What are your associations with the word “business”? What names come to mind with this word? Probably, you will name Google, Amazon or Facebook – the biggest market players with annual revenue of hundreds of billions. Surely, they are businesses. However, the leading role belongs to SMBs – small and medium-sized businesses. These teams exist in every industry and are responsible for insane cumulative revenue. Similarly to large corporations, these brands also can benefit from dedicated software, e.g. ERP for midsize company. We are to look at key points about this enterprise-grade apps’ type in details.
Initially, it’s important to understand how SMBs and medium companies work. The majority of economic departments and analytical agencies consider the main difference between all SMBs and big enterprises. However, we want to go deeper and look at features of midsized teams that are different both from small businesses and large brands. It’s hard to overestimate the role of SMBs and mid teams. For instance, they represented 99% of all enterprises in the EU in 2015! Similarly, the US market featured 99.9% of small teams in 2018! Regardless of the industry, SMBs are vital players so let’s explore them more carefully.
Major differences of medium-sized businesses
First things first, you may be interested in the idea of midsized companies. They are placed right between small local teams and worldwide multinational corporations. In other words, midsized brands represent the main development stage for almost any company. Looking at numbers, Gartner experts define medium business as a corporation with 100 to 999 employees and/or $50 million to $1 billion in annual revenue.
In the USA, the local Department of Commerce uses formal standards to define the size for each specific industry. These standards are based on a number of employees, annual revenue, and NAICS codes. For example, if you are an owner in a towing firm, then you should look for rules in the Motor Vehicle Towing category. It specifies that a business must have $7.5 million to $1 billion in revenue to be considered as a midsized team. This sector doesn’t have rules for employees. Simultaneously, a record company requires at least 250 employees to become a medium-sized team, while magazine publishers must hire at least 1000 workers.
But what about distinctive features of these teams? They are essential to know as you can select, order and deploy the best ERP for midsize company based on this knowledge. Here are the key characteristics:
- Relatively small teams. Medium corporations don’t exceed 1,000 staff members so they have simpler HR systems but should rely on more skilled employees.
- Simple structures. You can barely find a midsized group with a lot of departments or branches in different states. The structure is more flexible and simpler.
- Strong market relationships. Usually, SMBs rely on cooperation with other market players to develop top-quality products and services.
- Lower profitability. Annual revenues of these companies are usually lower than the same parameter for teams operating on a larger scale.
You can see that mid brands have several unique features. With this knowledge, it should be easier to get the idea of an ERP system for midsize company. Thus, let’s discover how enterprise-grade apps work, particularly, in the sector of SMBs.
Definitions and types of ERP system for midsize company
Well, the main definition of an ERP app is pretty simple. It’s a product focused on management and optimization of core business processes, collecting and standardizing data, and automating basic tasks. This principle can be applied to any industry and any business size. Still, different companies come with different requirements that define major functions of ERP. For mid companies, the number of modules is usually lower than the same for big teams. However, they also list unique needs.
We will unveil the main difference between custom and ready-made ERP solutions, plus functional areas for midsized software.
Custom VS Prepackaged solutions
Custom and out-of-the-box products are the two main types of enterprise apps as they represent two basic development strategies. Let’s look at the terms and features:
- Custom software. Devs create such apps from scratch. They discuss each client’s needs and wishes, analyze the business and the industry, propose the best set of modules, develop, test, deploy, and support the product. Custom software has longer time-to-market and higher initial costs but it suits your needs perfectly and has much better ROI.
- Ready-made software. These applications are based on predefined functions similar to all clients. Sometimes, you can choose between different pricing plans but can’t add or remove custom modules. Hence, ready-made software doesn’t provide a competitive advantage. It has better delivery time but worse suitability and profitability.
Talking about the best ERP for midsize company, we should mention unique needs. This idea is based on the current and planned goals of your business that define the type you need. Say, a medium distributor of various gadgets rarely needs exotic tools. Instead, it relies on proper interaction with customers and suppliers, solid tracking of orders, and good quality control. Instead, even midsize bank has to pay extremely high attention to security, business rules, taxes, and dozens of other financial aspects, not to mention traditional tools like HR or CRM. Thus, you should choose one or another type according to your team’s requirements.
Functional areas of ERP software for midsize companies
Modern apps for enterprise management are built on the same principle. Webopedia defines ERP modules as separate parts of the program focused on certain business processes, i.e. one module covers only one area. Thus, clients can choose the most suitable modules, combine them, and purchase the final program with required features only, for example, accounting + SCM tools or HR management + WMS + CRM. As you know, prepackaged solutions rarely offer this level of customization so mid businesses are more interested in custom products.
Average ERP for midsize company should focus on a few key areas instead of all-in-one services that are useful for larger firms. Medium teams often want to manage only a couple of core processes such as warehouse management, fleet tracking, CRM, etc. In this case, you can consider ordering dedicated applications for each functional area. Nonetheless, an ERP system is efficient because it unites all the essential data and gathers in one place so your employees can speed up in-house processes greatly.
Hence, let’s look at the functional modules. The list includes only those elements, which are useful for midsized companies:
- In-house operations:
- Financial management. Regardless of the business’s size, it has to deal with money in different forms: cash, digital transactions, maybe even crypto. Tools for financial management facilitate inflow and outflow tracking, accounting, and reporting. Using one single system, you will reduce the number of human errors and unnecessary expenses.
