The Australian business software marketplace is split into four segments
- Entry-level dominated by MYOB, QuickBooks and Xero
- Small to medium-sized business segment (SMB’s)
- Small to medium-sized enterprises segment (SME’s)
- Tier 1 Enterprise segment
In attempts to lock in and expand market share the entrants in each segment regularly add functionality to their core offering or turn to third-party developers to create interfaces or integrations, with varying degrees of success.
More often than not technical limitations of entry-level systems limit the vendors from realistically servicing companies who sit outside their traditional markets but quite often it is also functional limitations that simply mean the entry-level system isn’t capable of meeting the business needs of companies sitting in the SMB business software segment that sits directly above the entry-level segment.
Product design often stops software developers from reaching into new and larger business segments. As businesses mature and grow demands on system capabilities tend to change and expand. Most entry-level systems are unable to scale to accommodate more users and are unable to offer more sophisticated capabilities seemingly but definitely not exclusively around inventory. These challenges however don’t always result in vendors trying to play in areas best left for other vendors and products.
Not all add on’s and 3rd party products are equal.
System add on’s and 3rd party product extensions relied upon by many entry level business software vendors to plug gaps in their system and to extend their own core system appeal definitely differ in their effectiveness and overall contribution to a business system solution. Often the technologies used by 3rd party and add on products differs from the core system they are connecting to and often the systems duplicate data and tasks and create unnecessary costs of system ownership as companies deal with data discrepancies and reduced system user productivity.
The case for SAP Business One
SAP Business One was developed specifically for SMB’s. SAP’s primary target is SMB’s, businesses who have out grown the technical and functional limitations of entry level software and who are seeking to move to the next level of software to better manage their established, often growing and successful business.
On occasions, the investment required to implement SAP Business One acts as a roadblock especially when businesses are in a money hungry growth phase and buyers instead seek to extend their entry-level system with add-on products and third-party systems. This approach can extend the life of the system but often consumes more human resources and attracts more costs than anticipated or advised by sellers. That said, an investment in SAP Business One isn’t actually substantially more than many of the entry-level systems when considering their need for add on’s & 3rd party extensions and the internal costs of having to accommodate a less than complete system.
As a note, SAP does offer a Starter kit license for start-ups, essentially SAP Business One software with artificial limitations on functionality and user numbers and at a price to attract start-up businesses offered with a view to saving businesses starting with an entry-level system then later having to migrate but the key target segment is established, successful and growing SMB’s.
So where do companies who select SAP Business One obtain real value and a strong return on investment from their decision.
Let’s start with technology. The SAP Business One technology can cater for as few as a couple of system users to hundreds of system users. There are no transactional or data size limitations that are common with various entry level systems. The product architecture and application design support capture and easy viewing of current and historical data without diminished user effectiveness and productivity. SAP’s open API and development framework supports data exchange with popular Cloud applications without all the usual costs and work-effort. Check out the SAP B1 Cloud connector catalogue for further information:
https://help.openconnectors.ext.hana.ondemand.com/home/catalog
The functional capabilities of SAP Business One as an all-in-one suite go deeper than the entry-level systems that are predominately built to a price point and primarily targeted to assisting small businesses with simple business requirements, who often have no real accounting or book-keeping expertise on staff and who are comfortable following the prescribed and rigid treatment of transactions. Business size, maturity and growth generally lead to a need to capture more transactional properties and cater for a wider variety of business scenario’s; greater input from more users, a need for more involved system security, and better management capabilities (business intelligence, reporting, inventory management and currency controls to name but a few).
If you’re currently using an entry-level system, you’ll already know the various limitations and most likely the 3rd party and or add on options available to you to overcome system gaps in part or in full. The common issues we see as consultants, at a granular level, reside around delegation of duties, system access and security, quoting, inventory, purchasing, and landed costs, and at a broader level projects and jobs, manufacturing and advanced paperless warehouse management.
SAP Business One was originally developed for wholesale distribution businesses and over time has expanded its footprint to include coverage for businesses who require projects and jobs and manufacturing capabilities inside their business software system. However, SAP Business One has stayed true to its origins and continues to offer wholesale distribution businesses market-leading capabilities across sales, inventory management, purchasing, goods receipting and costing.
On the sales side SAP Business One offers companies the ability to run unlimited price lists, offer special pricing, volume-based price breaks, promotional pricing and customer group-based price lists. The costing options include FIFO, Standard and Average costing methods & lot-based costing. Lot and batch tracking and serial number management along with unlimited use of barcodes and multiple stock locations round out this area of SAP Business One.
