ERP software use grows in small businesses

By Karandeep Virdi

Content Developer

Allied Market Research

January 23, 2017

ERP software use grows in small businesses

Enterprise resource planning (ERP) has gained popularity as it simplifies the managing of business operations is gradually being implemented in small to large enterprises worldwide. The ERP...

Enterprise resource planning (ERP) has gained popularity as it simplifies the managing of business operations is gradually being implemented in small to large enterprises worldwide. The ERP software lets organizations access a system of highly integrated applications and assists in specific back-office activities. Large businesses have embraced the technology and the trend is gradually catching up with medium and small business. For small businesses, ERP software can boost sales, formulate manufacturing production goals, and develop high-quality parts required by the customer. Progressive Markets recently published a report on the ERP software market that covers market share, size, and growth.

Clearly, businesses of all the sizes can reap the benefits of an ERP software. It pushes small-scale businesses from paper-based systems and Excel spreadsheets to modern ERP automation, including digital scheduling and production-tool analysis. The latest software can be implemented at smaller businesses with a simple smartphone interface to access data and big-board electronic schedulers. Some solutions include on-the-floor installations or cloud-based ERP systems that can significantly eliminate the costs of maintaining expensive IT structure.

Not all ERP systems are developed in a similar manner, and small businesses, under 100 employees, are best suited to shop-floor management. A fully functional ERP system from vendors like SAP, Oracle, and others may not be suitable for smaller shops or businesses. Rich Henning, President, Henning Industrial Software (Hudson, OH), said that based on the features and functionality, the true potential of the ERP software is found in larger systems. He further added, “Robust ERP and shop-management software systems are fully integrated operational and financial management systems that are designed help SME (small-to-medium enterprise) manufacturers manage nearly all aspects of their businesses.”

ERP systems for small-scale businesses can support every functional area of a manufacturing unit. This includes the complete product lifecycle, including CRM, customer/prospect management, engineering, sales, job estimating, orders, scheduling, capacity and material-requirements planning, purchasing, receiving, labor reporting, and quality management.

The aerospace industry is ripe for ERP software use as it has witnessed significant growth over the last decade. Aerospace manufacturing includes rapid expansion of the commercial aviation segment and the budget-conscious defense sector. This has created lucrative opportunities for the ERP systems. In the commercial sector, the next-gen commercial airliners, such as Boeing 737 and the desirable private jets have lifted aircraft production.

In the defense segment, the U.S. military budget restraints place pressure on manufacturers to reduce costs while maintaining high levels of quality. Here, ERP software plays a vital role to help manufacturers remain competitive. In this space, ERP software vendors are having difficulty keeping up with the need for installation support as the demand continues to grow at such a rapid pace.

Jonathan Gross, vice president of Pemeco Consulting, an ERP project management firm based in Toronto, explained that clients are under pressure from their customers (aircraft and engine OEMS) and top tier suppliers to reduce costs and decrease lead times. “Generally, this means tighter integration and control among engineering, purchasing, manufacturing, and quality functions. In part, these efficiencies come from integrating ERP, PLM (product lifecycle management), and quality systems, and by automating workflows where practical.”

The cloud based model makes it easier for the defense industry to implement ERP as they can avoid the upfront software licensing costs. By opting for a cloud solution, you can avoid the entire Capex gauntlet common with choosing an ERP solution. Further, there’s now an inclination towards Software as a Service, or SaaS-based ERP.

The adoption rate in the aerospace and defense industry is relatively slow compared to other verticals, but shows a gradual upward trend. Also, adoption rate is high in developed regions like North America and Europe as manufacturers focus on implementing ERP systems for efficiency and quality. The adoption of cloud applications in different industries is further helping the growth of the ERP software market. The Asia-Pacific region has the potential to be a huge market as numerous small and medium enterprises are popping up.

Karandeep Virdi is a content writer at Progressive Markets who harbors an active interest in IoT technologies and software. He actively researches and writes articles for the upcoming trends and technological advancements in the industry, such as embedded devices, sensors, and software.