Introduction
ERP stands for Enterprise Resource Planning and presents a system of software applications utilized by for-profit and non-profit organizations in their daily activities and operations. ERP provides a unified system of managing and accessing various data used in business operation and planning. Activities covered by such a system include accounting, sales management, procurement of goods, services, and resources, as well as manufacturing, marketing, project management, and various other activities, depending on the nature of the business. The speed of information-sharing and decision-making makes businesses more profitable and facilitates effective communication on a larger scale.
Although the choice of appropriate ERP software depends on the size, type, and niche of the organization, there are several common systems for every ERP. These include integrated solutions that enable communication between departments, such as sales departments, customer service, financial department, HR, and IT (“Top 15 ERP,” 2017). The software that utilizes servers or cloud solutions can also serve as an information hub, providing necessary data to all areas of business via an elaborate network of solutions. The purpose of this paper is to compare three potential ERP solutions for the retail industry with the costs of application exceeding 1 million dollars.
Reasons for Utilizing ERP
As it stands, companies have a plethora of reasons to switch from outdated systems to ERP. Some of the most common reasons include replacement of the legacy system, promoting company growth, improving business performance, facilitating timely reports and regulatory compliance, and improving the quality of work. Additional reasons include standardization of global operations, reducing working capital necessary for business facilitation, integrating systems across different locations, and improving customer service.
Nearly all ERP provides the same advantages to large retail enterprises. The difference lies in the effectiveness, accuracy, and the number of applications and toolsets offered. The advantages of utilizing ERP as opposed to a legacy system are as follows (Bahssas, Albar, & Hoque, 2015):
- Improving the quality and accessibility of business data. This criterion is very important for the retail industry, which relies on quickness and accuracy of information sharing. ERP serves as a hub for data from various departments, which is automatically collected, consolidated, organized, and analyzed, to be later used by managers in day-to-day decision-making. Some of the potential improvements seen in retail from improving the quality and accessibility of business data revolve around the ability to change the quantity and pricing of goods based on various factors, such as customer demand, warehousing capability, and competitive advantage (Ganesh, Mohapatra, Anbuudayasankar, & Sivakumar, 2014).
- Improving reporting and planning procedures. Having access to all of the information coming from one source greatly improves the speed and quality of decision-making (Kurbel, 2016). A manager of a retail chain would have access to financial, sales, operational, inventory, and administrative reports within minutes. This useful data would help construct variance and business performance reports, to see if any division is lagging, due to various internal or external reasons.
- Improving visibility and transparency. ERP applications ensure transparency and responsibility on all levels of business. These applications are particularly useful in retail because shops and supermarkets require rigorous monitoring of inventory levels. Some products need to be brought; some removed (especially products that spoil quickly) (Cross, 2018). Knowing what, when, and how much must be replaced enables leaner management and more precise management of the working capital, freeing more financial resources for other activities.
- Supply chain management. For the reasons mentioned above, retail companies require a supply chain management software tool for timely and efficient logistics operations (Kurbel, 2016). An advanced ERP system typically features such a tool, which can be used for forecasting demand, managing inventories, and optimizing procurement. As a result, the amount of logistical inefficiencies goes down, which helps reduce costs.
- Improving customer satisfaction. ERP improves customer service in several important ways. It provides tools for timely management of customer input in feedback, enables demand forecasting, and ensures timely replacement of spoiled goods, among other things. The ultimate purpose of ERP is to improve the quality of work, which relates to customer satisfaction, which is one of its major components. Using an advanced ERP system, retail companies can ensure the best experience for their clients.
- Cost reduction. ERP smoothens the frictions between various departments and operations while optimizing the speed and efficiency of provided services. As a result, costs automatically go lower. Although the initial implementation costs of ERP in large retail businesses can go over 1 million dollars, spent on new software, equipment, training, and operational changes, the subsequent use of software can dramatically lower the costs for IT, administration, infrastructure, licensing, training, and support. The latter is particularly important for floor-level and middle-level managers, who would be required to learn only one system instead of many.
- Standardization, simplification, and data unification. This is particularly important for companies that operate as a franchise, which suggests greater amounts of variance between retail stores. ERP systems suggest the implementation of best industry practices in their systems, which helps to eliminate errors, simplifies planning and reporting, and improves the overall standards through automation of all processes that do not require direct human input.
- Saving time and effort. Most ERP software aid in the automation of nonessential tasks that computers can handle. ERP is good at handling tedious, repetitive manual activities. As a result, it reduces the amount of work needed to be performed, improves productivity, and reduces the number of employees necessary to perform a certain task. In large-scale retail operations, this could mean hundreds of employees.
