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Buyers, don't overlook small and midsize ERP providers

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Acumatica, Epicor, IFS and the Salesforce platform ERPs are among lower-profile players that are keeping up with the big four in cloud options and technical innovation.

The top ERP vendor by market share and revenue is SAP, with Oracle following at some distance and Infor and Microsoft typically competing for the third and fourth spots. These four also get the most attention from the press and analysts and end up on a lot of shortlists.

But it's worth looking beyond the top rung of ERP providers. Many smaller players have much to offer in speed of deployment, innovation and price. They're often the best vehicles for running ERP in the cloud or addressing industry-specific needs. Perhaps out of necessity, they lean toward the modular SaaS ERP architectures that the Gartner research firm considers a hallmark of "postmodern ERP" -- the leading edge of this now 50-year-old technology.

Small and midsize ERP providers -- which typically have annual revenues well below $1 billion -- can be a better fit for their fellow SMBs than the industry giants, the big four's low-end products specifically for small businesses notwithstanding. 

In this podcast, SearchERP News Editor Jim O'Donnell and I discuss his recent article on these ERP alternatives, identify advantages and disadvantages of smaller vendors and name-check the dozen or so players to know.

Drawing on analyst opinions, product announcements and a persistent feeling that a vendor is on the upswing or generating buzz, we highlight these five:

Acumatica

Gaining ground among SaaS ERP providers, Acumatica has been beefing up key ERP modules, such as payroll and manufacturing. It was among a small number of vendors joining Microsoft, Oracle and Infor in the leaders group in IDC's 2020 Marketscape ranking of cloud and SaaS-based ERP for midmarket companies.

Service-oriented industries have been Acumatica's biggest vertical, but it has recently gained customers in manufacturing and distribution. While SaaS may be the priority, Acumatica cloud ERP offerings include private cloud, and Gartner said the cloud platform and partner apps align well with postmodern ERP. However, in its 2020 Magic Quadrant on product-centric ERP, Gartner said Acumatica needs to build up industry-specific features for which it is overly dependent on partners.

Epicor

Founded in 1972 under a different name, Epicor is roughly as old as SAP and a true ERP pioneer. Its strength, according to Nucleus Research, is delivering specialized value to industries with complex ERP requirements.

Long hailed as an ERP technology innovator by analysts including Gartner, Epicor has been on an acquisition spree in the past two years, adding technology for e-commerce, warehouse management and content management to an already solid suite of offerings.

Gartner still terms Epicor a visionary for its understanding of cloud technology; the vendor still sells on-premises ERP but has strong private cloud and SaaS options. Epicor has recently been able to move beyond SMBs and attract large enterprises, but some customers have asked for more industry-specific features, and the partner ecosystem is considered weak outside North America.

FinancialForce

As one of two ERP providers on this list that run on the Salesforce platform, FinancialForce benefits from native integration with the market-leading CRM, with other applications hosted on the Salesforce platform and with Salesforce's Einstein AI. As its name implies, FinancialForce is mostly for accounting and financial analysis -- a sort of "ERP lite" that also has the project management features needed by consultancies and other project-centric services. Its target markets resemble those of Unit4, another small ERP vendor that was the focus of last November's podcast, but conspicuously lacks an HR module, which Unit4 has.

When paired with Rootstock and Salesforce, FinancialForce can almost form a complete ERP system for manufacturers, though you need a third-party HR application to complete the package.

IFS

Owned by the same investment firm as Acumatica, IFS has lately built on its longstanding strength in asset-intensive manufacturing (think aerospace, construction and utilities) to set down deeper stakes in enterprise asset management and field service management (FSM).

In a 2020 Magic Quadrant report on FSM, Gartner showed IFS substantially outpacing Oracle, Salesforce, SAP and ServiceMax in the leaders group. Formerly a niche application, FSM has been one of the hottest growth areas among ERP providers for several years. It has also been a proving ground for practical applications of emerging augmented reality technology, which gives IFS a chance to show its chops as a technological innovator.

Rootstock

Founded in 2008, Rootstock has quietly built a reputation as one of a small handful of SaaS ERP vendors serving specialized needs in manufacturing, distribution and the supply chain. It goes deep into its manufacturing specialty with solid tools for mixed production modes, such as make to order and engineer to order, and for vertical industries like electronics and industrial equipment.

A decade ago, it was the manufacturing module in NetSuite, the first SaaS ERP product. Now, like FinancialForce, it runs on the Salesforce platform and similarly benefits from integrated Salesforce CRM.

Nucleus Research said Rootstock has started enticing customers not already familiar with Salesforce to move on-premises ERP to the cloud. Salesforce Lightning application development and UI tools have helped Rootstock improve its ERP's ease of use and analytics, according to Nucleus, and the system can scale to accommodate customer growth and emerging technology, such as AI and IoT. Rootstock also recently tapped Lightning to offer low-code tools designed to let business users develop their own ERP applications, a trendy new feature from the market giants but still rare among smaller players, save perhaps for Epicor and Unit4.

Pluses and minuses of small ERP providers

While generalizations can be dangerous, it's probably fair to say small ERP vendors have the following advantages over the multi-billion-dollar market-share leaders:

  • Lower cost
  • Personal attention
  • Specialized industry knowledge
  • Faster deployment

But there are disadvantages:

  • Smaller ecosystem of developers and system integrators
  • Slower innovation
  • Fewer ERP functions
  • Less financial stability

Other vendors discussed in the podcast include Deacom, ECi, Kenandy, Plex, QAD and Sage Intacct. To hear it, click on the podcast link above.

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