ERP Software

ERP for Small Companies

The software systems termed Enterprise Resource Planning, or ERP, had the seeds of their beginning in the late 1940s. Although the term "software" was not used until the 1960s, ERP software systems are said to have evolved as a natural progression, capable of handling more business functions than just manufacturing tasks, from Manufacturing Requirements Planning (MRP) and MRPII. Today, ERP is thought of as an information system that gathers together all the applications of a business’ operations and all its departmental functions into one centralized database that can be used by all departments. Prior to ERP software, departments within the same business used separate applications. This was cumbersome and time-wasting.

At first, ERP systems were so expensive to purchase and operate that only the largest and richest of businesses could afford them. Furthermore, large businesses intrinsically carry a greater ability to absorb financial mistakes. ERP Software, however, has now developed to the point there is a special niche of ERP for various industries as well as for businesses of every size within these industries. ERP for Small Companies represents one of these niches.

For many reason, the ERP for Small Companies market was developed long after the market for large enterprises. This makes perfect sense. Once vendors realized that most of the larger enterprises had already invested in a software solution, not to mention the fact that the number of vendors was greater than the number of large businesses, which is limited, the realization dawned on many of them that it was time to expand their vision.

Vendors who chose to design ERP software for small companies were soon rewarded. First of all, there were many more small companies than there were vendors with product for them; and, secondly, the volume of sales was so much higher than it had been with the large enterprise market, that vendors were able to keep their prices lower. This helped many smaller companies buy ERP software which previously had not had the funds for such a purchase, and it also helped the vendors because less profit multiplied by many sales proved equal to - or even surpassed more profit multiplied by fewer sales (characteristic of their foray into the large business market).

This is not to say that there are no problems with ERP for Small Companies because there are.  One serious problem is due to the fact that smaller companies do not have as many complex needs and requirements as large companies.  Consequently, the ERP software packages, even those made specifically with the small company in mind, quite often exceed the desired specifications and thus have to be scaled down.

Written by :

Amy Cruz