Horizontal or vertical ERP: what needs your business?


Traditionally, companies were implementing a generalist ERP and then did custom development to include specific functions.However, increasingly exist in the vertical or specialized ERP market. What advantages and disadvantages of each option?

Since the appearance of the first ERP after the Second World War, there has been tremendous growth in the supply of providers and programs to manage corporate resources.

On the one hand we have the largest manufacturers of ERP : SAP , Oracle and Microsoft , with its various products; on the other hand, providers of ERP booming as Epicor , Lawson , Infor10 , etc. These developers addERP for SMEs ( SAGE , A3 , Exact ) companies ERP regional ( Solmicro ,Aqua eSolutions , etc.) and ERP software free (eg adaxa , Fedena or OpenBravo). The result? Hundreds of options to choose ERP for our company.

How can narrow your search to a more manageable number of possibilities? In previous articles we have discussed some useful criteria such as choosing between an ERP standard or custom . Now we will focus on another alternative that is equally important: go for a ERP landscape (which includes the usual basic functions in most companies) or ERP vertically (with specialized functions for a sector). Choose correctly can save a lot of time and money in settings.

ERP Horizontal vs ERP Vertical

First, we will look in more detail the differences between ERP and horizontally ERP vertical, and their main advantages and disadvantages. In the final part, we will give some tips that may be helpful in making a decision.

An ERP Horizontal (also known as ERP general or ERP generalist) is an enterprise resource planner software designed to perform the functions of typical management of any company such as accounting, billing, purchasing and sales, inventory, human resources, etc. You can use almost all companies, which is why most of the products ERP on the market that falls into this category. This amount and variety of provision also allows license prices are generally more affordable and faster implementation, relying on highly standardized modules. Moreover, competition between major manufacturers of ERP general makes innovation in this sector is faster due to the investments made ​​by these firms.

However, an ERP generalist can hardly reflect the specific processes of the activity of the company. Can be incorporated by developments customize the solution, but this triggers the cost of implementing the ERP and may also invalidate the support offered by the manufacturer of the ERP general. The result is often some of the most important business processes continue to be made ​​outside the scheduler software enterprise resource so much time and money has cost, which means giving up the main advantages of ERP .

Meanwhile an ERP Vertical (also called ERP specialized or ERP ) is a management program specifically designed for enterprise resource sector or niche. This allows for special features not usually available in the ERP horizontal. Consider a couple of examples: An ERP for construction industry includes tracking tools work plans; while an ERP for the wine industry can handle weather data, analysis of samples, etc. This specialization prevents developments as to adapt the solution to the business processes and allows you to work more efficiently, as the ERP speak the same language as the company. Of course, ERP vertical include common modules such as management, finance, procurement, etc.

The disadvantages of the ERP include the vertically that the available supply is reduced, the cost of licenses is often superior to those of an ERP horizontal, and maintenance and support can also be more expensive, to be unique to the company that develops ERP . Furthermore, often features specialized modules are inflexible to adapt to how the company that uses it works. On the other hand, large manufacturers often do not develop ERP niche, so that these products are usually offered by companies with more modest resources for R & D and more limited support.


Tips for choosing an ERP horizontal or vertical

Once you view the advantages and disadvantages of ERP general and ERP specialist, to make a decision should take into account the following aspects:

  • To what extent the company specializes or has a management different from the rest?
  • Are there specific vertical market solutions for our industry?
  • What experience and customer base credited solutions ERP vertical?
  • What kind of ERP use our competition? Do we want to imitate or differentiate?
  • What is the most important process or area for the company: production, logistics, design ?
  • What processes or areas management deficiencies or bottlenecks occur?
  • Does the planned one ERP general area that we identified as most important / poor?
  • Can the company afford the time and cost of adapting an ERP generalist?
  • How fast changing needs of the company? Will evolve ERP with them?

In any case, the boundaries between ERP horizontal and ERP verticals are blurring. Given the saturation of supply management software generalist, large manufacturers are betting on creating vertical zed solutions to differentiate and target specific market segments. For example, SAP already has versions of its ERP  for 25 sectors. In addition, ERP modern are more flexible: the basic solution can answer 75% of the needs of a company and the remaining 25% of specialized requirements can be met with a not very complex parameterization. Finally, many companies are specializing in tailor ERP horizontal to vertical sectors, which allows you to enjoy the advantages of both options at once. So ideally, first check if there is an ERP generalist who can cover most of the needs of the company and what cost would include the rest; and if the cost is too high, valuing the option to implement software ERP.

Your company uses a generalist or specialist ERP? What?

Platform9 or how to build your own cloud

cloud, Platform9

A group of ex-engineers have founded Platform9 VMware, a company that describes itself as the Salesforce.com for managing private clouds.

The service has been created by former employees of VMware, who founded his own company Platform9 , and which is expected to facilitate the work of professionals who want the best of a public cloud with a private access and security that have unique data center for the company and fully managed.

Platform9 thus acts as a SaaS built on an OpenStack-based and works with KVM , but will in the near future also with Docker or vSphere. Its main advantage is that it allows, as a cloud service, be no need to install, configure or update anything. In 5 minutes an administrator can have the system working perfectly.

