Johannesburg, 26 Sep 2022
Many things define the current era of software. But almost certainly, the most impactful is how choices evolved from tightly-coupled on-premises monolithic suites to decentralised cloud-native software platforms.
One of the impacts of this change is that enterprise-grade software, freed from tremendous upfront costs or ongoing overheads, has become more accessible to medium-sized enterprises.
But what about larger companies? Should they stick to those large applications? For industry and ERP veteran Grant McClymont, who recently joined ETS as Executive of ERP & Enterprise Applications, the trend is towards today's cloud-native midmarket apps.
"Organisations that were once nervous about transitioning to a cloud-based strategy are now more confident that it is possible. Not many years ago, people were suspicious about having e-mail in the cloud, but very few organisations now have an e-mail server. There are fewer reasons for companies to have enterprise applications, such as financial management systems running in a company server room or data centre."
Cloud is one of the key technologies disrupting the future of business software, and every forward-thinking company has a cloud transformation strategy. Some primarily see the cloud as merely a good place to "put" current applications - doing a 'lift and shift' of an existing on-premises application onto cloud infrastructure to save some money in the short-term. McClymont thinks companies should look deeper than this approach and also look to improve during this migration.
"Lift and shift is not necessarily good value," he says. "Cloud-native platform applications offer much greater value and make more sense for businesses that want to improve what they have. You won't get those results if you just put what you have in a different place."
Putting your current ERP in the cloud without refreshing the solution architecture could mean you still maintain many classic enterprise software issues that mid-market competitors avoid.
What are the advantages, and is mid-market software suitable for an enterprise?
Are there benefits from choosing mid-market software?
McClymont's career provided him with experiences in the trenches of ERP projects, and he notes several problems with more established enterprise ERPs. First, they are financially demanding and require large, long-running deployment projects. Second, companies don't use many of the ERP's features – which substantially increases the "cost-per-function" of your ERP. And third, monolithic enterprise apps are inflexible unless you count the additional costs and time that go into adding modules, often with limited functionality.
Mid-market software counters these points in several ways, starting with their most crucial attribute: "The leading new software choices are solution-centric and platform-first, then they add the extra services on top using the platform capabilities available as required.
"This makes it easier to select the feature sets that you need, drastically lowers the cost-per-function and increases value. Cloud application platforms are also more flexible as you can add functions without much fuss. These can be other applications using the platform, new features built by the vendor, or third-party enhancements from the platform marketplace. And what you don't need, you get rid of, so you don't keep carrying redundancies with you."
Vendors that offer a software development platform provide an advantage over other cloud products. Even though several major ERP providers have established cloud versions of their software, these alternatives can still be inflexible. Cloud development platforms naturally enable developers to add new services and features without impacting the underlying software foundation. Their dynamic features make it easier for enterprises to put together ERP features that take the business forward without wasting money on unused elements.
Mid-market software expands into enterprises
But there is a reason why enterprises prefer the tried-and-tested large applications: they purposely serve that market with the right features. This point is particularly relevant to such core applications as ERPs, which provide the framework for many crucial functions in large and complex organisations. And this won't change.
However, mid-market software that once didn't match those requirements studied the market's needs and systematically added them to their ERP platforms. Today, an enterprise can expect a mid-market ERP to match 80% to 90% of its needs.
"The mid-market often lacked operational capabilities. If your ERP is an administrative centre or used for financial management, supply chain, supply planning, warehouse management, enterprise asset management… few midmarket ERPs could cover that. But they've gotten richer and incorporated operational functionality into the overall ERP package. You can get a functionally-rich financial management application that also has some warehouse management and inventory management functionalities in there. You don't need to go to the large ERPs anymore to get such features."
Choosing your next ERP
Yet choosing the best ERP is a later step. Companies tend to jump the gun and neglect their planning, which is crucial if they want the best fit that improves on what they used before. Without enough attention to their requirements, they either stick with what is safe (but wasteful and expensive) or pick an unsuitable ERP platform.
"Go slow to go fast, and don't expect a like-for-like transition," McClymont advises. "Not all ERPs have the same functionality. Spend the initial period of the business case development understanding what you really need, and then mapping that to the available system functionality. You don't want to make a purchase, go into the implementation, and then hit a roadblock because you 'thought' all ERPs supported, you know, multi-currency conversion or multiple general ledgers that do translations."
Using this approach, it's relatively simple to add mid-market software platforms that can deliver the functionality that enterprise-size options once monopolised - and do so at lower costs and with much more flexibility.
"Budgets are under pressure and many companies just can't afford to spend the kind of money to upgrade a traditional ERP. Mid-market software platforms provide fantastic alternatives, even for those once-immovable core enterprise apps. This is a great time to revisit your requirements and find a new software alignment," says McClymont.
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