By Peter Kowalke • October 3, 2018

[Interview] Cloud ERP and the SMB: All the Benefits Without the Cost and Implementation Time

We talk cloud ERP with Grant Fraser, industry pioneer and CEO of Navigator Business Solutions

Interview by Peter Kowalke

If there’s a CEO more focused on enabling small and medium-sized businesses to reap the benefits of ERP than Grant Fraser, you’d be hard-pressed to find him. Fraser has been in the enterprise resource planning space for more than 25 years, and during much of that time he’s been a champion for cost-effective ERP solutions for SMBs.

As part of that mission, Fraser was an early advocate for cloud-based ERP.

While most ERP vendors and implementation firms clung stubbornly to the existing on-premise model, one that often would produce hulking systems that cost into the millions, Fraser recognized that cloud ERP made sense for everyone, especially SMBs that could not afford the cost, implementation time and maintenance of traditional on-premise systems. He became an early champion of SAP’s cloud-based Business ByDesign, and made the solution and SAP’s other cloud offering, SAP Business One, the centerpiece of Navigator Business Solutions’ implementation practice. Almost from the beginning, Navigator has been the top implementation partner for SAP Business ByDesign, an honor it has maintained for almost a decade now.

We sat down with Fraser to talk about ERP for the SMB, and where the industry is going.

 

You’ve been in the ERP space for decades. How is ERP changing for SMBs?

The complexity of what we deliver, for a small to midsize company, is dramatically different over the last 30 years.

At first it was accounting systems for $100,000 that included order entry and inventory. Then, some time later, customers wanted to get manufacturing or production as part of it, and it still was $100,000. Around 1999, CRM was added—and again it still is $100,000. Then it was quality, then ecommerce and EDI [electronic data interchange].

The movement has been toward more for less. Now customers want all of that for $50,000. So today, we deliver ERP software that is much easier to implement, much easier to program—and more affordable than before.

The SMB clients now are getting what the enterprise used to get, basically. It truly is the enterprise system now, not just accounting or material resource planning like we started off with 30 years ago.

 

So what’s the difference between ERP for SMBs and ERP for the enterprise at this point?

The big difference is the amount of resources that we deal with. In the SMB business, them having a full time project manager is unusual. Usually, we're dealing with the controller or someone like that who is trying to implement and also has to do his or her day job. This is different than at a larger company.

There also is less money to invest in an ERP system and implementation.

That’s where the cloud makes sense. Even if an SMB has the resources, we don’t want them to spend $15K or $20K out of a $60K budget on hardware where we could maybe host it for them. It also is a much easier implementation because they're not screwing up the on-premise server that hosts the system.

There’s the issue of cashflow, too. Small to midsize customers care more about cashflow than they necessarily care about cost. They care about both. But if you're going to ask a SMB to write a check today for $100,000, they can't do it in most cases--but they can send you a check for $10,000 and maybe over two years they can spend $100,000. So I think cashflow is a key selling point for cloud ERP and the SMB.

 

Should SMBs look for an all-in-one solution or go best of breed?

Our suggestion is to start with a good platform that does business processes in a standard way and is complete unto itself. Then, if you need an advanced forecasting system, for instance, integrate that into the system.

If it's a daily business process, it should be on the main platform. If it is something that you're going to look at once a month, it doesn't really matter whether or not it is fully integrated or embedded in the system. You can go with the best of breed on the systems you don’t use every day.

 

How do integrations play with the general trend away from customization, however?

If it's going to be a third-party integration, it has to be a click integration. Not something custom.

SMBs don't want a custom solution today like they did a few years ago. They want something that's off-the-shelf so they can implement quickly and get back to doing business as usual.

One thing that’s different about Navigator is that we started a middleware product called iConnect several years ago that is designed to create a click integration between SAP Business ByDesign or SAP Business One and popular third-party solutions. For ecommerce, for instance, it integrates Magenta, Shopify, WooCommerce, Amazon and things like that off-the-shelf. You plug it in and it works.

 

Is this why Navigator offers standard implementations, too, which is a mix between custom solutions and off-the-shelf products?

Exactly.

Everyone now offers their software in the cloud as a subscription, but most of our competition still does an on-premise implementation, which means they are going to drop in a bunch of consultants. They are going to do discovery and figure out exactly what you want, what you would ideally have, and come back and build the system for you.

Instead, we do what we call “standard implementations.” What vertical are you in? Ok, we’ve got three flavors you can choose. Pick that and we will implement your ERP that way, with off-the-shelf best practices, and we will get you up and running with roughly 60 percent of the cost and 60 percent of the time.

We are less concerned about customizations, and we try to keep customizations down. We do true cloud implementations, not on-premise implementations for cloud software. We focus on configurations, not customizations.

 

I imagine this requires some change management.

Change management is required whenever you put in a system and a lot of people resist or want to customize it just like their old system. I’ve been dealing with that my whole career. Everyone likes the concept of best practices until they find out best practices is not what they do. Then they don’t want best practices.

The cloud does tend to force change a little more since it's cloud and you don't own the software. The tendency is not to customize as much, and that’s also the cloud philosophy.

I think people are learning that if you customize a lot, you are going to end up having a system that doesn't work all that well in the long term because you may lock yourself in. The technology is such that if you customize right, you're not prevented from upgrading. But it's still a risk, and it certainly slows down your business when you customize just because you want the business processes to be the same as they were 20 years ago.

We see it all the time: people insist on customization during the implementation. Then once they go live, they realize they didn’t need the customization—there is already a way to do what they wanted built into the system by default.

 

Thank you for taking the time to talk with us!

You’re welcome. It has been a pleasure.