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ERP alternatives are small but powerful systems for SMB manufacturers
Small manufacturers that want full-functioning ERP systems don't have to go to the major vendors, as smaller ERP companies offer cost-effective systems and more personal service.
When it comes to enterprise software applications, smaller manufacturers often go with ERP alternatives to the large vendors. With many ERP choices available, organizations can find a system that suits their particular size or industry niche at a cost they can handle.
And these ERP alternatives typically come from vendors that are small enough to provide a personal touch that helps ease the complexity of implementing and running an ERP.
Earning trust is the key to success
One of these ERP alternatives has helped make business better for Phillips Safety Products, a specialty safety eyeglass manufacturer in Middlesex, N.J. The three-generation, family-run business had outgrown an inventory management system from Fishbowl Inventory and decided it was time to implement an ERP system, according to Brian Struble, IT architect at Phillips Safety Products.
"Back in about late 2016, we had seen the handwriting on the wall and said that the Fishbowl was no longer capable of meeting our daily needs," Struble said. "The database engine was not scaling, it was taking too long to get data synchronized, and it frequently crashed."
Struble considered several ERP products, including Oracle NetSuite, but liked the attitude of Priority Software Ltd., as the business relationship with the vendor was almost as important as the technology.
"We thought Oracle and SAP probably would have thought we weren't big enough, and we liked the scrappiness of a company that's interested in earning our trust and earning our business, which we found with Priority," Struble said.
Priority Software was established in Israel in 1986, and it has been making inroads in North America and the U.K., with an enterprise ERP aimed primarily at small and midsize manufacturers, according to Eran Rozenfeld, managing director of Priority Software U.S.
Many small manufacturers like Phillips Safety don't have a formal ERP system and may be wary of the cost and complexity of a large vendor system. Priority saw the gap in the market and wanted to offer an ERP system that was cost-effective, easy to implement and run, but also had specific functionality that a small manufacturer needs, according to Rozenfeld.
Some of Priority's customers have outgrown their accounting system or QuickBooks and may think they're not ready for an ERP system because of the cost, but "our system is not a lot more than an accounting system to start with," he said.
Priority has been hands-on in helping Phillips Safety get the most out of its ERP system and pushing the company into areas where it didn't know it was needed, Struble said.
"They've been willing to push when we don't have cookie-cutter requirements -- and sometimes we don't even know what the requirements are," he said. "But they didn't back away from any of our ideas."
Manufacturing-focused ERP fuels company growth
JD Machine Corp., a build-print shop in Ogden, Utah, was able to grow from a mom-and-pop machine shop to a 200-employee manufacturing company, in large part, because it has relied on M1, a manufacturing-oriented ERP from ECi Software Solutions.
JD Machine, a precision manufacturer for companies in a variety of industries, including aerospace, defense and medical devices, is a relatively small manufacturer, but it has an extensive products list, many of which require complex processes. It's a business niche that made the right ERP system a necessity, according to Matt Wardle, JD Machine's president and CEO.
At the time JD Machine implemented M1 in 1998, it had about 20 employees, but Wardle said they needed to implement an ERP system that could grow with the company.
"In the build-to-print industry, 200 people is a large shop. And when we talk to people with 40- to 50-people shops, they ask how we do it. I say a good portion of our success is because we use an ERP system to track things," Wardle said. "We have 4,000 different jobs going at any given time, and there's just no way you can have a big enough staff to track all those if you try to do it manually."
ECi Software Solutions, based in Ft. Worth, Texas, acquired M1 in 2010 and focuses it primarily on small manufacturers like JD Machine, according to Jeff Ralyea, president of ECi Software's manufacturing division.
Small manufacturers could use an ERP system to handle all of the important aspects of running the business -- taking orders, buying materials, building production plans, managing schedules, managing the books, and doing inventory and cycle counts, Ralyea said. But they also often need support from a vendor that's not always possible from large vendors.
"M1 is a fully robust enterprise ERP system for small manufacturers, but even the way we do our implementations are different, as we are very prescriptive in going in and helping customers understand how to use the software as it's intended," he said. "We are a best-of-breed product for a discrete job shop manufacturer that's a metal vendor, and we know exactly what metal vendors do with ERP software. So, we'll go in and teach you how to do that."
ERP alternatives find the right niches
The ERP alternatives are attractive to SMBs, in large part, because they target particular company sizes, locations or industry verticals, according to Mickey North Rizza, ERP industry analyst at IDC.
"They make a name for themselves in a particular niche or in an industry within a particular country," Rizza said. "Priority started out in Israel, but now they have some offerings in the U.S. and U.K. It's very open, very flexible, multilanguage, multicurrency, and it can be customized, as well as take you to the next step."
SMB customers who aren't ready for a large enterprise ERP often find a better fit with the smaller vendors.
"[The customers] see that [ERP alternatives are] more nimble and faster to get in play, and they get more attention from the salespeople and the implementation provider," Rizza said. "The smaller companies also tend to be better at listening to their customers and improving the product based on their feedback."
The cloud can be an advantage for smaller ERP vendors, allowing them to compete on costs and enabling customers to get up and running quickly. This is comparable to people being able to use TurboTax to file their tax returns at the last minute, Rizza said.
"With some of these companies, you can go online and, within a few minutes, get set up and start using their products," she said.
Need to know the limitations
However, while ERP alternatives can be more nimble and more cost-effective than large ERPs, they can also have limitations, according to Chris Devault, manager of software selection for Panorama Consulting Solutions, an ERP consulting firm based in Denver.
"Some of the smaller ones have been around for a long time, but they just don't have the ability to spend the money on R&D, and they can't keep up with the larger vendors," Devault said.
The smaller vendors can fall short in certain ERP functions, but this doesn't always hinder their appeal to the companies that are a good fit.
"We see that, a lot of times, they don't have a full functioning CRM [customer relationship management], or the back-end accounting isn't flexible enough for consolidation purposes or global compliance," Devault said. "Those are the typical areas where they fall short, but they can absolutely compete if it's the right size company, the right size functionality, the right industry niche and the right vision."
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