What IS ERP? (Hint: more than just Business Management Software)

When you provide solutions for small businesses, you get an interesting perspective on the overall economy. Small businesses in the United States are a primary driver of jobs and commerce, and provide good insight as to where the economy is heading. That's one of the best parts of this business — and of course, those growing companies are natural prospective users of xTuple software.

Every day we connect with people who understand our kind of solution and have implemented ERP before ... but we also often meet the company who has business challenges and problems, can articulate those problems, but does not yet fully understand the benefits of ERP.

Young companies often start off using technology to solve problems as they spring up, one at a time. See if any of this sounds familiar...

It begins with the need to bill your customers for products and services delivered, and so maybe you find some simple billing software. You need to pay your suppliers, so you pick up software that accommodates purchase orders and checks. And then the business takes off. You have money tied up in inventory, and you track THAT on a spreadsheet. A key vendor is overseas, and now you need to deal with foreign currency (there's another spreadsheet). As you continue to grow, you find your customer and prospect base is bigger, and your sales people get their own contact management software on their laptops. It doesn't take much more growth, and you begin to see that QuickBooks, ACT!, and your collection of spreadsheets and assorted databases are no longer enough for all you need to properly and efficiently run your business. In fact, they might be getting in the way.

This is where ERP comes in. ERP evolved out of the early days of business software where disparate point solutions solved individual or departmental problems. Accounting had their software, Manufacturing had their solution, and Customer Service had yet something else. The problem that ERP solves is the unification of these separate solutions into one place, in one database. In ERP we have built-in CRM (Customer Relationship Management) solutions that replace individual programs like ACT! and Goldmine; that solution is in the same database as your sales and customer service solution, which also runs all accounting (receivables, payables, and general ledger). All of this "front end" software is connected to the back office manufacturing operations, inventory management, vendor management, etc. This is beyond QuickBooks. (You might say it's post-QuickBooks!) The need at this point is for multiple software solutions, all working together, not separately. That is ERP. That is your business software platform.

ERP solutions, properly implemented, do a terrific job of bringing multiple applications together and making the overall business easier to manage. Finally, everyone can be sharing the same information, instead of fighting over it. Hooray! Now we're done, right?

Well, no. Inevitably there will be a problem (likely minor) that the ERP solution doesn't address directly — and while those problems are often addressed by making changes in the core product that can be available to all xTuple users, sometimes the requirement is just too unique. So in addition to making software that is easy for our customers to use, we have also made it as simple for other solutions to work with us, to offer our customers additional functionality, beyond the ERP, on our platform. If the platform is easy to develop software on, and well supported, then other application providers have incentive to develop for this platform. The Ecosystem grows. As the Platform continues to expand, it becomes more valuable for the entire community.

The chase to be the Platform of Choice is not new in the history of technology products (terrific Michael Mace article on the history of these platforms). The business PC market evolved in this manner. Early on, there were dozens of operating systems and many competitors, all vying for market share in the rapidly growing space. Microsoft changed the game with its willingness to be more open (don't laugh!) and won the operating system battle in the 80s and 90s. DOS, then Windows established a platform that let not just Microsoft but hundreds of other companies share in the success of the PC market explosion, and as a result, Microsoft has owned the PC platform for nearly 30 years. In that same time, Apple took a different, less open path, and made a different choice. That 1990's choice of direction has kept Apple below 5% of the PC market, even with today's success of the Mac. Jack Miller, writing for Seeking Alpha last month observed that "Apple could have been in MSFT's shoes, but while Apple has always made great products, it has failed to share the wealth with enough partners to make its software the primary choice" for developers. It was Microsoft's relative open-ness that encouraged more developers to write software for their platform, and ultimately won out the day.

It makes sense that a similar dynamic would unfold in the business applications market. On the xTuple ERP platform, we are endeavoring to make it easier for partners and customers (and xTuple) to simply add on to their ERP environment, without having to do major coding. Every day there are new additions to the xTuple ERP platform, as can be seen in the xChange marketplace. Continued success here makes for more options for the community and a richer experience for the end-user. Wouldn't it be nice to add curtains to your bathroom, versus ripping out all the plumbing, and replacing it, just to add that small, cosmetic feature? That's the platform analogy. We provide the house, we will continue to modernize and update it. We will continue to make it contractor friendly (see our on-line instructions). You feel free to add on and decorate. Or bring in an outside decorator. And if you have a good idea, that others could use, why not share it? Or sell it? This is the great benefit to xTuple conducting business more openly: you have options for addressing your own challenges and making it easier to solve your own problems.

Traditionally, the proprietary ERP companies had not been open to this kind of community cooperation. That's where xTuple is changing the game. Use our simple business software platform (which doesn't cost you anything), and you will have a way to solve all your business problems that just makes sense. How can we help? Need to directly connect your website store to your ERP solution? Would that make things easier? Instead of printing and mailing and faxing, wouldn't you just like to email those documents, like you email everything else in your life? Does you company have a walk-up business? Would a Point-of-Sale extension to your ERP help that walk up business? How about an ability to walk around your warehouse and do inventory counts via bar coding, wirelessly? How much time would that save? Come on into the xTuple xChange, and see what products are there that could help your business.

This is what makes our open transparent approach to enterprise software a compelling business value. We are providing the platform of a strong and comprehensive business software application. At the same time we are encouraging and growing the development of extensions within it and around it. We are providing our users with a solution AND an ecosystem. It is a community that is far stronger than any one commercial software company. (No matter how wonderful that company might be!) There is great value for users of technology to have a strong community around the products they use. This is what ERP should be. Let's continue to build it, together.

Wally Tonra

Vice President Sales

Wally has been with xTuple since 2004 and in ERP sales since the mid-1990s. After all that time selling vendor-centric, proprietary enterprise software, moving to an open source, Mac-friendly ERP package was a natural evolution. Prior to xTuple, Wally spent 10 years at JD Edwards, which was eventually acquired by Peoplesoft, in various sales and sales management positions. He made the move to xTuple before Oracle took over both Peoplesoft and the former JDE. Prior to JD Edwards, Wally held sales positions at ERP software company Daly.commerce (formerly Daly and Wolcott), hardware supplier XL/Datacomp and storage vendor EMC. Wally holds a B.S. from Boston College, where the Mac fanaticism all began.