Have you ever looked at the functionalities of an enterprise resource planning (ERP) software and thought ‘Wow. That’s way too much. I don’t need all of that fancy stuff.’
Or maybe you’re frustrated over how there are so many options to choose from. You just want an ERP solution where everything’s neatly packaged for your business.
Depending on your company’s requirements, you may end up having to choose between modular-based ERP systems and packaged (i.e. all in one) ERP systems.
Modular-based ERP Systems address the concerns of the first group of seekers – users get to choose which ERP modules they need, and implement only those modules.
Packaged ERP Systems are great for the second group of seekers. All modules are bundled nicely together in a single system; when you purchase one full license, you get access to all modules.
While there are many pros and cons for each ERP software type, for simplicity's sake, we list two main differentiators below:
Why Modular ERP Software
1. You Buy Only What You Need
Imagine a buffet line-up filled with delicious and not-so-delicious items. You know exactly what you want and pile those high on your plate, while whisking past the less attractive dishes (goodbye salads, hello steak).
In a similar fashion, modular ERP software lets you choose only the software modules relevant to your business. For example, if you’re in a purely services business, an Inventory Control module adds little value – if not, none at all – to your organisation.
However, here’s where the analogy ends. Unlike a buffet where you pay for everything in sight, modular ERP software lets you pay only for what you need – not any unnecessary extras. So if that Inventory Control module has no bearing on your business, you can give it a miss and save on investment costs.
2. You Get Potentially Lower Setup Costs and Learning Curve
Because you buy only the ERP modules you need when you need them, you can spread your investment costs over time.
Let’s use that services organisation as an example again. Suppose five years later the company decides they need to diversify into a line of business involving inventory. They can then purchase the Inventory Control and other necessary modules, thus spreading their overall costs over a five-year timeframe. This makes it more attractive for smaller, cash-strapped businesses, where they don’t have to pay a large lump-sum at the start.
Furthermore, while buying an ERP software is easy, implementing it successfully is another issue altogether.
When you implement your ERP solution in parts over time, you give your organisation more time to adapt to new business processes and practices, and make any necessary adjustments accordingly. Instead of having to learn an entire new system from the start, your employees can familiarize themselves with a few modules first.
However, this assumes your business model requires only a few core modules to run smoothly, and that additional modules are added later due to changes in business requirements or growth. If your business requires the functionalities of a full ERP suite, then it might be more cost-effective to go for a packaged solution.
Sage 300 ERP: Robust Modular ERP Solution for SMEs
One example of a modular ERP software is Sage 300 ERP. Formerly known as Accpac or Sage Accpac, the ERP system lets SMEs start small and add more as they go along. You implement and pay for only the ERP modules you need today. Once new business needs arise, you have the option to add more ERP modules.
Some features in Sage 300 include:
- Access transactional data with true Web screens across financials anytime, anywhere
- Robust financial, operational and inventory, sales and marketing, and customer service modules to choose from
- Easily supports multiple companies, languages, and currencies
- Intuitive workflow and process tools
- Personalised key performance indicator (KPI) dashboard and Business Intelligence (BI) tools
Why Buy Packaged (All-in-One) ERP Software
1. Your SME’s Agility is Potentially Future-Proofed
Picture a typical degustation set menu. As a customer, you know the total price and dishes are fixed. The chef decides what you’ll have, and you simply pay and enjoy the overall experience.
Maybe you don’t fancy that pungent whiff of Bleu d'Auvergne in your salad. Or maybe you wish you could swap your greens out for another dessert. Yet all in all, you’re happy to have everything covered from start-to-end.
Broadly speaking, a packaged ERP software is a bit like a multi-course meal. You get all ERP modules for a set price, regardless of whether you need every functionality at that given point in time.
There are advantages to this approach. With a modular ERP system, purchasing new modules can get a bit disruptive to your business. You need time to evaluate and purchase new modules, and your staff have to go through the implementation process again e.g. training, configuration, testing etc.
But with a packaged ERP software, you go through the 'teething' pains right from the start. Once the initial phase is over, your employees can re-focus on doing what they do best, without worrying about when and whether to add new modules in the future.
There’s also the risk that new ERP modules lack compatibility with older, existing modules. This sometimes happens when the gap between implementation is too long i.e. your SME’s using outdated versions. By getting a complete suite of functionalities from the start, you stand to future-proof your business for growth.
2. You Get Potentially Lower Setup Costs
Yes, you read that right. Starting off with a packaged ERP software could cost less than a modular ERP software.
Now you might ask: “How’s it possible? Isn’t it more affordable to buy only the modules that we need? Didn't you just say that modular ERP is cheaper?"
It all depends on your SME’s requirements. There comes a tipping point where it’s actually more cost-effective to buy a packaged ERP software than a modular-based one.
The reason? Pricing structure differences.
- Modular-based ERP Software: Typically, you pay for each module, and pay again for each user license
- Packaged ERP Software: You pay for each user license only, and get all modules inclusive
Let’s use a simple example. ABC Company requires 5 ERP modules and 5 user licenses (costs are for illustration purposes only, and not actual costs):
Modular-based ERP Software Example vs.
Packaged (all-in-one) ERP Software Example
As you can see, it’s more cost-effective for ABC Company to choose a packaged ERP software ($17,500) than a modular-based ERP system ($20,000) for five ERP modules.
However, if ABC Company needed four ERP modules or fewer, then it’d make more financial sense to go with a modular-based ERP software.
SAP Business One: Powerful, All-in-One ERP Solution for SMEs
One example of a packaged ‘all-in-one’ ERP software is SAP Business One, or SAP B1.
More than just accounting, SAP Business One gives you greater control over your SME or subsidiary, and streamlines all your key processes – from accounting and supply chain management to customer relationship management (CRM) and purchasing – in a single solution.
With SAP Business One, you can:
- Capture all business information in a single, scalable system
- Quickly get answers to critical questions, thanks to its integrated business intelligence
- Empower your employees with on-the-go access via SAP Business One’s intuitive mobile app, and more
Your Next Steps
There’s no simple answer as to which ERP system type is better. It depends on how you run your business and your priorities – whether you prefer a section-by-section approach or a more holistic, integrated approach.
But we do know professional advice can make a world of a difference. Leave us a note here for a free short consultation over the phone.
Alternatively, you can also download our free 5-Min ERP Software Comparison Guide in the link below, in which we give a quick comparative overview of Sage 300, SAP Business One, and Microsoft Dynamics NAV.