Why is Inventory Management called ERP? How is it different to accounting software?
ERP (Enterprise Resource Planning) is an acronym which doesn't actually mean much. Key functions are taking orders from customers, managing stock levels, reordering, suppliers. So even desktop software like MYOB can be considered an ERP, by that definition. So ERP is simply core business software to manage a supply chain.
The SME cloud ERPs reviewed here offers serious functionality:
multi-warehouse stock management
Partial shipments, drop-shipping
Multi-currency customers and suppliers.
Pricing rules. Shipping rules. Backorders.
Auto builds, and even simple backflush manufacturing.
Serial numbers, batch tracking, expiry dates
Pricing rules to deal with customer-specific pricing, quantity-breaks, discounts, multi-currency, markup pricing
3PL, EDI and all manner of integrations with sales channels, CRMs, reporting and analytics.
The Business Case for investing in a Cloud ERP
The business case for a business currently without an ERP is based on: greater efficiency, much greater cost insights, much better stock control and better reporting. On top of that, cloud ERP offers incredibly cheap and easy integration with modern sales channels.
Cloud ERP is different to legacy ERPs such as MYOB Advanced, Accumatica, Microsoft Great Plains, Netsuite in a couple of important ways. Firstly, these cloud ERPs don't do the accounting. Secondly, they integrates really well with the modern, web-based business software which is transforming customer relationships: online market places, omni-channel sales, marketing automation, 3PLs and support for staff in the field and at remote locations. Integration is the biggest single differentiation. Cloud ERPs are very disruptive because web technologies have turned software integration from a very expensive, difficult process to the natural state of modern software.
You might think the most obvious difference is that cloud ERPs run in the cloud, but a lot of legacy vendors now host their software on a cloud server too, claiming the cloud mantle. But integration is not in their DNA, unlike the true pure cloud solutions we consider here. They fundamentally don't talk very easily to other software; they were not built for it. This is why older ERP systems do so much under one roof: it was cheaper to reinvent yet another accounting general ledger than integrate to a better one someone else had already built.
The leading cloud ERP choices
Broadly, Unleashed, Dear Inventory and Trade Gecko are competing for the same target market. They are good general purpose supply chain solutions for wholesalers, and they provide a number of integrations for e-commerce sales channels and cloud CRMs.
Cin7 has some points of difference that appeal to more complex businesses.
The traditional server-based monolithic 'do-everything' systems are dying, but some have emerged as hosted solutions. This article doesn't consider these systems, such as MYOB Advanced or the Microsoft cloud-ports of Dynamics which come under different names. These systems generally offer a more sophisticated accounting solution than we can offer with a Cloud ERP solution, but they have a much smaller base of connectivity with e-commerce, CRM and other cloud-solutions.
We emphasises software solutions which are built from the ground-up to integrate with other cloud apps: this does mean complexity with synchronising apps, but it offers much more flexibility and innovation. When we talk of "pure cloud ERP", we mean those systems which have open APIs and a deep ecosystem of connected apps. In the second half of 2018, both Dear and Cin7 are rolling out new tools to make the accounting integration better, which addresses one of the perceived weaknesses of the non-monolithic pure-cloud approach.
A note: this is a very competitive market. Features are being added quickly. Since 2018, we have moved to a new level of innovation. Unleashed has woken up, although not to the point where it is has caught up with Dear.
Key Feature Differences
This review article is detailed and long. The features which currently differentiate Cin7, Dear and Unleashed are:
Support for Xero tracking categories: Dear is the best, Cin7 and Unleashed have some support.
Specialised warehouse management module: Cin7 is the best, Dear is a close second
API capabilities: Dear is far in front (which is an important long-term consideration because with Dear's API, you can extend and integrate much better)
Two-way Xero payment sync: Only Dear offers this
Customer and supplier deposit sync: Dear does this best, Cin7 has a solution.
Product costing capabilities: Dear has the best accounting design and the best costing, and is the most robust and reliable system for accounting support.
Purchase Order sync: Only Dear does this.
Vendor-supported 3PL integration: Only Cin7 does this, Dear needs custom or third party solution (the excellent API makes this possible)
Vendor-supported EDI integration: Only Cin7 does this. Dear needs custom or third party solution (the excellent API makes this possible)
Breadth of B2C integrations: Cin7 is the winner here. It has more integrations, and the integrations that are in common, such as Shopify, are better.
Multiple fulfilments: Dear has the best support, but Unleashed does allow multiple shipments. Cin7 is an order-splitting system. Unleashed has some backorder advantages.
Templating for forms: Dear uses MS Word-based templates, like Xero. Cin7 and Dear are not as flexible. This is a good win for Dear.
Support: Cin7 offers the best support plans.