- Human resource management (HRM). As well, any company features at least one employee. HR tools include time trackers, sheets, records’ databases, staff profiles, performance reviews, training papers, etc. This module is responsible for hunting, hiring, managing, and firing employees in the company.
- Manufacturing management. Being vital for all productions, the manufacturing module helps to handle proper planning, forecasting, and creating various products. Among the tools included, there are apps for production schedule, material control, distribution, etc. It’s bounded with inventory and supply chain.
- Inventory management. In other words, it’s a warehouse management system (WHS). With this module, employees can easily check stock, track raw materials and ready products, manage purchases and shipment. In addition, WHS helps in optimizing warehouse space.
- External operations:
- Customer relationship management (CRM). This crucial external element interacts with clients. CRM systems optimize each and every part of the customer lifecycle from getting leads to creating brand advocates. CRM tools handle also SMM, orders’ history, clients’ profiles, and, partially, sales.
- Marketing management. Operating in strong cooperation with customer management, marketing apps help your employees to work with existing clients: attract them, engage to purchase, and retain. The entire sales chain can be optimized with this part of ERP. Advanced tools also cover taxation and shipment.
- Supply chain management (SCM). Similarly to WMS modules, SCM tools are obligatory for companies that deal with delivery. They allow tracking flows of products between suppliers, producers, shippers, and consumers. SCM apps speed up all processes and cut delivery costs.
Apart from these managerial approaches, ERP solutions for midsize companies provide handy tools for reporting and analyzing, creating dashboards and tracking workflows, integration with other in-house or external systems, etc. Finally, there are dedicated modules for certain industries, e.g. government, healthcare, transportation, and so on.
ERP systems benefits for mid businesses
Midsized companies are likely to use legacy software, particularly, in the IT department. Respectively, customers are unsatisfied with inefficient resource planning, long delivery time, poor quality, low level of personalization, and more. Lack of quick data access causes various problems from leads’ loss to performance dips. These issues are easy to solve with a dedicated ERP for midsize company. A single database with real-time access to all core information packages boosts key business processes and improves customer experience.
Let’s look at how ERP apps can benefit mid brands in details:
- Reduced operating costs. For medium companies, even minor expenses are undesirable. ERP platforms streamline data flow and boost productivity so you can cut costs related to all core processes such as manufacturing, delivery or accounting.
- Easy-going collaboration. As we’ve mentioned, midsize teams rely on cooperation with other corporations: suppliers, producers, distributors. Thanks to the high compatibility of ERP apps, this cooperation becomes simpler, faster, and more cost-effective.
- Enough space for future expansion. A lot of mid companies have ambitious strategic goals. Hence, they need software with high scalability that will suit future requirements, not only current ones. Look for ERP products that support this approach.
- Access to best practices. By getting ready-made applications, you can get the best examples of working software. Out-of-the-box ERP systems are based on the most efficient approaches so they also can act as basements for your own future products.
- A wide selection of tech stuff. Instead, if you decide to work with custom devs, you will get almost endless customization options. Various languages, frameworks, deployment schemes (hosted and SaaS), and platforms (desktop/mobile) are available.
This list isn’t exhaustive. For each company, the exact benefits will be slightly different, especially, if you use custom ERP apps tailored to the specific requirements.
Summarizing the info, we want to list five key questions and answers to them. They will be useful not only for owners of midsize companies but for everybody interested in the idea of ERP and proper resource management.
What ERP abbreviation stands for?
It means enterprise resource planning. Generally, ERP is a strategy for corporations focused on optimization of processes. Plus, we know ERP as software applications designed to meet the goals of this strategy.
Which applications are available for corporations?
Among all ERP products, you can choose between custom and ready-made apps. The first type includes unique software with all the modules you want to add. The second one features packages that are similar for different users and are based on popular modules.
Why use ERP for midsize company?
This software category can enhance business processes greatly and cut costs. Mid businesses that use ERP apps usually improve their collaboration with partners, get high scalability for future expansion and enhance customer experience.
What are TOP-rated ERP solutions for midsize companies?
Choosing among famous vendors of ready-made applications, you should consider Microsoft, NetSuite, SAP, and Sage. If you want to get a good custom product, our team of keen developers is ready to work! Here’s another hint: opt for cloud solutions.
How much ERP development costs?
When it comes to pricing, be sure that you include all elements of the total ownership cost. Typically, 5-10% go for system management and maintenance, 10-20% are for infrastructure, 15-30% relate to the software itself, and 40-60% are all about HR, including training and operating expenses. For midsize teams, average ERP app will cost from $150,000 to $500,000.
The best ERP for midsize company
At the end of the day, the best software product is based on your unique requirements. Regardless of the company’s size, it’s recommended to choose custom apps that can be tailored to your business goals, including current and future ones. In DICEUS, we’re happy to deliver unique ERP systems for different industries: insurance, finance, construction, healthcare, travel, sports, e-commerce, and so on. We guarantee to consider all your requirements and develop the most suitable product without hidden costs. Consultations are totally free!