Advanced ERP systems have long been seen as something only big companies with big budgets and IT teams could have. High costs and complexity kept smaller businesses away.
For one in three organisations, expensive implementation was the top reason for not adopting an ERP. Other common barriers were different priorities, implementation challenges and not needing such a system.
But the landscape is changing. The business environment – both technologically and organisationally – is getting more complex and demanding. This is forcing SMEs to realise that the software with limited functionality targeted at small businesses, let alone spreadsheets or basic apps, will only take them so far.
That’s why GROW with SAP, a solution package for midmarket companies, brings the power of SAP’s flagship S/4HANA ERP to their doorsteps. SAP’s competitors (Oracle with their Fusion Cloud ERP for mid-market, Microsoft with Dynamics 365 Finance, a scaled-down offering for SMEs) are following the same path, saying their product lines now include various types of SME-adapted versions of their ERPs.
It’s a definitive change: previously SAP was different, they had a separate product for SMEs, SAP Business One, and now they’re extending their flagship ERP to the new audience.
But how exactly does this approach now emerge?
How Enterprise-Grade Functionality Is Changing the Landscape for SMEs
The key to an offering like GROW is the enterprise grade functionality that was previously thought to be the domain of big companies. It has a rich set of features — from core financial and accounting to real-time analytics and automation — for mid-market businesses. So a company with 50, 100 or 500 employees can have the same capabilities that Fortune 500 companies use to run their business and strategy.
Plus GROW with SAP comes with prepackaged best practices and preconfigured business processes for a wide range of industries. These have been refined over years of experience from both SAP and its customers. This level of guidance is a unique opportunity for SMEs to get their processes right and efficient.
And finally these capabilities are multiplied by the AI features throughout the offerings. For example SAP has deeply integrated AI into GROW which will help customers simplify their daily work and grow their business.
Most importantly these features support business growth and efficiency and the idea of a cloud offering.
Cloud Has Become the Power Move, Not a Vulnerability for ERPs
After years of working with on-premise SAP solutions, many clients – and even some of our consultants – were skeptical about the cloud. As my colleague Pavel Zhylko, Senior Partner at ACBaltica, recalls from those early days: “It felt like a step too far. Would the cloud be as reliable? Could it handle large volumes without performance issues? Wouldn’t our clients pay more in the long run due to subscription fees or unexpected challenges during migration?”.
He wrote about this in more detail in his article on ERP cloud transformation. Now he’s convinced that the cloud is one of the biggest enablers of ERP accessibility, removing traditional barriers to entry.
First, the client is completely relieved of all tasks related to building and maintaining the infrastructure and the associated costs. With a cloud solution the vendor takes care of these tasks which are included in the price.
Second, in a cloud ERP model there is no need for an upfront purchase of expensive licenses and hardware. A small company can start with lower costs. This pay-as-you-go flexibility turns a heavy investment into an operating expense.
And then with SAP’s GROW cloud ERP companies can scale (up or down) and adapt as needed. You can request additional features or users from your SAP provider without worrying about servers, updates or infrastructure – a typical B2B SaaS product in fact. The flexibility to control your budget via the number of users is also a factor.
Another big advantage of cloud ERP is that the provider takes care of the updates, security patches and compliance updates with minimal disruption to business.
But does an SME focused cloud ERP provide capabilities 100% identical to traditional on-premise ERPs? Yes and no.
Balancing Flexibility and Standardization
Traditionally large on-premise ERP projects involved a lot of customizing the software to fit the company’s existing processes. But now there is another way in the philosophy of B2B tools: away from heavy customizing.
It’s about out-of-the-box best practices and configurations that work for most companies with minimal adjustments. It reduces costs and speeds up implementation. Instead of spending months setting up your ERP environment the new tools help companies adopt the preconfigured processes above. SAP has been refining these processes for over 50 years, based on its global experience with companies from various industries. This also means the system is aligned with industry standards and compliance requirements from day one.
Of course every company is unique and a balance between flexibility and standardization is important. The goal of modern ERP isn’t to force a one-size-fits-all process on every company but to provide a strong, efficient template as a starting point. And sometimes it works backwards just fine: we at ACBaltica can recommend adjusting real business processes to the pre-built in S/4HANA – to make them more standardized.
If truly unique needs arise today’s cloud ERPs often allow extensions, integrations or even customizations. This way adaptability is maintained for exceptional cases, often with additional costs though. And vice versa: avoiding customizing speeds up implementation and makes the total price of the solution more attractive.
For some companies implementation speed is a big factor in their growth – along with scalability. But are there even more ways an SME-adapted ERP can help with that?
Why Fast-Growing Businesses Need Scalable ERP Solutions
A startup that doubles or triples in size can quickly find that the simple tools it used early on can’t keep up with the complexity of a more extensive operation. As a business expands, it may need to comply with stricter financial regulations, undergo audits, or handle multi-currency accounting if it enters new markets. What worked for a 5-person company no longer works for a 100-person company.
An overwhelming 93% of businesses have outgrown some of their digital tools since launching — 23% report outgrowing all of them.
This dilemma highlights the need for right-sized, scalable systems. Fast-growing SMEs need ERP systems that they won’t outgrow. A modern ERP solves these issues by having scalability at the heart of its feature architecture. Moreover, a scalable ERP is designed to handle more transactions, users, and complexity without a decline in performance or reliability.
GROW with SAP, for example, is essentially the same powerful S/4HANA cloud technology used by large enterprises but packaged for smaller teams, meaning there is plenty of headroom as the business expands. If an SME doubles in size, it can simply activate more capacity or additional modules in the ERP; there’s no need to switch to a whole new system.
This scalability also covers new functional needs. A company might start out just needing financials and sales in the ERP but later find that it requires an entire manufacturing or advanced analytics product — a scalable ERP lets them seamlessly add these products to the company’s software landscape when the time is right.
And there’s the implementation speed question we’re coming back to. SMEs can go live on GROW with SAP within a few months. This means a small or mid-sized company can start reaping the benefits of a world-class ERP in under six months from kickoff to go-live.
As a result, a fast-growing retailer can seamlessly go from 50 to 5,000 orders a day, or a manufacturer can ramp up production volume, a warehouse can hire 100 more people, and the software will scale to match that demand.
The Future of ERP for Businesses of All Sizes
The convergence of cloud technology, automation, and industry best practices has dramatically lowered the cost and complexity of implementing an ERP. At the end of the day, this whole shift is about empowering smaller companies.
For a startup or an SME in a tough spot regarding its budget or profit margin, the ability to receive ERP functionality without adding to their bills can be crucial. For those companies that feel more comfortable, adopting an ERP can be a way to stay on track with the competition or outgrow them.
The market now lets you use the same system to manage operations that a larger competitor uses, which may transform SMEs’ business opportunities.
Looking ahead, we believe ERP providerswill keep doubling down on user-friendly, scalable systems enriched with smart features that grow alongside the business. The line between tools for enterprises and those for SMEs is becoming increasingly blurred. Solutions like GROW with SAP are making advanced ERP capabilities available to companies of any size.
This direction is fully aligned with what we observe: modern ERP is no longer a privilege of large enterprises — it’s a practical tool for fast-growing companies of any size.