Documentation: Dear has the best documentation (detailed, accurate and up to date)
User-interface: Cin7 is unconventional, not very flexible but very information rich. Most people find Unleashed to have the best design. Dear fits in the middle: it follows conventional ERP design (as does Unleashed) but it lacks as many shortcuts as Unleashed. Dear has a much more powerful Sales and Purchasing module as well as the Simple module, which is confusing for new users.
Review of Recently Added Features
Here are some examples of how fast these products are adding features, and it also shows the key points of market attention
Dear Release Updates
Cin7 Recent Updates
Unleashed Recent Updates
TradeGecko's equivalent page requires a login
Cin7, in my opinion, targets more complex businesses. It is considerably more expensive, but it has features not found elsewhere, such as some multi-entity support, native EDI and 3PL, and the best POS and B2B portal, a mobile-friendly Pick & Pack module (Dear offers this too now) and more rigorous accounting integration tools. Cin7's pricing has become a bit complicated, unlike its competitors, which price purely by users. Cin 7 is more open to customising functionality; Dear and Unleashed do not entertain this.
Unleashed has the best user interface. But Dear radically overhauled its interface in the second half of 2017. The first phase of this was the introduction of an advanced sales module which enabled a more sophisticated multiple-fulfilment workflow and some faster processing of orders. Dear offers much more sophistication in its order flows, but I still think Unleashed has the best user interface.
Trade Gecko's interface is quite nice, no complaints.
Cin7 has a complicated and information-dense user-interface, which is overwhelming at first, but which rewards experienced users.
Neto is an odd fish. Mostly known in Australia, it was originally an online shopping product similar to Shopify (but more capable and better designed). It was able to serve both consumer and small-scale wholesale channels. Over time the product expanded to have a pick-pack module, beating every ERP except Cin7, and it has a POS option. Its once-rudimentary inventory management features have grown to include an attempt at purchasing and costing. Most businesses of any scale won't find it good enough yet: it is crippled by no real multi-currency, and it still lacks depth in its stock management. The 'pure-play' ERP vendors still have a large advantage in supply chain management, and at the same time they are all adding POS and B2B portals, although they are leaving B2B e-commerce to the specialists. I am not yet ready to group Neto with the genuine ERP products but it's one to watch. In its original role as a frontend for online commerce, it's a good choice, although Dear no longer integrates with it (Cin7 has a good integration).
Small and Medium Businesses are migrating to Cloud ERP
It's not just a question of upgrading from MYOB or Quickbooks. We implements cloud ERP for businesses leaving SQL Server-based mid-tier packages such as SAP Business One, MYOB Exo, Accpac/Sage 300, Sage X3, Prism and Attache. Integrated cloud ERP can't match the core accounting power of mid-tier systems such as multiple legal entities, but they have advantages in cost, simplicity, speed of deployment and vastly superior integration with CRM and online commerce. Also, they grow in value: you keep getting new features without the cost of upgrading. They remove the need for servers and remote access, which are both expensive and security risks. Cloud ERP systems are much easier to use. Clients see a much greater use of features among staff because these systems are simpler to understand. New hires get up to speed faster, and existing staff get more information more quickly.
The use of integration in these cloud systems is not all positive, but as a business looks to add more automation and business intelligence to the way it works, the plug-and-play approach becomes vastly superior. SMEs can access IT as good or better than anyone had five years ago. This is an incredible levelling of the playing field between medium sized SMEs and large businesses. It's bad news for traditional ERP vendors. The functionality gaps are closing fast and in core ERP and fulfilment, there are already clients leaving legacy ERP who don't find any backwards steps. The rate of innovation in the cloud ERP is concentrated among a small number of products, unlike the hundreds of SQL Server-based ERP choices, which means potential clients are getting a lot more innovation bang-for-buck.
How is SME Cloud ERP different to big, expensive enterprise class software?
A cloud ERP has one big weakness: it does not offer a very good multi-entity accounting solution. You run one balance sheet.
There are workarounds with Xero tracking categories to support multiple legal entities, which can get you by for two or three different entities, or to help you do New Zealand GST (a common Australian requirement). But can not fully reproduce sophisticated inter-entity transaction flows (such as automatically balanced inter-entity bookings). Enterprise-class systems allow for different tax systems, so in one system you can keep track of Australian, British and New Zealand GST/VAT. This is possible in Xero, but with some workarounds and manual work (which can be automated, to be sure). Cin7 does actually have some support for multiple entities, but giving some shared visibility of stock between groups of Cin7 instances, but it is still nothing like a genuine multi-entity solution.
So if you run multiple companies on SME Cloud ERP, you will have multiple Xeros and multiple ERPs, with manual inter-company bookings.
On the other hand, compared to enterprise systems, the cloud solutions I suggest here have much better localisation and they are much, much more nimble and innovative in their third party integrations. That is, payroll, GST and bank feeds are usually not very good in the larger systems, which are not very tweaked to the local market (and most larger clients outsource it anyway). A small but telling example of how good Australian localisation is: Xero submits new employee TFN declarations directly to the ATO. It goes way beyond that: payroll calendars with state holidays, HELP/HECS deductions, changes to BAS submissions ... you can expect Xero to be well ahead of its larger competitors when it comes to localisation in its major markets.
