applications. In comparison, large enterprises are significantly more likely to opt for a bundled solution (55%). This bundles everything into one package, but obviously offers no potential for additional applications.
This research also shows that ERP vendors are working hard to attract these smaller companies. In fact, over half of all small and mid-market organizations say they have had a positive experience with their current vendor, while nearly 40% of large enterprises say the same. The key differentiator here is that this segment reports a significantly higher rate of satisfaction with the sales team – 62% to 48%, respectively. Amongst large enterprises, only 11% are satisfied with their vendor’s sales team. This suggests that there is a high opportunity for ERP providers in this market segment, and SAP has made some strides in this market with its recent acquisition of Portal Software.
Overall, this research shows that the ERP market is diverse and can encompass the modern business processes of small and mid-market companies. They are interested in flexibility, functionality, and scalability. The research also shows that it’s important for vendors to recognize that their success in this market will depend on their ability to attract these customers, even as they continue to enjoy top-line growth in large companies.
This research was conducted by independent market research firm IDC. It surveyed nearly 1,000 SMB end-users with 10+ employees who have the ability to purchase ERP software.
Interested in how ERP could help your business? ERP Assessment – The Value of ERP in 2021 discusses the value of ERP within a business in 2021.
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