2020 ERP Trends and Predictions: Is 2020 the year SMBs invade ERP?

 

If there was a theme for 2019, it was the year cloud-based ERP finally arrived. No longer a novelty, cloud ERP is the new normal, the “big deal” — the baseline paradigm.

But if 2019 was big, 2020 will be small … and medium. For our Annual Report on the State of ERP, we sat down with Shawn Windle to reflect on 2019, and discuss why 2020 is the year the SMBs invade ERP.

Highlights:

  • The three biggest ERP trends for 2020
  • 2019 was one of the best years for ERP that we’ve seen
  • Everyone is investing in software: small businesses, large ones, you name it
  • Industry-specific ERP solutions for micro-verticals
  • The stark reality: ERP implementation is hard, which is why finding the right people is so important
  • The time to invest in ERP is now

Short on time? Here are the 3 biggest 2020 ERP trends:

  1. Companies and organizations of all kinds are investing in software. And that includes everyone from gigantic government agencies to emerging startups.
  2. Industry-specific solutions are dominating their respective fields. The deployment cost of bringing new applications to market is lower than ever, meeting needs of the most demanding micro-verticals.
  3. ERP implementation partners are coming of age. They are meeting the challenge of understanding your business, the product, the technology, the configuration, and the customization you need.

Our biggest prediction for ERP in 2020:

We’re expecting 2020 to be the year of SMBs — the year that ERP for small and midsize businesses will finally become a cost-effective reality. And for SMBs with an annual revenue between $50 million and $500 million, the number of ERP software options available in 2020 will be truly awesome.

Transcript:

My name is Shawn Windle, and I’m with ERP Advisors Group. I’m the Managing Principal and the founder of the organization. And what I want to share today with you are some ERP trends from 2019. It’s been a really interesting year for ERP: I’ve seen a lot of changes over — probably the last 10 years or so, from a cloud-based perspective, but 2019 in particular.

There are three things that happened that I’m really, really excited about, and I think probably make 2019 one of the best years for ERP that I’ve certainly experienced. 

The first thing is that companies and organizations of all kinds — nonprofits, government agencies, you name it — everybody’s looking at investing in software. We have a lot of people that are out in the market that are looking at their business processes, and the reports, and kind of all the information that they need, and they’re saying, “I’m going to the market and I’m going to find a solution for that.” 

Of all the years that I’ve worked in this industry — gosh, probably 25 — I have really been astonished at the size of organizations (from teeny tiny to super, super big, as well as just the different types of organizations that are out in the market) really looking to automate their processes with ERP. I think that’s super cool, because it does show that there’s a lot of interest, but there are also a lot of interesting solutions in the marketplace too, which leads to the second point that I have.

We’re really seeing that there are a lot of different types of software in the market that are very specific to industry, not just, say, wholesale distribution — but also to contract equipment manufacturers for high tech electronics, very specific solutions. 

So it makes our job as selections consultants pretty interesting because we have to go out and really understand the solutions that are there and figure out what’s really best for our clients. Which is great, because there are a ton of great applications out there.

I think with what we’ve seen with cloud — and I think the deployment cost of getting a new application into the market is a lot less than it’s ever been. For instance, when I think back to my days at J.D. Edwards and PeopleSoft, the software application vendors had to build a huge framework, and then they’d build business processes on top of that, or business applications that then they’d go to market with.

It’s not that way anymore. There are several organizations that build apps on top of Salesforce, on top of their platform, that almost overnight they can come in with an industry-specific solution for a micro-vertical. Not just a vertical, but a micro-vertical. And boom, there’s a great product that’s available.

Of course, you’ve got to look at longevity, and you have to look at how many customers they have and how much R&D they have for the long term. But it’s exciting to us to see the types of solutions that are coming into the market.

And then the third thing that is probably the most beneficial for our customers is that I feel like the implementation partners, the systems integrators, the value-added resellers … we’re really seeing a lot of companies come of age. And what I mean by that is the implementation partners know how to do what you would think they’re supposed to do. 

So, you know, truth be told, implementing ERP is really, really hard. This is not the kind of stuff that you want your kids to do when they grow up. Just kidding — it’s not that bad. But getting an implementation partner that understands your business, understands the product, understands the technology underneath the product, understands the configuration, the customization, the reports, the analytics packages, everything else that goes with this, is kind of challenging. It’s really challenging. But what we’re seeing from an ERP advisor’s perspective across the many, many selections and implementations that we did this year is that we really feel like our partners are strong.

And as I said, they’ve really come of age. They’ve been through lots of different experiences with the different products that they represent, and they’re good. So as always, on all of our conferences, everything I talk about, the implementation partner — and our experience is usually more important than the software solution because the software solutions are more on a mature kind of path.

Again, it’s a huge trend in 2019 as we see that these implementation partners are really stellar. Now, don’t get me wrong — there are always some out there that you have to watch out for. But with some simple questions up front, you can figure out who really are the best ones. 

So those are really the big three changes that we’ve seen in 2019: definitely micro-vertical-based solutions, we’ve seen strong technology platforms, we’ve seen solutions that have really come in and that are really at kind of a whole new level of capability in terms of industry focus. And then the implementation partners: there’s some great partners in the market, and it’s easy to go out and do business with these guys too.

Looking Ahead: ERP in 2020

We’re expecting 2020 in terms of ERP to be the year about SMBs — small, medium-sized businesses. Because we kind of have these really interesting forces that are at play where we have the large vendors that focus on bigger companies like Workday or Oracle — they’re kind of moving downmarket. And then we have the companies that have traditionally focused on smaller businesses, let’s say NetSuite, that are going upmarket. 

So you’re going to have, I think if you’re in this — maybe I’d say 50 million in revenue, upwards of 500 million in revenue — that might equate to a hundred or two hundred people, upwards of maybe 5,000 employees, somewhere in there (that’s a big range, kind of depending on how you look at it) — your options for software are going to be awesome in 2020.

Everybody has different predictions on the economy and politics and the government and all that stuff. I’m definitely not going to go there, but we are still seeing that our clients are willing to invest in a lot of infrastructure to make their operations better. 

And so I’m super excited for the people that we haven’t even talked about and haven’t met yet in 2020, because I think in that market space especially, you’re going to have a ton of great options for software and a lot of good vendors. I think it’s really going to be the year where, if you’ve been on the fence, kind of waiting to see, “Well, is this cloud thing for real?”

It’s for real. We do know that. “You know, well, what about robotic process automation and AI, artificial intelligence, and you know, cryptocurrency and kind of these other trends and we’re not sure about … and what about the economy and you know, is it, does it really make sense to do this from a tax basis?”

All of these factors are still kind of coming in to say: investing in technology, especially enterprise resource planning, makes a ton of sense. And honestly, if it didn’t, I’d tell you. 

And there are some businesses that we talk to that we say, don’t do it. I just got off the phone with a company that we’re going to basically say, “Well, let’s leave your line of business application out in the manufacturing plant, but then we can get something back at corporate. They can let you do some more financial planning by bringing in a trial balance with a better process.” 

So I really do honestly feel like 2020 is going to be the year for SMB for ERP.

 

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