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Cloud-based ERP may be a lifeline for many small to medium-sized businesses as they struggle to respond to the challenges of the COVID-19 crisis.
Although many ERP projects may be endangered by the pandemic, some organizations -- SMBs in particular -- may find they can't not afford to have ERP.
There's certainly no single need to convince Rebecca Ogle, CFO at Safety Management Group (SMG), that cloud ERP has made a huge difference during the crisis.
Based in Indianapolis, SMG provides corporate safety program consulting services such as OSHA compliance for organizations across the U.S. The company had implemented a cloud-based ERP system from Acumatica in October 2019 to replace a "patchwork quilt" of old software applications for invoicing, payroll and financial reporting, Ogle said.
Acumatica, based in Seattle, provides cloud ERP systems primarily for smaller manufacturing and services companies, as well as public entities like fire departments.
For SMG, the new Acumatica system was an immediate success for several reasons, which include enabling SMG's remote advisors to enter time and expense reports from anywhere in the country, Ogle said.
However, the system proved critical when the pandemic forced SMG to initiate a work-from-home order for its Indianapolis-based employees.
"When we were told we had to work from home around March 16, everyone packed up their laptops and we literally have not missed a beat," Ogle said. "I heard it took some companies a week or 10 days to set up shop from their remote locations. But we were able to pick up and the next day it didn't matter where they were sitting, Acumatica was all they needed. It's made a huge difference for us as a company, because you don't want to have to worry about your foundational functions not working full tilt, and we haven't had to worry about that at all."
Keeping the business running
For SMBs that deployed cloud-based ERP systems, the decision may keep them in business during the pandemic and after, said Jon Roskill, CEO of Acumatica.
"I'm sure we're going to have a few customers that go out of business as a result of the crisis, but broadly speaking, our customers are up and running," Roskill said. "This is because a company like a lighting distributor or auto parts manufacturer made the decision a couple years ago to build a modern software infrastructure to run their business on."
Cloud ERP has definitely made it possible for some companies to keep going during the crisis, said Shawn Windle, founder and managing principal of ERP Advisors Group, a consultancy in Lakewood, Colo., that works with organizations on ERP implementation and management projects.
ERP Advisors Group focuses primarily on SMBs that are moving from older ERP systems to cloud deployments, Windle said. He pointed to one client that made the move from a legacy system to Infor CloudSuite Industrial and hasn't missed a beat.
"While it's kind of a luxury to move to new software now, they bit the bullet and moved to cloud and all of their salespeople were able to sell, their purchasing people were able to buy, and they were able to keep things moving with limited exposure to the guys in the warehouse, so they've been able to keep going," he said.
Midsize ERP vendors with pure cloud platforms like Acumatica and Sage Intacct that have specific industry functionality may fare well during the pandemic, while large industry players like SAP and Oracle may struggle in their efforts to move customers from legacy on-premises systems to cloud-oriented platforms, Windle said.
"The big guys are still going to have the challenge of huge custom installs that people just don't want to get off because they know it's going to be a nightmare," he said. "The horizontal solutions that can position for lots of different industries will come out like gangbusters."
Take the load off IT
Cloud ERP is having a moment now because companies are swamped with IT challenges, said Scott Deakins, COO at Deacom, a firm in Philadelphia that provides ERP systems for manufacturing and distribution.
"A lot of CIOs are overwhelmed right now; they're being called on to juggle a lot of different initiatives to help overcome some of the challenges here. And [if they have] their ERP infrastructure in the cloud, it gives them one less thing to worry about," Deakins said. "That's from a usability perspective, a security perspective and an uptime perspective; they have people accessing systems all throughout the day now [with more employees working from home]."
Deacom systems primarily focus on process manufacturing, used for products like pharmaceuticals or beverages that are made using a specific recipe. Many of the companies involved with process manufacturing have been designated as essential industries. In fact, most Deacom customers have seen a 10% to 20% uptick in their business, Deakins said, so they must bring on temporary employees to production and warehousing areas, while having their back-office team work remotely.
"Right now, a lot of these companies are just trying to focus on maintaining infrastructure, while also making sure that they're supporting the business," he said. "Because Deacom is a web-based platform, they're in a pretty good spot to be able to focus on doing what they can to keep the business running and not focused on maintaining their ERP infrastructure."
Cloud ERP can handle new requirements
That perspective is echoed by Steve Murphy, CEO of Epicor. The vendor provides a variety of ERP applications, primarily for manufacturing and distribution, in on-premises and cloud deployments, but Murphy has seen an increase in customers wanting cloud ERP.
"We are seeing more come to us now about SaaS for all the usual reasons. They can work more remotely and don't have to worry about getting someone into the plant or into the office and having COVID-19 contamination," Murphy said. "If [running ERP systems is] not your core business, and when you're really focused on just getting through a crisis, a lot of folks are thinking they just really would like to not have to worry about this at all. So that will push some businesses toward the cloud."
Many SMBs are still running the business by passing around Excel spreadsheets over Outlook, which becomes even more unworkable when people are working remotely, Murphy said.
Shawn WindleFounder and managing principal, ERP Advisors Group
"If you're running on Excel spreadsheets right now, you could have thousands or tens of thousands, and it's really hard to push them around the internet on Gmail or Yahoo Mail, so it's a mess for somebody in that situation," he said. "You're probably going have to get off the spreadsheets to future-proof yourself from this kind of a thing, and there are variety of things you can do to not have a heavy implementation."
SMBs can get started on implementing a relatively less complicated SaaS ERP deployment now and be up and running in a few months, Murphy said.
Most SMBs will use an implementation partner to get the system up and running, and the partner must be chosen carefully, Windle said. This was important before the crisis, but it is critical now.
"There's the normal stuff of making sure you get good implementation resources and that they know your business, and not just look at the applications," Windle said. "But you also need to look at their viability, because a lot of these partners may be very busy right now, but their pipelines are running lower and we may see a reduction of implementation partners. You want to do business with someone who's going to be viable for a while."