Date posted: 16/08/2023 10 min read

Tech guide: ERP software options

Enterprise resource planning (ERP) software used to be the pricey, complex solution the big guys used. However, cloud platforms and mix-and-match modules are increasingly making ERP an option that can grow with the business.

In Brief

  • Cloud enterprise resource planning (ERP) is much cheaper and more available.
  • Business has become more complex, driving up demand.
  • Adopted early, ERPs can help businesses scale, rather than operate businesses that are already large.

How much does enterprise resource planning (ERP) cost? Not half as much as it used to. Twenty years ago, ERP platforms were mainly used by enterprises that could afford Oracle and SAP’s million-dollar price tag. Now you can pay A$200 a month or less per user for a modern, cloud-based platform. Global tech companies including Microsoft, Sage and Oracle are selling more affordable ERPs to smaller businesses looking for a simpler way to manage and scale up complex operations. “As soon as you talk ERP, people go running into the woods” because they are intimidated by the cost and complexity, says Klaeton Sheehan, founder and director of KickAss Products, a company group that runs manufacturing, ecommerce and events, including a showroom in Australia and the US.

Sheehan’s former financial controller had told him that moving to ERP would be a disaster. After spending a year researching options, Sheehan recently signed a six figure deal with Oracle NetSuite. It will replace a number of systems including Xero (accounting), Unleashed (inventory management) and Netstock (supply-chain planning).

“My feeling was that it was a fair price. If I’d known that, I probably would have done it earlier,” Sheehan admits.

In Australia and New Zealand, Microsoft, Sage, MYOB and new brands such as Wiise and Odoo are selling ERP software that manages financial and operational processes in a simple, single-entity business for less than $20,000 a year.

Oracle NetSuite, which typically sits in a higher price bracket, sells a lower-priced version called SuiteSuccess for Financials based on the finance and accounting module.

These software companies say company directors are now considering ERPs when they reach $5–$10 million in revenue, rather than waiting to reach $50 million and above. Directors typically install an ERP to help scale a company from the tens to hundreds of millions in revenue.

Clare Hart-Davies – managing director of Retailquip, a Queensland-based retailer and distributor of material handling equipment, such as trolleys for supermarkets – upgraded to Wiise from MYOB AccountRight two years ago.

“Sometimes you can be a bit hamstrung by systems that aren’t giving you the information that you need. The more data you can get out of a system, the better you can make decisions,” she says.

Retailquip’s family-owned business of 16 employees can now track sales inventory and maintenance inventory in the one platform. “I don’t see us needing another platform until we’re at the 1000-employee level,” Hart-Davies says.

Demand up, easier delivery

Why are software companies selling cheaper ERPs and who is buying them?

In the days of desktop software there were hundreds of ERPs targeting niche industries, many homegrown and suited to one specific country. The cloud distribution model, where businesses can access software through a browser, has made it easier to sell the same ERP more widely. It is much easier to produce and sell a generic, cloud-based ERP that can be configured or customised for varying industries in many countries.

Demand for ERP software has also increased. The public-cloud ERP market is growing at a compound annual rate of 15%, rising from US$36 billion in 2021 to US$73 billion by 2026, according to research from the International Data Corporation (IDC).

The demand is partly driven by the increasing complexity of business. For example, retail has moved from bricks-and-mortar to ecommerce, a business model that requires real-time inventory management when run at scale.

A typical ecommerce retailer may source products from China, India or Vietnam and sell them through their own warehouses or through third-party logistics providers. This may involve dealing in multiple currencies and managing remote teams who are employed by multiple entities, speaking various languages.

Even domestic retailers are running more complex operations. They often have a multichannel sales model with online, bricks-and-mortar and wholesale options. A retailer needs to manage inventory quantities for all three channels, sometimes at different prices based on the type of customer and time-dependent marketing campaigns.

According to data from Statista, in 2023 Australia’s ecommerce market is projected to achieve US$38 billion in revenue and New Zealand’s ecommerce market revenue is on track to reach a value of US$6 billion.