For now Platform9 is in beta and although its main competitors seem like ServiceMesh services, or Mirantis MetaCloud, its creators are Amazon Web Services somo its main competition. The service has already secured $ 4.5 million in funding from Redpoint Ventures , and VMware experience of its founders will surely help you succeed Platform9.

What essential modules must include an ERP?

Erp module

Today we find ERP programs with just half a dozen modules and other exceeding 30 Modules, market Is better because it has more ERP modules? Not necessarily, lets see what are the most important to include.

As explained in a previous article, one of the main advantages of ERP is that there is a single program, but a software package that includes several tools connected together in order to manage an integrated all resources a company. Each of these tools is called a module and performs various functions.

But then how many modules have an ERP ? It is a difficult question to answer, because the number of modules varies by manufacturer or type of business that the software addresses. For example, a system ERP for SMEs whch has six core modules; while a program for midsize companies like SAP Business One includes 13 modules; and the ERP for large companies such as offering Oracle and other vendors the figure can skyrocket up to 30 modules or more!

However, enterprise resource planner that has more program modules is not necessarily better: we must keep in mind that each additional module increases the cost of implementing an ERP and not all businesses need the same modules. In this sense, it offers good review manufacturers ERP  to ensure that does not require us to implement modules of ERP we do not require or will not use for now.

Then we will give a brief overview of the essential modules that include (or should include) the majority of ERP and then see the modules that are optional to end up with a few tips.

Essential system modules ERP

The modules are generally present in most software ERP are:

Production / Inventory : is the area in which focused first ERP and consists of tools to plan production, purchase of raw materials, manage the store, always know where each part or finished product, etc. However, it is a module that is losing weight as the ERP no longer unique to manufacturing companies to be extended to service companies.

Finance: now is the linchpin around which revolve almost all ERP , since most companies tend to implement this type of program to improve financial management. The financial module in an integrated handles everything related to the economic activity of the company such as budgeting, accounting, cost control, bank accounts, paying bills and receipts, taxes, etc.

Human Resources: This module covers all aspects of the personnel of the company, from salaries and wages to the employee information, performance evaluations, and attendance, etc. The ERP may include other more advanced functions such as career planning, job descriptions, incentives, etc.

CRM : Customer Relationship Management (or management of customer relationships) is an element that is used to administer separately using software CRM specific. But increasingly it also chooses to integrate the ERP , because of the close links it has with other modules such as production, inventory or sales.

Sales: It is another aspect of the business that tends to progressively integrated into the ERP and covers all the business of the company, from the generation of offers and budgets shipping products, track orders, etc. Sometimes modules Sales and CRM bind, especially in the ERP for SMEs.

SCM: Managing the Supply Chain ( SCM ) is an activity that has been freeing module production / inventory due to its importance for companies. Includes purchases from procurement and distribution of the final product or service, through intermediate flows with suppliers and customers.

Optional modules of an ERP

The amount of additional modules that can be incorporated into software enterprise resource management is almost endless. Some of the extra common modules are:

  • Marketing to manage promotional activities (sometimes integrated with Sales).
  • Business Analysis: get a strategic overview on the company.
  • Project management: planning, budgeting and implementation of non-repetitive tasks.
  • Management Product Lifecycle ( PLM ) is the entire process relating to a product, from its design and launch to the end of its life on the market.

Other newer modules that progressively tends to add to the ERP include, for example, the e-commerce to sell online, or the  document management for scanning documents and move towards the paperless office. Finally, we must take into account the specialized modules that can incorporate the ERP vertical : from the management of transport companies floating on the aftermarket and customer support manufacturers.

In any case, we must never lose sight of the real needs of the company at the time of implementing the ERP , to avoid adding modules that are not needed. We must also take into account the flexibility offered by the  ERP to incorporate new modules as you need them in the future, since the supply is increasing.

What is ERP and what are the advantages to the companies that implemented?

advantage erp

Most of the companies have an ERP, according to the study 2013, a figure that rises to 62.8% for large companies. But what exactly is ERP? And what are the benefits that justify its implementation, not always easy? We will learn more about these programs.

What is ERP? This “famous” acronym we hear so often are in Enterprise Resource Planning and usually translated into Castilian as System Enterprise Resource Planning or Enterprise Resource Planning. As its name suggests, it is software packages that allow business management plan and control resources and business processes of a company.

The ERP emerged in the United States during World War II. Taking advantage of the first computers, the American authorities created rudimentary management programs to plan and control the production war effort. After this kind of software passed the business sector and was developed into what we now know as an ERP.


The keys of an ERP

Unlike planning programs primarily focused on production, ERP solutions that are modern cover all areas of a business organization: finance, accounting, billing, sales, marketing, logistics, production, inventory, payroll, etc. To that end, the programs ERP are formed by different modules or tools corresponding to each of these areas. Thus, the company can decide which modules will be implemented at all times depending on the activities you need to manage your business. Therefore, the implementation of an ERP is always in some part a measure as well as chooses which modules are implemented; a process is required to fit the specific operation and the idiosyncrasies of individual companies.

