Why Salesforce.com and not a full-blown ERP system?

Recently we’ve been doing podcasts about our experiences with implementing Salesforce.com. While we favor Salesforce as a CRM solution, it’s not the only CRM that we’ve implemented in our portfolio (we have a fair amount of SugarCRM). One of our kindly listeners opined that we seemed to have an obsession with Salesforce — and asked us why we would not consider a full-blown ERP platform in lieu of SFDC. It’s a good question, and there is no simple answer. First off, we’re not real ERP buyers. We are focused on founder-owned companies in the technology space. Our companies rarely have much in the way of inventory or manufacturing. A “full blown” ERP for our companies will typically be General Ledger, Accounts Payable, Accounts Receivable and Purchasing. These are companies with less than $100 million in revenue, so payroll and H/R functions (sick days, vacation accruals) are handled by an outsourced payroll vendor — ADP or Paychex. It’s more accounting than ERP. Many are running on Quickbooks as their accounting system when we buy them. We almost always change that out for Microsoft Dynamics GP or NetSuite. (Lately we’ve been eyeballing Intact as well). There are plenty of good accounting platforms out there. Our companies rarely need specialized accounting functions and Dynamics and NetSuite both scale just fine for the size companies we build out over our hold period. If a CFO has a strong preference for something else, we listen. There’s no need to be dogmatic about it. We find that all of our companies are unique in some facet of their business — and they all write software. So, by definition, we ALWAYS have a hybrid environment. Typically it is at least three systems, the accounting system, some in-house software and a “point” solution for some aspect of the business. Both Dynamics GP and NetSuite are solid accounting platforms, but they don’t handle subscription management very well. Zuora handles that well, so it’s often our go-to point solution for subscription management. To us, “full blown” ERP is rarely, if ever, a single suite of products from a single company. We have a company that uses NetSuite’s accounting and CRM modules with great success — but they also have a home-grown time management and scheduling application. We will never buy a single suite of products from a single vendor. At least we haven’t done so. So opens the door to implementing several best of breed solutions at each company. But it’s not the only reason we often end up with Salesforce.com.

Our companies have small teams focused on their own product — the software they build and deliver to customers. They have some sort of accounting system, mostly Quickbooks. They have development tools, source code control (SVN, Git, Perforce) and a project management tool (Basecamp, Trello, Jira). Often they have no system for managing sales or customer support. There is no single record of truth for a customer. Data is spread between the accounting system and their own internal systems. Salesforce.com is a easy platform to implement for creating a single system of record for the customer data. With some help, our teams can create a reasonable account/contact hierarchy with some custom fields and custom objects for their unique data. We can easily pump data from the “external” systems into SFDC and create a simple platform for managing customers. We also get a platform for centralizing sales data and customer support data. CRM systems don’t help sales people to be more productive. They help management get a handle on just exactly what is going on with the sales pipeline. But, if we do it right, we can add value for sales by getting customer support data and sales history into a single place that sales people can get to without going through a VPN. And lots of people use salesforce.com. They already know how to “work the screens and reports” from prior companies. We have good consultants that know us well that help us implement it. It might not be the best solution — but it’s a good solution and it’s timely.

If I had to some this all up in a neat package, here’s what I would say: We don’t need fullblown ERP for our companies, no single vendor has ever provided a complete suite that is good enough for everything, we always have our own internal “point solution” to consider, and we don’t want to make perfect the enemy of good.