Mind the Gap: The ERP Midmarket Black Hole

Jon Roskill | September 19, 2014

Accounting software has been available for both large and small companies for some time now. In fact, financial software vendors specifically target small or large companies in terms of their functionality and pricing terms. Larger, established companies tend to have complex organization structures and business processes, as well as established IT staff and resources. These larger companies are able to purchase software licenses from the "big" enterprise resource planning (ERP) vendors and implement their software on existing, in-house IT assets. Larger companies often have established, complex supply chain processes and financial operations, which require functionally robust ERP systems.

By contrast, smaller businesses tend to acquire their software from software vendors that provide accounting systems that can be installed on a single PC or a small LAN environment. These products provide basic accounting and customer service functions but are limited in capabilities for inventory, manufacturing, or requirements planning and, as such, can hardly be considered true ERP systems. However, these systems are often available for a monthly per-module or per-user charge, which avoids a large cash outlay.

A view of the railway please mind the gap

The advent of cloud computing technology has potential benefits to large and small companies in hosting and access to cloud accounting solutions. As a result, the providers of both large and small cloud accounting software have scrambled to "adapt" their product to be cloud friendly. However, these adapted, cloud-friendly versions are often not designed for the cloud and as such, are not available in a variety of configuration options that would best serve the needs of individual customers.

But what about companies in the middle? Midmarket companies are often just as complex in terms of structure and business processes as large companies. Midmarket companies often have manufacturing operations that require robust inventory management and resource planning capabilities. They also may have operations in multiple locations requiring software with multiple language and currency options.

Midmarket companies often do not have excess cash resources to commit to expensive software licenses. Cash reserves need to be invested in increased manufacturing capacity, new distributor relationships, or new product research.

As a result, both large and small ERP vendors often do not attempt to serve the needs of the midmarket. Small ERP vendors would need to increase their software development investment to add the increased functionality that midmarket companies require. Most are not willing or able to do so. The big ERP vendors already have functionally robust software but would need to offer them on a variety of cloud-based platform options and at different pricing terms than their traditional perpetual license purchase format. That is something they are very reluctant to do. Even ERP vendors who have served the midmarket up to now seem engaged in an all-out chase upstream for larger ERP customers and traditional ERP licensing arrangements. As a result, the ERP needs of the midmarket are being abandoned.

At Acumatica, we believe that midmarket companies are the engines of economic growth throughout the world. Midmarket companies are the source of product and service innovations. They often lead the way in supply chain and customer service process improvements; they have to, in order to compete, prosper, and grow. While other ERP vendors may focus their products and outreach efforts on safer, established companies —or smaller entities that ensure a consistent revenue stream — we will continue to enhance our ERP products to provide the features midmarket companies need to succeed. We will provide cloud-based solutions that support a variety of deployment options and pricing terms to provide the flexibility midmarket companies require. We will continue to expand our network of partners who provide industry-specific and region-specific integrated solutions and support wherever midmarket companies need to do business.

We believe strongly in the energy and innovation inherent in the midmarket, and that's where we will be. We will indeed mind the gap.

Jon Roskill

Chief Executive Officer at Acumatica. Passionate about sports, family, community and Cloud ERP with & thru the channel!

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