In addition, unlike a pack of applications that operate separately (as might be the popular office suite MicrosoftOffice) in an ERP  all data is  integrated and connected . Thus, the company ensures that information flows seamlessly from one module to another and can gain valuable centralized overview of the status of your business, which can not be achieved with any other business program.

It is also necessary that the ERP is upgradeable as time can vary both the needs of the company (eg launch of new products and services, opening offices, creation of departments, etc.) and the environment in which it operates (eg changes in procedures to overcome an audit and be certified ISO , or changes in the legal framework and regulations SEPA ). In this sense, there are providers that offer upgrade plans to update the ERP without discarding all the investment made so far.

The advantages of an ERP

In a summary, the advantages of implementing enterprise software ERP are:

  • Increase productivity
    The ERP allows the entire company to work with the same applications and automate many business processes, which helps employees to work harder and better.
  • Increases control
    With ERP, you can know when everything is happening in the company. For example: Who has made ​​a sale? How much inventory is left? Are unpaid bills?
  • Improves safety
    he information ERP is standardized and is traceable. So the risks are avoided dispersed information, loss of data, unauthorized access, etc.
  • Optimizes Service
    Just access the ERP , it is possible to know the exact status of a client, when your order will be served, if you have unpaid bills, claims or complaints, etc.
  • Generates savings
    The ERP reduces operating costs by automating business processes, increasing employee productivity and reducing the risk of error.
  • Supports decisions
    Many entrepreneurs say they have all your business in the head. But when the company grows, it is no longer possible: the support of a required ERP to make informed decisions.
  • Create corporate culture
    Implement an ERP requires all departments to document, systematize and coordinate their work processes. This is a professionalization of the activity.
  • Drives growth
    When a company acquires a certain size or complexity, ERP is the tool to manage the business professionally, instead of going putting out fires.

All these advantages translate into tangible and measurable results for the company. According to a study by consultancyPriceWaterhouseCoopers , implementing an ERP improves the quality of information by 65% of enterprises; reduces the need for staff in 35% of cases; and lowers costs Information Technology in approximately 20% of the implementations. However, these benefits are not immediate, because implementing an ERP is a process that requires time, effort and investment but then just worthwhile!

Does your company have an ERP? Do you think you need it?

Underlying Tensions of Small Business vs. Corporations

small business

The goal of every small business is to grow up to be a big business someday. Until that time comes the relationship between a small business and a large corporation can be rather strained. Big businesses tend to dominate the marketplace, making it hard for small businesses competing with the big guys. This can lead to uncertainty for small businesses struggling to survive. Large corporations may be getting a greater share of the marketplace, but they also must fend off challenges from small businesses which have the ability to be more flexible in their product and service offerings, even though they can’t pull in the resources the big guys have at their disposal. Regardless if you are a small or large, business Ethernet is a must have for conducting necessary business.

Survival of the Fittest

The underlying tension is a survival instinct. Small businesses fear, number one, that they won’t be able to match price or that they won’t have enough resources, staff, or time to pull off their projects and make enough money to grow. While large businesses fear they will and then present a huge challenge to their own business models that won’t be able to react swiftly enough. Big businesses fear losing their business overnight to a more nimble competitor.

The Internet: The Great Equalizer
Even though small businesses don’t have the capital available to large businesses it’s a great time to be a small business because the Internet evens the score in many ways.

The Internet has provided a boon to both small businesses and large corporations. Small businesses can leverage their websites to appear bigger than they actually are, thus grabbing some of the prestige of a larger business. Large businesses can use the Internet to cut costs even more significantly and make them more responsive by automating help functions and product ordering online.

However, the internet has also been ideal to create distinct niches for both entities, thus helping to eliminate some of the tension. For instance, small businesses can make use of online local listings more than a big business, which has a global business model. They may both still be using the Internet, but they are learning to compete in different marketplaces to keep both alive and thriving.

Technology Can Blur the Line Between Big and Small Businesses

The price of technology has drastically dropped as the capability and functionality have increased. That means that even small businesses can now afford to use technologies like VoIP and cloud computing. Broadband is available for small businesses, making it possible for them to deliver many of the remote services that only big businesses were able to afford previously.

Small businesses may not have the money to hire a large staff or the resources to buy equipment, but they don’t have to these days. If they have a secure, and efficient, connection that allows them to communicate without the need to hire more staff, like an online website, they can leverage technology to save them money while growing their business more efficiently.

Large businesses also can reach out to their locations around the globe by invoking communications technologies that have that reach without additional expenses in hiring or even laying transoceanic lines (when’s the last time you heard of that happening?).

As long as they have a good provider, they can leverage that infrastructure with offerings like Software-as-a-Service that will allow them to continue to offer their products and services anywhere in the world at a fraction of the cost in the past. It also offers them the flexibility of changing their online offerings quickly without incurring massive development and infrastructure costs normally associated with large businesses.

As both small and large businesses learn their defined niches online, they will continue to reduce tensions and create a healthier economy where both small and large businesses can prosper, but not at each other’s expense