In the past we've examined what you should look for in good ERP software support, and discussed the wisdom of looking at other important aspects of vendor evaluation such as good ERP software consulting. Now we're going to explore another factor: ERP vendor company size.
Company size is not necessarily one of the most important decision factors when evaluating vendors, but should still be considered. Some people are more comfortable dealing with the corporate Goliaths of the world, while others prefer a one-on-one environment. Neither approach is better than the other, but there are a number of key areas to review to be sure you know what to expect.
1. Differences in Support
A common difference between small and large vendors is the way they handle support. Although there are many exceptions, it pretty much goes without saying that you can expect more personalized service and support from a smaller organization. Large organizations vary in their ability to provide personalized support, with some doing a great job through account reps and local representation, while others offer support via overseas help and with rotating personnel (which can be a frustrating experience).
Large organizations tend to offer better international support and extended support hours through outsourcing (such as 24/7 support), although technology allows even the smallest organizations to offer support around the world.
Be sure to question a vendor's existing clients at length about support to get a feel for response times, level of personalization, and overall expertise of the people behind the software.
2. Differences in Functionality
Software functionality ranges greatly from vendor to vendor, and as a generalization there are variations between small and large vendors. Large vendors may, for example, offer broader horizontal functionality, whereas small vendors may be better suited to specific vertical markets in which they have specialized. Smaller vendors tend to be more flexible and accommodating, with fewer layers of bureaucracy to deal with software changes that may be needed.
Get a sense for whether the small company is innovating at a reasonable pace. Small vendors have the potential to innovate faster than large vendors but it doesn't mean that they actually are. Some small vendors in fact remain trapped in old technology.
It is easier to glean general information on large vendors, as most of their pertinent information is public. However, with small vendors it is easier to get a true sense of the team you are dealing with and you may often get the opportunity to speak with key C-level executives directly.
4. On-going Dependability
A primary concern amongst decision makers is (or at least it should be) whether the software will be supported in the long run. For example, small vendors are more at risk of falling into bankruptcy. Large companies have their own sets of risks — frequently "sunsetting" or discontinuing products. In either case, be sure to feel out whether the software/company is a healthy going concern, and check that they have been in business for more than a few years. Additionally, make sure their source code is held in escrow in case the software becomes no longer supported.
5. Price Differences
There is no guarantee that a smaller vendor will offer software at a lower price, but because of lower overhead (think: the absence of several layers of middle management) the software is often priced accordingly. Price should never be the most important factor in making a decision, of course — that should be functionality / suitability — but it is important to make sure you pay for what you get and vice versa.
6. Organizational Fit
One easy way to figure out whether you're considering the right vendors is to look at your own business. Are you a small business or a large one? Small business are great at dealing with other small businesses but often struggle in a relationship with big business. In dealing with large vendors as a small account, you may have to yell a little louder for help.