Deep integration with Microsoft Office productivity tools, on-screen drag and drop analytics and multi-select line items for a quote, sales order or invoice speed up the sales process dramatically. Right-click access to pertinent sales data and in-built CRM round out the SAP Business One sales and customer area of the system.
MRP functionality in SAP Business One can be used to create suggested purchase orders of stock to resell or it can be run as a part of a production planning and scheduling exercise. Either way, the MRP capability streamlines the ordering of goods in a timely fashion and in logical quantities for optimized stock on hand. Flexible landed cost management allows both primary and secondary supplier costs in one or multiple currencies to be applied across the purchased products using an allocation selection method from a variety of options.
Security, fraud detection and preferably avoidance is topical given the outrageously high number of ransomware attacks and some recent high-profile cases of staff theft through undetected system subversion. As businesses grow and more staff interact with the business system owner oversight of the business can diminish opening the door to fraudulent activities.
SAP Business One offers audit trails, electronic alerts and approval processes and separation of duties to reduce the possibility of staff or contractors being able to steal from the business. The application of business rules such as the need to approve a change of banking details for suppliers a classic control that can reduce accounts payable fraud. The use of named licenses with password requirement further controls user monitoring.
When comparing entry level business systems with SAP Business One around advanced paperless warehousing the usual difference resides with the use of one or multiple inventory data sets and the advanced warehouse systems relationship with the core business system.
There are several independent software vendor (ISV) advanced warehouse systems developed exclusively for SAP Business One build on the SAP Business One platform and extending upon the SAP Business One inventory data rather than creating a secondary warehouse database. These solution characteristics are far superior to most of the entry-level business system solutions for companies requiring advanced warehousing. Whilst the entry level solutions will offer system integration (data exchange via various methods) with the core entry level business system often the systems are build using different technologies, do not look or behave the same way as the core entry level business system and more often than not create their own inventory database a less than ideal situation. Similarly entry-level business solutions almost always rely on 3rd party manufacturing and project job costing systems to provide coverage for these business transaction types. The intricate nature of manufacturing and projects and jobs (They interact with accounts payable, receivable, sales, purchasing, general ledger & stock) means any 3rd party manufacturing and project job costing system needs to be super sophisticated to accommodate so many transactions and data exchanges.
SAP Business One offers manufacturing and project job costing in the core system license and has the luxury of being able to offer companies best of breed manufacturing and projects and jobs functionality when best breed features are required. Again, the advantage SAP Business One has over most entry-level business systems is that the SAP ISV’s in this area have been specifically developed for SAP Business One using the SAP Business One platform which provides buyers with a superior business system solution.
SAP’s deeper and broader set of capabilities translates in to more opportunities for companies to either reduce FTE numbers or to grow more profitably as existing staff are empowered by the system to achieve more in the same amount of time. System automations, streamlined data entry & capture and tailored viewing of information, and less reliance on off-system activities can quickly justify an investment in SAP Business One.
Reduced overtime, fewer FTE, more time to analyse data rather than collect data for analysis, more timely supply of business intelligence and the ability to more readily address business exceptions which will have diminished any way due to more stringent application of business rules in SAP Business One will combine to quickly justify the investment in SAP Business One. Entry level systems typically require compromises that collectively add business costs. Often the costs aren’t immediately obvious but on occasions system limitations lead to significant losses that are hard to ignore.
Some generally accepted savings available to businesses implementing more sophisticated and capable advanced business software (ERP Software) such as SAP Business One include a 20 percent inventory reduction (Improved purchasing practices that result in reduced material costs; an 18 percent reduction in average debtor days. (Tighter debt collection processes and system sales controls); a 5 percent reduction in material costs and a 10 percent reduction in labour costs because of less overtime and improved productivity.
SAP Business One can also help increase sales. Improvements in customer service typically leads to a 10 percent sales increase.
These possible savings and opportunities can quickly deliver a significant ROI for companies investing in SAP Business One. The fact that SAP Business One is scalable and functionally deep means companies can enjoy the on-going benefits of SAP Business One for an extended period of time even with significant business growth over time and if growth is so significant you do in fact outgrow SAP Business One there are logical growth paths to SAP By Design and S4HANA positioned to serve the SME and Enterprise spaces.
To discover how SAP Business One can help your business run simple and grow more profitably contact CitySoft on p 1300 762 762 or e sales@citysoft.net.au
*A general description of an SMB business is one that operates a single operating entity, turnsover somewhere between $5M – $100 M AUD p.a. and employs between 15-250 employees.
