Seamless operation and single databases lead the list of requirements for SMB success; on-demand products are the most popular in the segment.
Posted Feb 23, 2006
Smaller businesses are learning that a suite of applications designed to work together are often those firms' best choice for the IT environment, with lower TCO and fewer administrative headaches, according to a Yankee Group study. "SMBs Prefer an Integrated Business Applications Suite" identifies the key concerns among 700 SMBs surveyed in November 2005 as integrating current standalone systems; achieving full coverage of all operational areas; and putting an end to siloed business processes. It also names on-demand provider NetSuite as the one preferred by survey respondents in all criteria.
"Businesses in all size segments want an integrated environment, including the front office, back office, e-commerce, and database, but most integrated suites are targeted at larger enterprise," says Sanjeev Aggarwal, Yankee Group small and medium business strategies senior analyst and author of the report. "Smaller businesses are asking which one vendor they can approach to integrate their critical applications, but not many solutions truly focus on SMBs," he says, also noting that many top suite vendors, including Oracle and SAP, are better suited to midmarket and larger companies.
The study explains that SMBs are now following the trend larger businesses did in the 1990s, switching from best of breed point solutions to an integrated suite approach. According to Aggarwal, in addition to the attractiveness of simpler management, merged processes, and a single supplier, SMBs are under pressure from their larger trading partners to comply with their business practices and reporting requirements.
The most important challenge faced by SMBs, according to the study, is the need to integrate applications and systems that currently stand alone, with 46 percent of respondents naming it as their key issue. Close behind that is the need to integrate the company Web site with accounting, inventory and messaging (42 percent), and difficulty getting work done because unshared information is sitting in multiple applications and departments (41 percent). Other factors include the business outgrowing outdated applications; insufficient IT staff; and a desire for a Web store and/or general Web presence. "Every company regardless of its size must maintain good relationships with customers, suppliers, and partners, and adhere to consistent and lawful accounting practices," the study states. "Many companies must manage both online stores and brick-and-mortar warehouses. SMBs look favorably on applications suites that support these requirements."
The survey ranked on-demand suite vendor NetSuite as the most popular choice among SMB customers, equaling or exceeding its top competitors in every category. SAP BusinessOne tied NetSuite in several places, including market share, geographic coverage, ease-of-integration and customization, and channels, but respondents thought NetSuite's coverage of business processes was best. "SAP BusinessOne is in much the same area as NetSuite, but is missing an e-commerce solution that works for SMBs," Aggarwal says. Sage BusinessVision was ranked third, followed by Everest Software. NetSuite is the lone on-demand product among the ranked solutions.
The study also provides a series of recommendations for vendors seeking to excel in providing SMB solutions. These include:
All are important, but Aggarwal explains that integration and e-commerce are the most so. "E-commerce is becoming more and more crucial," and solution vendors will be hard pressed to succeed without an answer for it. "In the end, business is about making money."
Companies Are Selecting Software for Integration
SMBs Take Advantage of the Web
- Offer integrated business applications suites that include front office, back office, and e-commerce that work from a single integrated database.
- Offer hosted solutions.
- Offer relevant, quantifiable service level agreements (SLAs).
- Support well planned and tested business continuity and disaster recovery plans.
- Expand sales and customer support channels.
- Build an expanded complementary application partner ecosystem.
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