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The Recession and Unfavorable Economic Climate is Helping Smaller ERP Systems to Shine

If you consider why many companies use the "big" ERP software solutions, those of who are well recognized by even not IT centric business folks, it's not surprising that the benefits of "small" ERP solutions are beginning to shine. These smaller sized enterprise systems solutions are quickly gaining traction because companies are looking for a quicker payback in light of the challenging economy.

With larger enterprise software implementations, most likely, a return on investment won't be realized years and in some cases even a decade or more out in the future. Given intense pressures to cut costs, any expenditures made in today's market needs to have a detailed ROI with a payback preferably within 12 months or less.

The reasons that larger sized companies keep their current ERP systems are quite eye opening to say the least. Surprisingly, the motive for keeping current systems has little to do with the functionality, tools, bells, and whistles of software application itself. Most companies do not switch from current vendors because the cost of scrapping old systems and implementing another large ERP implementation is too costly, the timeline of the switch is too lengthy, and getting employees retrained and up to speed on a new system would be too much of an organizational effort. All of which make it difficult for a new vendor to put his foot in the door of new prospects.

However, given the intense pressure for more efficiency and productivity in today's business climate, companies are starting to consider alternatives. Hence, the spotlight and benefits of smaller sized ERP solutions are starting to emerge. Specifically in the services sector, or human capital focused companies as opposed to manufacturing type companies. The reasons for considering a switch to these smaller ERP vendors all revolve around costs and return on investment. These smaller sized systems are less costly, are easier to implement, and are less cumbersome to use simplifying employee training and accelerating user adoption. All this leads to higher productivity, and a high return on investment which is paramount for most companies today.

These smaller sized systems are also easier to integrate and consequently are more nimble to adjust to changes in the business landscape that would be necessary to navigate or to capitalize on for mining new opportunities. Company performance seems to underscore this new trend. In 2008 the performance for the Global ERP software giants as a whole reported high single digit declines year over year whereas a significant number of smaller sized ERP vendors have reported year over year growth.

Analysts all agree that the large ERP vendors aren't going to disappear anytime soon, but it is clear that there are always opportunities in any industry for a better mousetrap and new ideas. The benefit of ERP systems is undisputed, its just a matter of getting the right solution for the right company. The opportunity for introducing ERP systems in smaller sized companies and shops are growing at a good clip. The benefits of an enterprise wide system means better decision, better utilization of resources and more flow through to the bottom line. For this reason, more and more midsized and smaller sized companies are now considering ERP implementation. With an attractive ROI, reduced capital outlay, and a shorter term payback, its easy to see why these "small" ERP systems are beginning to shine.

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