Management muscle
Choices grow to help streamline operations
by Neil Orman Large companies have always had more choices when it comes to business management software. But a lot more options are springing up for smaller firms.
For those with a little more spending money, a new option is ERP, or enterprise resource planning, software. ERP refers to prepackaged, integrated information systems that serve all departments in a company.
Historically the exclusive domain of giant companies, ERP is now offered for firms with as few as 10 employees by major vendors such as Irvine, California-based Best Software; Redmond, Washington-based Microsoft and Shakopee-based Open Systems.
However, ERP is still expensive and more technology than many small firms need.
“Minimum total first-year cost for any of the packages is above $10,000, perhaps $12,000 to $13,000,” says Kirk Hoaglund, CEO of Minneapolis-based Clientek, a technology consulting firm.
Hoaglund adds that the first-year cost correlates with the size of the company, and can be much more. He also says maintenance fees are, at a minimum, several thousand a year. When you factor in integration costs, it’s rare for a small firm ERP system to be implemented for under $30,000.
For smaller firms with tighter budgets and simpler needs, small-business management packages are available for several hundred dollars. Accounting applications such as QuickBooks and Peachtree today offer so many new features they compete with small-business ERP for many customers.
New features include broader business management functions, modules for managing e-commerce and credit card authorization, and special versions for manufacturers, contractors and other groups.
“Revolution” is the word Clientek’s Hoaglund uses to describe the proliferation of choices for small businesses to buy integrated management software.
“Technology integration was just not available to smaller firms until very, very recently,” Hoaglund says. It was “too hard, too expensive, with a very long payback.”
Pulling it all together
What kind of small businesses go for the pricier ERP option? It varies, but they are often companies that require more automation. An example is New Boundary Technologies of Minneapolis, which migrated from QuickBooks to Best Software’s MAS 90/200 last spring.
The firm employs about 40, and develops software to give firms control over their remote assets. That ranges from allowing them to install the latest software or security patch throughout their organization to allowing them to manage the temperature of refrigerated trucks from thousands of miles away.
In early 2003, the software firm wanted to pull together all its business information, particularly customer and financial databases.
“We were trying to get everything into common databases to manage the business,” says Tom Diamond, the firm’s chief operating officer. “QuickBooks didn’t have all the functionality we needed.”
The company also wanted to avoid the needless re-typing of information among departments.
The firm searched for the right product for about three months, and finally settled on MAS 90/200. Among the reasons Diamond cites are the software’s ease-of-use, customizability and ability to connect with customer relationship management packages the firm plans to implement.
ERP software has a reputation for being difficult to implement. For his part, Diamond says he “wouldn’t use the word difficult,” but he says his company has chosen to go slow in implementing the software “to reduce stress on the organization.”
“We’ve been implementing it in stages for the past year, and that process continues,” he says. The cost of the whole project will be “between $25,000 and $50,000.”
On the less expensive end, accounting packages like QuickBooks and Peachtree do a lot more than in the past. For one thing, they offer much more advanced reporting tools to give managers a better idea of what’s going on within their companies.
Rachel Keogh, an accountant with St. Paul-based Lawrence Cumpston & Associates PLLP, is one of hundreds of certified QuickBooks advisers in the country.
QuickBooks “has gotten a lot more flexible,” she says. “They tell them much more about business trends like who their most profitable customers are, in addition to more traditional functions such as who’s paying on time.”
One of Keogh’s clients, and a QuickBooks user, is the Bloomington franchise of Nationwide Floor & Window Coverings, which is based in Milwaukee. The three-employee franchised firm provides options for floor and window coverings to home and small-business customers. The company is unusual in that it goes to customers and shows them samples, rather than requiring them to come to a showroom.
Jim Thompson, the firm’s president, has been using QuickBooks since he started in late 2000. He says he’d be “lost without it.” He offered examples of what he might use the software for after installing carpet for a client.
“I might get invoices from the carpet company and the installer,” he says. “Once I enter that data, I could hit ‘account profitability’ and see how much I collected and how much I paid out. It’s also extremely useful for keeping track of customers: who I’ve collected from and who still owes me. I can track my profitability and my receivables. I can also find out what my sales mix was in terms of how much was carpet, tile or window coverings.”
Technical limitations of packages like QuickBooks and Peachtree include how many users can access financial information at one time and how many transactions they can process.
Industry-specific solutions
Finally, some users find that neither pre-packaged ERP nor accounting packages suit their needs, and go with industry specific solutions for small-business management.
Julie Landreville, CEO of Autumn Grain & Transport, is one. Her Woodbury-based trucking company has 90 trailers, and works with independent contractors to haul goods for customers such as Tyson chicken.
In 2000, her company was in the technological dark ages, working with a DOS-based billing system that integrated with nothing.
“We did most of our accounting on spreadsheets, and the balance of our sales was accounted for on paper,” she says.
She partnered with Orbit Systems, an Eagan-based technology outsourcing firm, and Orbit recommended an industry-specific solution.
She then began a year-long search in which she reviewed more than 100 software firms. The vendor she selected was TMW of Cleveland, even though it wasn’t the cheapest. One of the biggest reasons was that the system was geared toward bulk hauling, her firm’s specialty.
She also liked that the software was very customizable as her firm grows, and the fact that support personnel were assigned to her account. “When I call, I know that I’m going to talk to one of three people,” she says.
Experts say there are also negatives with vertical solutions. Their technology is sometimes dated, and these are often less flexible solutions if your company changes. Also, vertical software typically has weaker financial software.
Tom Diamond, New Boundary Technologies: 612.379.3805, ext. 126; tdiamond@newboundary.com; www.newboundary.com. Kirk Hoaglund, Clientek: 612.379.1440; kirk.hoaglund@clientek.com. Rachel Keogh, Lawrence Cumpston & Associates: 651.227.2333; rachelk@lwc-cpa.com: Julie Landreville, Autumn Grain & Transport: 651.738.6998; JKLandreville@autumntransport.com. Jim Thompson, Nationwide Floor & Window Coverings: 952.891.4200; jthomps@frontiernet.net
