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Who's who among midmarket ERP vendors?

Whatever your ERP needs may be, knowing the makeup of vendor offerings is the first step in choosing the right software. Here is a quick look at midmarket ERP vendors.

ERP developers have been interested in servicing the so-called midmarket -- also called mid-range, small and medium-sized businesses (SMBs) or small-to-medium enterprises (SMEs) -- ever since they discovered that only 500 companies are in the Fortune 500 and many more are in the next tier down. Among ERP vendors, each has its own definition of midmarket, usually defined in terms of annual sales volume. Typical limits range from $50 or $100 million at the low end to $1 or $2 billion at the high end.

The general perception of the midmarket manufacturer is that their functionality needs are essentially the same as larger companies but they have less to spend on ERP, do not have the resources for complicated software and a prolonged implementation process, and demand software that is more intuitive and user-friendly because the users often have broader responsibility within the organization and must be very efficient with their use of the system. Midmarket ERP vendors try to cater to their needs.

Tier 1 vs. tier 2 ERP vendors

The ERP developer and supplier market has evolved in a tiered structure wherein several suppliers are considered to be tier 1 providers catering to large multinationals. SAP and Oracle are the undisputed kings of this tier, with several other contenders sometimes considered to be in the mix (e.g., Microsoft and Infor) that are really tier 2 providers, albeit very large ones.

Products from tier 2 ERP vendors offer industrial-strength functionality with less complexity, faster and simpler implementation, and lower cost. Many tier 2 ERP systems are installed and running successfully within tier 1 and Fortune 500 companies, but seldom appear in the corporate offices. Generally, tier 2 ERP systems are considered to be plant or division systems in what has become known as a two-tier or hub-and-spoke topography (e.g., SAP or Oracle at corporate headquarters; tier 2 systems at plants, subsidiaries and divisions).

Midmarket ERP vendors target a high-volume segment

The midmarket is the high-volume segment of the ERP world. Infor is arguably the leading midmarket ERP supplier with a number of products and thousands of customers. Microsoft is the other big player among midmarket ERP vendors, also with a large installed base. Both of these suppliers built their portfolio and user base through acquisition, but continue to develop their leading product offerings and build next-generation products and environments for consolidation and a clear upgrade path for existing users.

A number of other contenders are in the mid-range, of course, including long-time midmarket ERP vendors IFS, QAD, Aptean (formerly Consona, made up of Made2Manage plus a number of acquisitions), Epicor, Exact, Syspro and others. Note that there is a "tier 3" cadre of suppliers with smaller, lower-cost products for small companies. Tier 3 ERP products support a limited number of users, have limited functionality and expandability, and are sometimes built on Access or Excel, or may be open sourced software.

All Tier 1 and tier 2 ERP vendors offer hosted (cloud) deployment options either directly or through partners.

Most new ERP systems are cloud-based

Although new ERP systems come into the market from time to time, most are cloud-based offerings. Any new product is challenged to provide functional depth, which takes years (decades) to evolve, giving veteran suppliers a functional advantage, whereas new products are likely faster to incorporate technological improvements. The leaders among the "new ERP" products are cloud-based Plex and NetSuite. Plex has impressively deep functionality in a native cloud architecture. NetSuite is stronger on the distribution side with less manufacturing depth. Newer contenders include Rootstock and Kenandy, among others, built on the Salesforce cloud technology toolsets.

Midmarket manufacturers have many ERP choices in both cloud and on-premises deployments. Although tier 1 suppliers try to be all things to all types of manufacturing, which partly explains the high level of complexity in these products, tier 2 products are more likely to be focused on particular market segments, like industrial equipment, food and beverage, or consumer packaged goods. Market segmentation leads to more focused products with functionality tailored to the needs of the particular segment. Tier 2 vendors therefore are likely to offer either specific products for specific markets or tailored versions of their main product pre-set for each target customer environment.

Next Steps

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