The pace of innovation is also increasing, pushing businesses to diversify into new services, products and business models. These three directions all increase the complexity of running a business.

An ERP is also desirable for managing groups of entities. While you can use an application to consolidate multiple ledgers, some ERPs can manage multiple entities on a single database.

The management team can then create real-time dashboards of the group’s performance, and see costs and revenues for individual entities versus the group benchmark.

The new crop

If you’re keen to get into ERP sooner rather than later, there are many different vendors vying for your business.

Microsoft Dynamics 365 Business Central is the baby brother of the Microsoft ERP family. Based on the desktop Navision ERP, it has the benefit of integrating natively with the Microsoft 365 productivity suite. For example, Business Central can sync, in real time, data within the ERP – such as stock quantities – with an Excel spreadsheet.

Businesses can buy Business Central for as little as A$7000/NZ$7500 a year, however the international version requires a significant amount of customisation to meet local accounting requirements.

Wiise is a customised version of Microsoft Dynamics 365 Business Central that has been localised for the Australian and New Zealand markets. It includes a lot of features that businesses would expect moving from MYOB or Xero, such as automated bank feeds and comprehensive reports. It also has a very useful landed costs calculator for import/export and wholesale businesses. Wiise is owned by KPMG and operates as an independent company.

Sage Intacct focuses less on inventory and more on complex accounting, such as acquiring grants for non-governmental organisations and subscription revenue for software-as-a-service (SaaS) and other recurring businesses. It is often used as a high-powered financial engine in combination with Salesforce.

MYOB Advanced Business is a customised and localised version of Acumatica, a popular ERP based in the US. MYOB has released modules that manage human resources (HR), payroll, rostering and workforce management. The most recent addition is an edition for the construction industry that makes it easier for Queensland-based businesses to comply with the mandatory trust account framework being rolled out by the state government.

There are some players who still sell on-premises ERP software that you either host on your own server or host in a data centre. Pronto is one of the best-known Australian ERPs that continues to invest in developing its software.

Odoo is the dark horse in the field. The Belgian vendor has been around for a long time (since 2005) and sells its software as SaaS, hosted and on-premises. However, most companies use the hosted or on-premises version, as the SaaS option doesn’t allow you to customise the modules.

Odoo is winning market share through a ‘bargain buffet’ approach due to its aggressive pricing – US$34 per user per month for all modules. This includes ecommerce, sales, finance, HR, marketing, inventory and manufacturing.

The main catch with on-premises software is that the user or their integration partner is responsible for hosting, securing and updating the software, which can add substantial cost and risk.

When is the right time?

The most common question about ERP software is: do I need it right now or should I wait a little longer? Sheehan recently helped his 15-year-old son set up an online store. Sheehan says he would have started with an ERP if one was available on a freemium plan.

“If there was a way to start a business the way you intend to finish” you would begin with an ERP, Sheehan says. “But instead, you’ve got to start on this cluster of systems and spreadsheets and Xero and this and that. By the time you’re ready for an ERP, you’ve got to go and unwind all that crap you’ve created over the years and put it into the system that it should have been inside.”

Many businesses don’t realise that they already have complicated needs; the number of systems and processes increases naturally as the company scales.

When Hart-Davies first moved her company to Wiise, she felt that the software was intended for a much larger business. “I think everyone was overwhelmed by it and went, ‘Oh, my gosh, this is far too much. We don’t need all of this.’ And everyone had a whinge about it.”

Two years after the implementation, Hart-Davies says the ERP was a “very justifiable investment”. The staff have also realised its usefulness.

“We’re getting to the stage now where we are actually using a vast majority of what’s there,” Hart-Davies says.


What’s in a name?

As ERPs become a more common sight among small businesses, the original name – enterprise resource planning – makes less sense. ERP originated in manufacturing. Manufacturers wanted to track the number, price and location of all materials required to create products in a factory. A manufacturer producing dozens of products needed a powerful inventory and financial management platform to calculate the optimal mix of materials.

