The Effect of ERP on Mid Market Companies
When Enterprise Resource Planning was first introduced, very few companies could actually afford it. In most cases, the only companies that could afford this technology were Fortune 1000 firms. However, like many forms of technology, the cost involved with ERP would eventually be reduced, allowing small to medium sized businesses to afford it.
While ERP has been around for little more than a decade, more companies are now seeing the benefits of using it. Many companies in the Middle East and Africa have failed to utilize the benefits of ERP, and the reason for this deals with procedure rather than cost. Many of these companies have used the same methods for many years, and are unwilling to switch to something new.
ERP vendors had a tendency to focus on companies that had very deep pockets. At the same time, many of these companies made the mistake of viewing ERP as simply being a new technological tool that they could use to increase their profits. They failed to look at the implementation issues surrounding this technology, and many of them lost substantial amounts of money. In some cases, hundreds of millions of dollars were lost when a company failed to properly implement an ERP system. It should be noted that many companies learned from their mistakes and those of their contemporaries, and they were effectively able to install and utilize ERP systems. While this has allowed ERP vendors to gain billions of dollars in profits, a number of issues have occured in the last few years.
First, many large companies have already implemented ERP, and this means they are not in need of another system. This means vendors must look for othe markets in order to generate revenues. The next logical market would be the small to medium sized business market. Companies which are designated as "mid market" are those that have no more than 500 workers and maintains a turnover of no more than $100 million. There are a number of things that separate these companies from their larger counterparts, and these differences extend beyond their revenues. Many mid market businesses have to deal with tough economic issues as well as fierce competition from smaller countries. Because of this, these companies will be looking to utilize every form of technology they can get their hands on.
In addition to this, mid market companies must be able to optimize their businesses. This includes things such as supply maintenance and accounting. While Fortune 1000 companies would spend millions of dollars implementing an ERP system in the 1990s, mid market business can now implement the same technology for about $100,000. This has allowed Enterprise Resource Planning to become a low cost solution for companies who are looking to utilize it. Before a mid market company decides to utilize ERP, it may be a good idea to look at their larger counterparts to learn from them. They should view their successes as well as their failures. Most importantly, they should understand how to avoid failure while simultaneously reaching for success.
The results of studies connected on companies that have utilized ERP show a number of things. It should first be noted that firms that utilized ERP technologies how surpassed their competitors by 20%. This means that Enterprise Resource Planning is a powerful technology that can give companies an edge in the marketplace.
This also demonstrates that small companies can achieve the same feats. A number of companies have failed when attempting to use ERP, and much of this rests on their own actions rather than the actions of the technology.
A company must make strategic plans before purchasing ERP systems. It is not a matter of just installing the system and letting it run. A number of things must be done to insure the system will work properly. The goal of ERP is to integrate the many processes of a company, and this technology should only be used by companies that are willing to do this. They must work closely with the vendor to ensure everything is implemented correctly. If this is not done, it will be very difficult for the company to succeed. There are a number of companies that fail for this exact reason.