In the late 1980s, what was then called the Gartner Group came up with the concept of “total cost of ownership.” By calculating what it cost to run and maintain software, as well as how much it cost to buy it, Gartner was able to show that sometimes it was cheaper to actually buy some software products rather than use a competing free one.
That’s similar to what Adam Bluemner of Find Accounting Software (@FindMySoftware) discovered earlier this year when researching enterprise resource planning (ERP) software. Using the other inexplicable example of a concert with the 1980s hair band Winger (what, using Nickelback wasn’t believable or something?), he went on to tally up a whole range of potential ERP costs. These include a number of potential licensing fees, consulting, implementation services, hardware and hosting requirements, software support, data conversion, and training.
“Only a handful of ERP line items are actually predictable and stable from one ERP project to another,” Bluemner writes. “Most cost factors are highly variable and dependent on your specific needs. This volatility often leads to a delayed presentation of some price-contributors and an ERP hidden cost rude awakening.”
Until recently, this sort of thing hasn’t been an issue for small to medium businesses, because ERP software was, by definition, limited to enterprises – that is, big companies. However, some may argue that as the market has become saturated, ERP vendors have had to start moving downmarket to survive. However, even more important, what many small businesses don’t realize is that they don’t have to implement ERP. Thanks to the cloud, software vendors now have a platform to build solutions tailored just for small businesses. These solutions offer small businesses powerful ERP-like functionality without having to implement a full-blown ERP system.
So, what is this ERP-like functionality that this type of software offers? Simple. It’s functionality that aligns your business information with your financial information and enables you to manage the many moving parts of your business from anytime, anywhere.
The technology that enables that functionality is the cloud. But don’t get tripped up on the word “cloud.” Simply put, using the cloud means that you don’t have to buy and maintain the hardware and software to support an infrastructure, which reduces both expenses and complexity. Having the data stored in the cloud makes it available to anyone from anywhere. Using cloud technology, even smaller businesses can have the functionality of ERP – without the cost. (Or having to see Winger.)
Steve Leavitt, GM of U.S. Cloud Solutions for Exact