Part 2 of The Cost of Inventory Management Software
A common problem when searching for a software system is setting a budget. After all, there are so many options and they range greatly in price. In this post we will determine some strategies for setting a budget depending on your needs and what “software tier” you are seeking.
For the most part, there are 3 major software segments when it comes to finding a solution to manage your wholesale and distribution business. The first step in setting a budget is determining what major software segment is appropriate for your business. At a macro-level there are 3 main segments:
Introductory/Basic Systems
- These systems typically accommodate one business process (such as accounting) but on the upper end may accomplish several.
- They are not true ERP systems and often must be integrated with many other systems to offer solutions across business operations.
- Examples include: QuickBooks, Fishbowl and Simply Accounting
- Because these systems are geared towards smaller businesses, they typically have limitations on database size and transaction volume
- Price range: $100-$10,000
Middle-Tier
- These systems offer full ERP functionality across business functions including: inventory management, accounting, CRM, order entry and processing and warehouse management.
- Many Middle-Tier systems will also provide optional components that can be added on depending on the nature of the business. Examples include eCommerce integration, barcode scanning, point of sale and lot tracking.
- Examples include: Blue Link
- Price range: $10,000-$100,000
Top-Tier (Blue Chip)
- These systems offer full ERP functionality on a scale necessary for vast organizations with global operations. They provide similar functionality as Middle-Tier systems but are designed for companies with more of users and global operations. The complexity of their operations necessitates a significant capital spend.
- Examples include: SAP, Oracle, Infor
- Price range: $100,000-Many Millions
These tiers offer a basis for determining a budget based on the following factors:
- Company size and number of software users
- Desired level of integration and functionality
- Goals and objectives
- Growth projections
Introductory systems offer a great solution for many start-up companies or small “mom and pop” businesses. In order to facilitate growth, a proper Middle-Tier package will be needed at some stage. Middle-Tier systems allow a vast amount of growth – allowing a company to transition from an introductory system far into the future. A Top-Tier system may never be required, but if so, it will become readily apparent that it is necessary based on specific factors such as multiple global divisions and a vast numbers of employees.
