The essential guide to ERP for small and medium-sized businesses
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It used to be that the term ERP was associated with big, slow-moving companies, largely because they were the only ones who could afford such complex software. SMB technology wasn't even in the same league.
Today, with the cloud having ushered in an era of enterprise-grade software for small and medium-sized businesses (SMBs), companies of all sizes are tapping into the capabilities of ERP and other heavyweight categories of business applications, typically via the cloud.
That new reality is fueling a couple of SMB technology trends that help to explain how smaller companies are increasingly beating larger rivals at their own game. Both trends were on full display during a recent SMB technology event SAP hosted at the San Francisco 49ers' swanky Silicon Valley stadium.
Trend No. 1: The cloud has made it a lot easier for small companies to act like large ones than vice versa.
The cloud has ushered in an evolution toward businesses having to simultaneously possess the nimbleness of a small company and the momentum of a large one. While cloud-based technologies have evolved faster than many large enterprises' ability to adapt, SMBs have been able to take advantage of every incremental improvement to help themselves act more like large enterprises.
"Things are changing so fast, and big companies aren't built for that," said Sudheesh Nair, president of Nutanix, a provider of cloud-based IT infrastructure software, noting that what used to be a five-year technology refresh cycle has shrunk to closer to two years. "Small companies can make very quick decisions."
Brad Brooks, chief marketing officer at digital transaction enabler DocuSign, said he believes that this sped up rate of change has, in turn, shortened the failure and success cycles, forcing companies to shift their business strategies faster. That has proven harder for larger companies to do and, as a result, they're increasingly looking elsewhere for inspiration.
"[Large enterprises] have a way of killing their own best ideas out of fear of undermining their existing business models," Brooks said. "This is why they make innovation acquisitions."
Eventually, he said, large enterprises will have to learn how to pivot in this way more quickly. Meanwhile, smaller companies must get better at scaling their operations faster to take advantage of growth opportunities.
"The animal that survives the long run will be able to run the marathon at sprint speed," Brooks said. "It doesn't exist today."
In the case of DocuSign, for example, the company has been growing at a more than 50% clip annually, and trying to keep up with that growth without slowing down the business or eating into customer satisfaction has proven to be somewhat of a conundrum.
"The challenge with scale is that you have to introduce process, and that can slow you down," Brooks said.
Trend No. 2: SMBs have discovered data in a big way.
Data has proven to be a sort of elixir for smaller companies and startups alike, whether it's to improve the way their business runs or to serve as the core of their product or service. And there's little question that today's sophisticated cloud-based applications, most of which now have powerful business intelligence (BI) capabilities embedded with them, are a big reason data has become so much more important to SMBs.
In the startup world, data is a popular product. Young companies are demonstrating how a novel approach to data -- information that wasn't accessible until the latest technologies brought it to the surface -- is allowing them to do everything from modernizing energy delivery and integrating health care information to solving internet of things (IoT) challenges and enabling augmented reality.
For instance, Validic is trying to establish a sort of healthcare portal where consumers can access all of their health-related data. It's a monumental task that aims to provide people with the insight they need to stay out of the hospital. It's also an approach that has been made possible by the BI capabilities of cloud-based ERP systems that weren't available to small companies just a few short years ago.
As huge an undertaking as that is, Sensify's data mission may be even more ambitious. The company builds and sells software for tracking, monitoring, managing and securing IoT devices, which means storing and sifting through unimaginable amounts of data, something a company its size couldn't have hoped to do in the past without access to enterprise-grade ERP. The payoff for its customers is the ability to make much better-informed decisions.
"That's the challenge, and that's the insight we're trying to bring to our customer," said CEO Tim Horlick.
It's not just startups that are capitalizing on having access to more powerful SMB technology. A small-market professional sports team, the National Hockey League's San Jose Sharks, has also found that access to cloud-based ERP can help it extract insights from its data to better compete in the crowded Bay Area entertainment scene.
The Sharks are a small organization with a small sales staff, so it has to be efficient in reaching out to potential new fans, which can be like finding a needle in a haystack. Think about it: The team is essentially limited to searching for new fans in the Bay Area, a region it has already saturated with marketing messages for 25 years.
Flavil Hampsten, the team's executive vice president and chief sales and marketing officer, said it formed a BI department last year to focus on that task. The BI group looks at behavior patterns, such as who has liked the team on social media, visited the website or opened marketing emails from the team or sent them on to friends, and uses that information to target its outreach efforts. And the Sharks have accumulated valuable new insights in the process.
"Not every customer is worth the same amount," Hampsten said. "They may sit in the same seats, but, through our BI, we now know that customer A buys a lot of merchandise and customer B doesn't, and customer A attends all of the games while customer B sells a lot of his tickets."
Whether it's getting at data to provide insight or build previously unthought-of products and services, or simply being able to scale the business quicker, it's clear that having access to enterprise-grade ERP and other software is changing the game for SMBs. The bad news for their larger rivals is that this trend figures to pick up speed as more powerful SMB technology hits the market, with SMB-friendly pricing and ease of use.
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