ERP for SMBs

For small and midsize businesses, enterprise resource planning implementations can be dicey endeavours. ERP rollouts involve not only huge capital outlays, but also long implementation times, significant IT resources and intense cultural change.

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These factors can be especially daunting to a small but growing business attempting to move off of familiar QuickBooks or Excel spreadsheets.

The average SMB ERP implementation takes 10 months, though the installation work continues long after the go-live date hits, according to recent Aberdeen Group survey data of 920 SMBs.

The financial costs can be just as significant: SMBs with less than $50 million in annual revenue will typically pay nearly $300,000 for ERP software and services, while larger businesses (revenues between $100 million to $250 million) will spend $1.4 million, the survey data states.

"Given this level of investment, one would think ROI would be top of mind for most companies," writes Cindy Jutras, VP and research fellow at Aberdeen in a March 2009 report, "Measuring the ROI of ERP in SMB" (registration required).

But it's not. The data shows that 52 percent of respondents "sometimes" or "never" estimate ROI in order to cost-justify an ERP project (48 percent "always" do it). And post-rollout, 75 percent "sometimes" or "never" measure ROI after the completion of ERP projects (just 25 percent do this "always").

In other words, many SMBs feel "compelled to make this investment," Jutras writes, "simply because they view ERP as a necessary infrastructure to support the business."

Of course, Jutras's point is that determining ROI pre- and post-rollout is key to achieving success with ERP projects, especially with resource-challenged SMBs in these tough times.

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