ERPs today are used by businesses in every industry, some without any products at all. Services-based businesses still benefit from a single platform for project management, human resources (HR), capacity planning, budgeting, accounting and financial management. The ultimate goal is to have a single source of truth that contains all the company’s data about products, people and companies.

Some companies are shelving the acronym ERP for a more generic title: business management software. The minimum requirement is an accounting and finance module. Software companies will then offer additional modules for a number of different departments including sales, marketing, inventory management, project management, HR, supply-chain management, and so on.


How better systems reduce risk

There are many technical reasons to upgrade to enterprise resource planning (ERP), but some of the most important benefits relate to risk, says Scott Power CA, managing director of ERP integration consultancy Integrated Logic.

“In a lot of businesses that are for sale, the biggest risk to the new purchaser is that they just won’t be as effective as the person they’ve replaced. ERP systems take all those processes and customise and standardise them for the business, which then removes a lot of the reliance on the key person,” says Power, who previously ran an investor group that bought, sold and managed hospitality companies.

“ERP systems take all those processes and customise and standardise them for the business, which then removes a lot of the reliance on the key person.”
Scott Power CA, Integrated Logic

Recording and monitoring processes helps the company identify issues earlier. This can improve customer service and satisfaction, as well as reduce working capital requirements for accounts receivable, stock management and supplier management.

Defining processes and embedding them in workflows in an ERP leads to a secondary benefit – it reduces the pressure on business owners, Power adds.

“I think there’s a lot of burnout with business owners and people who are primarily in charge of these businesses. Standardising those processes balances the workload among a range of people. And you get competitive advantages from a bigger, better system that can grow with you over the next 10 to 15 years,” Power says.

The third angle on risk is the improvement in forecasting. Forecasting is an iterative process that requires regular review of budget versus actual results.

An ERP can show individual teams and divisions how they are tracking against the forecast for all areas of the business – sales, marketing leads, inventory and operational costs. This granularity of performance measurement makes it easier for management to see areas that are falling behind and what is working well.

“Having everything in one place allows better decision making, improves the quality of data, reliability and visibility,” Power says. 


A sample of your enterprise resource planning (ERP) software options

Considering a move to ERP for your business? Here are some popular solutions to compare. The options listed here are by no means exhaustive and a product’s inclusion should not be regarded as an endorsement by Chartered Accountants Australia and New Zealand. The information included below has come from the relevant vendors.

What is the name of the organisation? What is the name of the product?  What are the five most popular modules?  What is the lowest number of users for your product?  Do you have automated bank feeds?
MYOB The MYOB Advanced suite includes a range of ERP products. MYOB Advanced Business is a cloud ERP platform that connects critical business functions in one single platform, reducing reliance on manual processes and providing accurate insights in real time. For specific industries MYOB also offers Advanced Manufacturing, Advanced Construction and Advanced Professional Services for accounting practices. The core modules are: general ledger and financials, CRM and invoicing, and debtors. Customers from specific industries tend to select modules that matter most to their business, including project accounting, retention management and subcontractor management for construction; materials resource planning, bill of materials and planning and scheduling for manufacturing; and projects and job management for ccounting practices. One, however the Advanced suite of products typically suits businesses with 20 or more employees. Flexible licensing options are available depending on business needs.  Yes
Oracle NetSuite
NetSuite
Finance, procurement, CRM, inventory management, order management.
 A typical implementation is 45–60 days, but it depends on customer requirements. Implementations are in a phased approach, where companies gradually increase their use of the suite based on individual business needs, driving faster time-to value, better return on investment and greater employee adoption. This avoids long, drawn-out implementations.  Yes
Sage Business Solutions Sage X3
Sales and distribution, process and discrete manufacturing, formulation, quality and regulatory control, production planning, financials, business intelligence.
10 Automated bank statements.
Wiise
Wiise
Finance, inventory, manufacturing, job and project management, service management.
Two  Yes

 

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