If the inter-entity feature is important, you will need to look at next-level systems, many of which now have some kind of web interface. However, be prepared for total implementation costs of $50K to $100K and annual licence fees of around $1000 a month. We could write a decent inter-entity addon to Xero with lots of spare change left over :)
Cloud systems are designed to be integrated, and by now, the best CRM and e-commerce platforms are cloud-based. Cloud business intelligence systems (data visualisation, dashboards etc) are not absolutely the best, but they are now very good and much, much cheaper than traditional offers. If you want very good CRM, e-commerce and advanced reporting, SMEs are looking at cloud solutions even if they have a legacy ERP, and cloud ERPs are much, much easier to integrate. Cloud SME ERPs have big benefits even for multi-entity businesses.
Cloud systems deliver extraordinary value for money. Never before has so much functionality been available at these prices. The integration of web services is a huge reason: previously, every ERP vendor had to duplicate payroll, accounting, and tax. It cost a lot of money but didn't differentiate the product. Then the vendors added generally poor CRMs as well. Now you can plug together really good systems, paying each vendor just to do what they are good at. Also, legacy systems use technology choices which have much smaller developer bases, and on top of that, they tend to have a tightly-guarded, proprietary API. Developers need to have specific skills, and they often need to pay expensive fees to get access to the API. In contrast, a genuine cloud system publishes the API for free, and cloud APIs are not locked into to any particularly technology. Most cloud integrations are build with open-source technologies, and they have a mass pool of developers.
Support and business model of the cloud ERPs
The SME ERPs systems do not make money from implementation services. Even when they have "onboarding" services, they are primarily designed to get you paying monthly fees as soon as possible.
For implementations, they encourage businesses to use a 'partner' (a consultant) although you don't have to. It is possible to do the implementation yourself.
If you do use a partner, they should be like us which is an expert in the system, and hopefully an expert in data conversion, implementation, reporting and in helping you see and realise opportunities for the new system to grow your margins and results. Partners are independent of the vendor, except they earn a commission which is typically 15% to 20% of the monthly fee. On the flip side, the partner gets a free user licence to your deployment. There is no requirement from any of these systems that a partner be exclusive. Cin7 has a certification process; the others don't yet.
As the Cloud ERPs get more sophisticated, it is possible that we will see partners concentrate of a smaller range of products.
Cin7 provides an good level of support and different levels of service, both to partners and to customers directly. The level of access and support from Cin7 is very good (phone calls, emails and tickets).
Unleashed offers telephone access, email support, a "university" of good documentation, and pretty good partner support (real people making real phone calls, including the founder who is quite keen to get feedback on the product).
Dear Inventory was in the past quite hands-off, but is now making more effort to contact partners to seek input about feature developments. Dear's ticket-support is fast (usually within two hours, at least for first-level support). Dear's documentation is the best of the packages. We usually get answers in less than two hours; for sure Dear does not guarantee this so we shouldn't set expectations, but the experience is good. First level support appears to extend well beyond Australian office hours. From time to time I find bugs, some quite obscure: did you know the official name of Brunei is actually 'Brunei Darussalam'? Dear fixed that very quickly, in fact I've never waited more than a few days for a bug fix (and I have only encountered minor bugs). The documentation is the best of all of the packages, being comprehensive, accurate and up to date, and it is easy to search. All resources are open to all users, partner or not, and the support and feature request forums are active.
Trade Gecko has spent a lot of effort on its knowledge-base and integrated help. It's now very good.
In summary: the support models are different but lack of support is not an actual problem for any of them, in my experience. In all the implementations we've done, we would not once flag support as a negative experience. The self-help experience is weakest with Cin7, but it has the best real-person help, and has a certification process for partners (so does Xero).
Customisation and Upgrades
Pure Software as a Service (SAAS) discourages or even 'outlaws' client-specific customisations, instead offering a steady stream of updates which are made available to all customer, and guaranteed, perpetual upgrades. Legacy software vendors promised upgrade too, and justify software maintenance fees for this reason ...however, implementation partners have a strong incentive in customising the software (to earn service fees), so many clients face a complex and expensive upgrade process to access new features. The SAAS approach is very appealing if you've faced this problem.
Cin7 will respond to user requests for customisations, particular if they are in the user-interface or simple tweaks to reports. The other packages will not do custom development full stop (although they are fast at fixing bugs). Requests for new features go into a prioritisation process which is very obscure.
The point of IT is meet the requirements of the business. We places a high value of the capabilities of an application's API because this allows integration and automation, which still preserving the benefits of the pure SAAS approach. A good API gets us close to the best of both worlds.