What Is ERP Software?
An enterprise resource planning system helps organizations track information across all departments and business functions, from accounting to human resources to sales and beyond. Common ERP functionality includes:
- Product and purchase planning
- Manufacturing and delivery planning
- Inventory management
- Shipping and payment
- Supply chain management
- Marketing and sales
- Customer relationship management
The term “ERP” took root in the U.S. around 1990 as a growing number of organizations required integration outside of—but not exclusive of—their manufacturing applications. They needed to share data from their MRP system with say, their financial accounting, customer relationship, supply chain or other applications. Enterprise planning software was introduced to describe a broader system that integrated each of these applications. The top ERP software packages will cover the following application categories.
A Comparison of Top ERP Solutions
There are many popular accounting solutions on the market, and it can be hard to know what distinguishes one product from another and which is right for you. To help you better understand how the top accounting systems stack up against one another, we created a series of side-by-side product comparison pages that break down the details of what each solution offers in terms of pricing, applications, ease of use, support and more.
Common Features of ERP Software
|ERP Accounting||Accounting systems help organizations manage their financial transactions. At its core, it will have a general ledger, accounts receivable, accounts payable and payroll. Vendors often develop additional features and functionality to meet unique business and industry needs (e.g., Sage Nonprofit with fund accounting). Example vendors include Sage accounting software and Microsoft Dynamics.|
|Business intelligence||Business intelligence, as a term, gained widespread adoption in the late ’90’s. However, the technology has existed in some shape or form since the ’60’s. It is used to analyze and report business data to help companies make smarter business decisions. Core functions include analytics, data mining, reporting and more. An example vendor is SAP.|
|Customer relationship management||A CRM application is used to manage interactions with prospects, customers, clients and/or partners. It tracks activity across all departments: marketing, sales and service. Core applications closely align with these departments. They include sales force automation, marketing automation and service and support. CRM aims to increase customers, revenue and customer satisfaction. An example vendor is Oracle.|
|Human resources||Modern HR systems help organizations manage traditional HR activities such as personnel tracking and benefits administration, as well as new strategic HR initiatives like talent management, employee evaluation and learning management. Example vendors include Epicor and Lawson Software.|
|Inventory management||An inventory management program helps companies track up-to-date information about their product supply. Its aim is to maintain optimum stock levels so that companies avoid depreciation of inventory and overspending, and ultimately maximize profits. There are different types of inventory programs to meet the unique requirements of different industries and companies. For example, a food distributor will have different inventory management needs than say, an apparel retailer. Sample products include MAS 90 and 200 Software.|
|Manufacturing||We wouldn’t have enterprise resource software if it wasn’t for manufacturing resource planning software. Today, it’s at the core of many well-known ERP systems. Other manufacturing applications and/or modules include manufacturing execution systems (MES), bill of materials (BOM), product life cycle management and more. Example vendors include NetSuite, Infor and Sage.|
|Supply chain management||The supply chain management (SCM) application tracks goods as they move from manufacturing facilities to distribution centers to retail stores. Common applications include: supply chain planning to adjust inventory as demand changes; supplier management to monitor performance of suppliers; warehouse management to track placement of goods within a warehouse, and others.|
What Type of Buyer Are You?
Before evaluating options and performing an ERP software comparison, you’ll need to determine what type of buyer you are. Over 90 percent of buyers fall into one of these three groups:
Enterprise resource planning systems buyer. These buyers require integration of data across all departments. They want to have everything in one system and avoid the technical challenges of integrating disparate applications. These buyers favor complete ERP solutions like SAP, Microsoft Dynamics, Infor, Epicor, Oracle and others.
Best-of-breed buyers. These buyers require a single component like a standalone CRM system or a HR system. They often need greater functionality and more features than what is offered in an integrated suite. Because of the functional depth these buyers require, it’s important that they spend time evaluating reviews for specialized systems instead of integrated suites.
Small business buyers. A year ago analysts predicted that the average company would have 18 employees before adopting an ERP system. Five years ago the average number was 29. Statistics aside, more and more small businesses want to leverage ERP technology for better business performance. In the past, high upfront costs and technical challenges kept many small businesses out of the market. But with a growing number of cloud options, small business buyers have a new opportunity to implement enterprise-level technology. Of course there are still on-premise or client/server options still available for small businesses.
Market Trends to Understand
There are several trends playing out in the market. ERP software vendors are consolidating, adoption of software as a service (SaaS) is growing and more. Here we’ll highlight a few you should know about.
Vendor consolidation. The consolidation of ERP products isn’t necessarily a new trend. Mergers and acquisitions have always been a part of this market’s history. However, the rate at which it’s taking place and the implications it has for buyers are worth mentioning. Large vendors continue to acquire niche vendors to round out their product lines, acquire excellent technology or to expand into new geographic markets. Buyers need to consider this when evaluating systems. In a worst-case scenario, their provider gets acquired, the product gets sunsetted and support and updates are no longer available. Avoid this situation by considering a vendor’s financial and strategic viability.
Adoption of software as a service. SaaS or Web-based ERP is an appealing alternative to traditional on-premise systems. The initial investment is lower, the implementation can be quicker, the user interface is familiar (it runs in a Web browser) and companies don’t need full-time IT staff to maintain servers and hardware. Most ERP vendors now offer—or have plans to offer—some kind of Web-based option.
Mobile app development. Vendors have responded to rapid growth in smartphone adoption by developing mobile interfaces for their ERP software systems. For example, Oracle already has a mobile client, so do SAP and Epicor.
Social media integration. Although very much in its infancy, many ERP companies are developing social media tools to keep abreast of the bigger trend playing out. Internal tools are being developed to foster greater collaboration among employees, while integration betwen ERP programs and outside networks such as Facebook and Twitter is also taking place.
What Is the FrontRunners Quadrant?
A Graphic of the Top-Rated Enterprise Resource Planning Products
FrontRunners uses real reviews from real software users to highlight the top software products for North American small businesses.
Our goal is to help small businesses to make more informed decisions about what software is right for them. That’s why we engineered FrontRunners.
To create this report, we evaluated over 150 Enterprise Resource Planning (ERP) products. Only those with the top scores for Usability and User Recommended made the cut as FrontRunners.
Scores are based on reviews from real software users.
What’s the Difference Between the “Small Vendor” and “Enterprise Vendor” Views?
The Different Graphics Show Different Sizes of Vendors
Small and Enterprise refer to the size of the software vendor company—not necessarily the size of customers they serve.
We break vendors into two groups for two reasons: It’s a more equal comparison of products, and software buyers have told us it’s helpful.
To determine who’s Small and who’s Enterprise, we look at how many employees the vendors have. All products in FrontRunners, whether Enterprise or Small, are evaluated using the same process.
Each graphic shows the top 10-15 performers for each the Enterprise and Small vendor categories. You can switch views simply by clicking on the version you’d like to see (above the graphic). You can read more in the full FrontRunners methodology here.
How Are FrontRunners Products Selected?
Products Are Scored Based on User Reviews
The gist is that products are scored in two areas—Usability and User Recommended—based on actual user ratings.
To be considered at all, products must have at least 20 reviews published within the previous 18 months, and meet minimum user rating scores. For example, vendors were only considered for this market if they offered both core financials, human resources and inventory management as well as at least three of the following: data collection and analysis, supply chain management, manufacturing planning, enterprise asset management, warehouse management or customer relationship management.
From there, user reviews dictate the Usability and User Recommended scores. Usability is plotted on the x-axis and User Recommended on the y-axis.
You can download the full FrontRunners for ERP Software report here. It contains a table showing the scores of each product in the Frontrunners report.