As it is possible to see, ERPs provide significant advantages for large-scale businesses, where benefits from utilizing elaborate software increase with the output. Smaller organizations do not need so many tools and can manage their enterprises using simplified, small-scale ERP software, which covers inventory management, scheduling, accounting, and CRM alone. Nevertheless, the criteria provided above will be used to compare and contrast three ERP systems to determine the best one for a large-scale retail enterprise. According to the ERP Technology Value Matrix report, the three best choices for retail are NetSuite, Acumatica, and Sage (Nucleus Research, 2017).
NetSuite
ERP Technology Value Matrix classifies NetSuite as a facilitator (Nucleus Research, 2017). This ERP system has gained much since its recent association with Oracle, which granted it access to the latter’s data centers found in Europe and East Asia. This ERP system is geared towards eight industries, which include advertising, finances, manufacturing, nonprofit operations, services, wholesale distribution, and retail, which makes the software eligible for being used in this comparative analysis (Nucleus Research, 2017).
NetSuite currently focuses on updating its functionality to adhere to the standards of the existing financial systems. Its latest product, OneWorld ERP solution, focuses on financials, revenue flows, billing procedures, resource planning, and managing compliance risks. Customers are automatically updated to the latest version of the product, which enables them to utilize its new features and advantages. The goal of NetSuite’s promotion strategy is to automate and simplify financial operations for multi-company enterprises, which makes it efficient for large retail businesses and franchises, which have offices in many different locations and countries.
The ERP is compliant with the ASC 606 revenue standard (Nucleus Research, 2017). Although ERP Technology Value Matrix placed it in the facilitator bracket, added financial support and technological improvements from Oracle are likely to move NetSuite into the leader bracket within the next few years, as it has a promise of greater usability and functionality.
Sage
Sage is currently found in the core provider bracket, which is characterized by lower customer usability and functionality, which normally is considered to be average-tier when compared to other ERPs available at the market. Sage’s latest product is the Sage X3, which can be used in small, medium, and large-scale businesses. Due to the company’s focus on smaller enterprises, its ERP is not as advanced when it comes to bigger ventures (Nucleus Research, 2017). The X3, however, which is used for vendor management, warehousing capabilities, process manufacturing, and service solutions, also has a very solid accounting suite.
To focus on its competitive advantages, Sage purchased Intacct accounting software and included it in its ERP module. It also helped to expand Sage’s customer base by added Intacct’s customers to the pool, which is over 11.000 separate business entities (Nucleus Research, 2017). As it stands, Sage is quickly gaining ground and can become an expert ERP with a focus on accounting software. Intacct will enable Sage to compete with Netsuite and Financial force, which usually dominated the field of financials and accounting.
Acumatica
ERP Value Matrix places Acumatica into the leader bracket due to the high functionality and usability of its features (Nucleus Research, 2017). Acumatica’s products are known for their heavy focus on flexibility and usability, which enables them to fit a great variety of large-scale businesses and enterprises. It is a choice product for manufacturing, wholesale distribution, retail, food operations, nonprofit organizations, and other services. The company’s greatest strength lies in its ability to provide plenty of standardization tools to fit the needs of nearly any customer and enterprise.
Besides, Acumatica has been improving its functionality to deliver products specifically tailored to various micro-vertical industries. Examples of these include cardboard production and beauty products, which, due to various industry-specific processes, cannot be fully managed by mainstream ERP applications. Acumatica’s latest product, the Acumatica Cloud xRP platform, is a modular system, which allows for easier customization – the customers can attach and detach different modules as needed. As the name suggests, Acumatica makes heavy use of true cloud services, which greatly improves its computing, storage, and operational capability, in comparison with others (Nucleus Research, 2017).
Acumatica’s latest investments revolve around multi-company capabilities and accounting procedures. The company experiences rapid and stable growth, increasing its market share, and offering services that have been ignored by other large ERP providers. Acumatica Cloud xRP platform also has a powerful customer relationship management solution developed in conjunction with Hubspot and Salesforce. Field service management has also been integrated into the ERP’s modular package suite.
Acumatica’s products are typically optimized to be used in browsers, downloadable clients, and mobile appliances. It features a user-friendly interface, which helps improve usability and intractability. The product is easy to learn and become proficient at, as it features a series of pre-determined tasks, visuals, and dashboards that are usable in nearly every enterprise while maintaining a large spectrum of capabilities for customization and optimization. Possessing a variety of tools and a solid tutorial, it can help save money on managing, supervision, maintenance, and personnel training. ERP Value Matrix indicates that Acumatica’s vector of value is currently directed towards greater functionality, as it currently bolsters the highest usability parameters out of all major competitors, surpassing even Microsoft, SysPro, and Qualiac.
