Understanding ERP Add-Ons
Many Small Businesses depend on accounting software to organize their operations. Simple ERP solutions, with low total cost of ownership and high return on investment, offer the tools that these businesses need to get started in streamlining processes, managing business growth, and reducing costs. These solutions accomplish this by increasing visibility into company operations and laying down a procedural backbone that organizes and tracks the ongoing activities of a business.
Smaller ERP systems often depend on third-party applications to deliver the complete suite of functionality that benefits a business. This can offer a good alternative for companies to attain additional functionalities necessary to run their business. On the other hand it can also lead to issues of integration and companies becoming more dependent on a variety of different providers for support and upgrades to their solution.
History of ERP Add-Ons
Not long ago, ERP was the luxury of large companies that developed systems in-house or had them customized by a major provider of ERP and CRM. Things have changed, and now many small and midsized businesses also enjoy the functionality of ERP systems. Solutions with added modules like sales, customer management, manufacturing and distribution applications, connected to the accounting-based systems, gave small and medium businesses a complete set of tools to manage operations with.
Much of this functionality was delivered by add-ons developed by third parties, bolted to the existing system, from providers with various degrees of relationships with the main ERP system provider. Add-ons provide additional functionality for companies that have already invested in expensive systems. Instead of overhauling entire information technology strategies, these add-ons could be used to support specific activities of a business unit.
Operating systems with multiple add-ons created specific problems though, particularly with data integration where applications needed to work together, and support activities like updates and upgrades. To address these pesky issues, and thanks to advances in technology (cloud delivery, web-based solutions, subscription models) ERP systems, and the industry as a whole, are moving towards all-inclusive solutions, with modules and applications delivered by the main provider.
Integration With Multiple Add-Ons
The hardest and most problem-prone part of any ERP system is data integration. Taking data from different software applications that service independent business units can be troublesome. Data from these applications must in some way connect to the financial, accounting, and other core modules of the systems within the ERP. This communication of data between third-party add-ons and the central ERP system has to happen seamlessly and continuously. When a business’ systems do not integrate properly with its applications, it will have additional costs due to managing data in multiple databases, customizing applications, upgrades, and hiring personnel to oversee integration within all the business’ systems.
Updates, Upgrades, and Support With Add-Ons
ERP systems will get multiple updates a year, leaving add-on providers to ensure their solutions still work with the updated system, and company employees to deal with any downtime that may arise.
Issues of Add-On support can also arise. ERP systems are generally supported by third parties as it is. Providers, such as Sage and Microsoft, rely on a network of resellers that are also in charge of supporting the solutions sold to customers. This is good news for users, as resellers, like The Answer Company, normally service the solution from its beginning – implementing and supporting both the ERP and any add-on applications. The quality and degree of support offered for add-ons will be determined by the reseller’s experience with the applications. If a reseller can’t provide support for an add-on, a company is left being supported by several providers, consequentially adding to the costs of running an ERP system.
More issues arise if the company does not keep up with the maintenance of their systems. Although not advisable, companies with existing ERP systems may at one point or another forego ongoing support for their ERP systems. These companies face problems when they return the marketplace to fix, update, or upgrade their solution, along with the add-ons they have ran their businesses on, which can be difficult as these solutions advance quickly.
For companies in this situation it is worth looking at the bigger picture, and re-evaluating their system focusing on ownership costs and ongoing support costs. It may be that a better quality of software is available, with easy migration paths, at a lower cost than updating or upgrading their small business accounting systems.