Small business cloud ERP may seem like a recent trend, but that’s not really the case. Enterprise resource planning software, with its ability to manage production, planning, purchasing, accounting, manufacturing, sales, distribution, customer service, and every other aspect of business, used to be a privilege reserved only for big corporations. After all, the word “enterprise” doesn’t exactly connote a mom-and-pop operation.
However, the trend in the past decade or so has been increasing the democratization of ERP for small businesses. The primary enabler for this was the advent of cloud computing. As early as 2010, even before most consultancy companies offered cloud ERP for SMEs, many small businesses were already expressing interest in cloud and cloud-based solutions.
Navigator Business Solutions was one of the first ERP consultancies to recognize this trend. And by reorganizing our business around cloud ERP for SMEs, our share of cloud-based business increased from 40 percent in 2011 to nearly 100 percent just five years later.
The larger market trend also bears this out. A report from Forrester Research shows that a majority of cloud-based ERP adoption came from SMBs, and that this market is expected to reach $32 billion in 2023, up from $13 billion in 2016.
Why SMBs Choose Cloud ERP
Although ERP software was originally developed for large-scale businesses, its benefits extend to small business as well. ERP’s ability to integrate all business processes and data in one place, including financial information and customer information, can prove invaluable.
Processes can be streamlined by connecting and integrating all of an organization’s departments and allowing data to be easily shared. Once these processes are automated, redundant work is eliminated and efficiency is increased, which in turn boosts productivity. And perhaps most importantly, accurate data can be collected, organized, and reported, providing complete visibility of your entire operation.
All these things that ERP can do for large corporations, it can do for SMBs as well. But the cost of the up-front investment used to be prohibitively high—between $100,000 and $2 million—for the hardware, software licensing, and implementation support. And that doesn’t even include the ongoing maintenance of hardware and software.
Cloud computing changed all that. With no hardware or software to purchase, SMBs now can instead pay according to a subscription model and only pay for what they need. Small business cloud ERP delivers the right-sized system, with a choice of modules and features, and all at the right price point for any business or budget.
From Basic to Industry-Specific Solutions
The credit for being the first to recognize the advantages of small business cloud ERP really goes to SMBs themselves. They were asking vendors for it before the vendors were even ready, and they were willing to accept some sacrifices in functionality and customization to get it. They felt that it was worthwhile, given the advantages of quick deployment and low cost.
However, as the market has matured and vendors have come to realize its potential, ERP for small businesses no longer needs to be a compromised, imperfect product. Software vendors such as NetSuite, Microsoft Dynamics, and SAP began offering dedicated cloud ERP for SMEs such as SAP Business One Cloud. These ERP solutions were tailored to take advantage of cloud computing and offered the full functionality of on-premise ERP.
The market continues to evolve, as vendors began rolling out industry-specific ERP for small businesses. These include Flexibake for small-to-medium bakers, or implementation firms like Navigator offering cloud ERP solutions prepackaged for sectors such as consumer products and retail, manufacturing, and life sciences.
Shifting Away from Customization
Instead of custom solutions, SMEs now prefer prepackaged solutions and standard business processes built around industry best practices. SMEs have found that these are much quicker to implement and come with much less hassle than a custom system that must be maintained.
This isn’t to say that adopting such an off-the-shelf solution doesn’t require some organizational change, especially for companies that are shifting from legacy on-premise ERP. But many SMEs have found that reducing customization actually brings improvements in cost, nimbleness, and overall process effectiveness. Instead of staying version-locked to a customized on-premise system, they can run an ERP that is in line with changing technology and shifting business imperatives.
Hence, what there had previously been a customization nightmare there can now be standardization via cloud methodology. No longer do smaller companies need to reinvent the wheel just to have ERP for areas such as accounting, human resources, and product track-and-trace.
Cloud ERP solutions such as SAP Business One Cloud are proving to be a huge boon for SMEs that have long wanted the advantages of enterprise resource planning but lacked the funds for it. SAP Business One enables companies to manage their business as an integrated whole, gain greater insight into operations, make faster decisions, and drive growth and profitability. And with the benefits of cloud computing, small to mid-market firms can now enjoy all these advantages as well.
For more on how ERP can help your small business, contact us or watch an on-demand demo of SAP Business One in action.