Since installed ERP systems are expensive, complex to deploy, and require dedicated IT resources to maintain, cost-effectively automating mission-critical systems for small manufacturers is a challenge. Many small-to-medium (SMB) manufacturers instead make do with multiple applications run by different staff. Such was the case with ProSoap, a small manufacturer of industrial hand cleaner.
According to President Billy Self, his company relied on about 10 different applications, among them accounting, payroll, sales database, shipping and custom applications for activities like inventory management. The solution, of course, was costly but, as importantly, it was inefficient. Self says he was paying about $100,000 for an IT guy and $150,000 a year in software license fees and upgrades. Because upgrades interrupted his business for several days at a time, he says also that "we found ourselves concentrating so much on our servers that we couldn't get on the phone enough to make sales calls."
Furthermore, he says, "we didn't have our manufacturing side talking to our sales side;" so sales, for instance, had to log into the inventory application to verify that it had enough product to fulfill an order on time. Orders, therefore, did not drive inventory, so ProSoap could not manufacture to demand to cut storage costs.
That all changed in 2002 when ProSoap leased nine seats of a hosted ERP suite comprised of fully integrated ERP, CRM, and e-commerce services. The move replaced all other applications and eliminated IT staff and license fees.
Source: Outsourcing Journal, http://www.outsourcing-journal.com