BUSINESS SOFTWARE APPLICATIONS

Business Software Applications

Business Software Applications

Software applications are powerful tools in the battle to make your business more efficient and effective. An online application can combine database and programming, allowing you to collaborate, share data, and run certain aspects of your business from a web browser.

Companies use ERP software to facilitate the exchange of information throughout an organization. Vendors usually sell it in suites containing modules such as audit trail, payroll, purchasing, point of sale, manufacturing, inventory, job costing and bill of materials.

For example, when Belvedere Co.'s order-entry clerks couldn't keep up with constantly changing product lines and couldn't get reliable real-time data on product availability, the company's profits suffered.

Usually, midsize companies buy ERP in one of two ways: directly, from a software vendor, or indirectly, through a value-added reseller (VAR). The exhibit on page 47 lists the top 10 ERP vendors to midsize and smaller companies. The figures are based on licensing revenue and include sales through VARs. Whether you purchase directly or through a VAR depends on what products you're looking for and what support you need.

The largest vendors--SAP, Baan, and Oracle--have a large share of the market for ERP sold to midsize companies. But many midsize companies see advantages to buying from the vendors in the next tier down--the midmarket vendors such as Great Plains (number 10 on the list) or Solomon--which didn't make the top 10 list. Midmarket vendors often understand and respond well to a midsize company's needs, budget and culture. Their sales staffs cater to such companies.

Software vendors recruit and train VARs, but some have closer relationships and more rigorous demands than others. The software vendors also may restrict the distribution channels and geographical areas available to the VARs that work with them or may have VARs compete with other distribution channels such as direct sales. Vendors expect the VARs they work with to invest capital--sometimes large sums--in technical staff, training facilities, offices and software purchases. Some software vendors may require the VARs to participate in co-op marketing programs, demanding that a small percentage of sales, say 2% to 4%, be directed to a budget for local ad campaigns.

A VAR usually shares a percentage of its sales with the major vendor whose products it sells and customizes for its clients. However, both these fees and the level of assistance the product supplier gives the VAR can vary significantly. Customers should ask how much technical support the VAR or consultant can draw on, because that can be critical to a successful ERP implementation.

If a company has very specific needs in mind when it begins looking for an ERP package, it may want to work directly with a midmarket vendor that has an excellent reputation for designing a suite that meets the needs of its industry--food distribution or catalog sales, for example. Such a vendor selects specific modules needed to perform tasks important to that industry and partially customizes them with those needs in ...