Comparative Analysis
As the purpose of this paper is to compare and choose the best ERP solution for a large-scale retailing enterprise with estimated costs for ERP implementation being 1 million dollars or above, the analysis will feature the latest solutions presented by Acumatica, Sage, and NetSuite. The latest products of these companies are as follows:
- Acumatica: Acumatica Cloud xRP platform.
- Sage: Sage X3 platform.
- Netsuite: OneWorld ERP Platform.
Since there are many points of comparison to be used in such an analysis, it was narrowed down to ten major criteria for functionality, which included (Shen, Chen, & Wang, 2016):
- True cloud. Determines if the ERP was built with the use of cloud services in mind or was merely optimized to enable its usage (often found in older software).
- Mobility. The ability to be used on all devices, including tablets and smartphones.
- Full function ERP. Provides a full array of functionality expected in an ERP solution.
- Full relational database export. The ability to transfer databases from one ERP to another.
- Customization using industry-standard tools. The ability of the ERP to provide instruments specific to the industry.
- Schedule upgrading. The ERP will offer solutions on schedule optimization.
- Flexible licensing options. Depending on the number of employees working with particular licenses, it may be necessary to switch between subscription-based and perpetual licenses.
- Multiple deployment options. Support for cloud installation, on-premise usage, and hybrid.
- Potential for scaling. Determines how useful the ERP is for a growing company.
- Lower total cost of ownership. Provides a relative value of how much is needed to upgrade the company to operate using the chosen ERP.
The results of the comparative analysis can be found in the table below:
As it is possible to see, all three ERP solutions differ one from another on a variety of levels. Due to being planned for large-scale enterprises, all three systems have good scaling potential (“Sage enterprise,” n.d.). However, the similarities end here. Sage is one of the strongest legacy products currently available on the market. However, its relatively outdated operational base (legacy) makes it harder to upgrade and compete with other ERPs. Its notorious setback is computing slowness, as it does not fully utilize the cloud to handle such operations. Nevertheless, it has excellent customization capability and is relatively flexible with licensing options. Due to charging per user count, this system is relatively expensive for enterprises that require many users to operate the system.
NetSuite is a true cloud ERP system. It excels in financial operations, accounting, and sales/marketing (“NetSuite OneWorld,” 2018). However, it is woefully lacking in customization options and does not support a fully relational database export from one server to another, due to using proprietary development tools rather than the industry-standard C# and.net. Although NetSuite provides upgrades to their existing systems two times per year, the upgrading times are standardized and cannot be canceled, which creates issues for users and interruptions during work.
The program suite has good scaling potential but not a very good TCO, due to charging for computing power and user count at the same time, making it expensive. Nevertheless, with the recent acquisition by Oracle, NetSuite is likely to gradually receive major upgrades that would improve its operational performance.
Acumatica is the most balanced ERP solution out of all three. It is a true cloud service, which guarantees the safety of data and high computing speeds. It uses C# and.net, which ensures high configurability of the software (“Get to SAAS fast,” 2015). Acumatica Cloud xRP platform uses a built-in backup system, which enables easy migration of data off Acumatica’s servers. The product offers both subscription and perpetual licensing options, enabling cost-efficiency and flexibility for customers who need specific types of licenses.
Cloud xRP supports different ways of installation and data storage, which includes the utilization of Acumatica’s true cloud, a private cloud, or on-premise, using a private server. Lastly, due to charging per computing power rather than per user count, Acumatica provides a more attractive option for enterprises that have numerous ERP operators.
Recommendations and Conclusions
Based on the comparative analysis illustrated in the table above, it can be concluded that the Acumatica Cloud xRP platform is the preferable solution to a large-scale retailing company. It provides great functionality and customization options as well as a more all-encompassing ERP experience, whereas Sage X3 is (despite optimizations made for large-scale companies) remains a preferable alternative for small and middle-scale businesses. OneWorld ERP, as it stands, is a middle-of-the-road solution with a focus on sales, marketing, and accounting.
Although its partnership with Oracle promises significant improvements in the next few years, Acumatica Cloud xRP provides a more solid product now. Besides, the retail industry is characterized by a great number of users (both managers and employees) having to interact with the ERP system. Products by Sage and NetSuite punish large amounts of users, resulting in high TCOs, which is a significant factor since the use of ERP is associated with significant expenses as it is. Acumatica, which charges by computing speed rather than user count, is, therefore, a more economically prudent solution. Therefore, it is recommended to use Acumatica Cloud xRP for large-scale retail businesses.
References
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