Kristjan Vilosius is the CEO of Katana Cloud Inventory.
Meeting today’s market demands means connecting the customer-facing tech stack with powerful backend systems. But unlike large corporations, small to medium-sized businesses (SMBs) need practical solutions that streamline operations and support quick, confident decision-making.
Over my years as an investor across industries from manufacturing to healthcare, I’ve found that the most resilient businesses are those that integrate their backend tech in a way that serves their customers best. The key to success is setting this up early on. ERP software gives businesses the flexibility to navigate demand as they grow. But one question still remains:
Is a full suite or composable ERP stack the right choice for SMBs?
The traditional enterprise resource planning (ERP) system was an evolution of materials and resource planning systems developed in the 1960s. This evolution is important in my view, because a business that sells physical products today still depends on the accuracy of its inventory as much as it does on its cash flow. This is particularly clear on display during holiday sales. Accurate inventory management that doesn’t cost a fortune is more important than ever; and could explain why 73% of businesses in a recent Gartner survey claimed to have changed their supply chain network over the last two years.
Over these years I’ve seen more and more small businesses opting for a cloud-based approach to ERP, especially as the traditional business-suite ERP systems, such as SAP, Oracle and Microsoft Dynamics, continue to focus their tools on large enterprises. Oracle Netsuite, a cloud-based business-suite ERP, states that traditional ERP platforms can be overly complex for small businesses to set up, requiring additional hires to maintain and ultimately lacking the scalability that smaller businesses depend on. In my experience this is correct: a whole stack of tools may not allow SMBs to take full advantage of the ever-evolving systems in various areas of business operations like accounting, logistics and resource planning.
But the choice is not as simple as traditional or cloud-based ERP. Companies today must also navigate the decision between a cloud-based ERP with a full suite of seamlessly integrated tools or whether to assemble a best-of-breed stack of SaaS solutions.
A full-stack ERP can be the way to go for a bigger enterprise that wants and can afford to build a customized business suite to fit specifically to their needs and individual workflows.
For small companies navigating this decision, I often advise that it’s not about building a rigid ERP that tries to cover everything; it’s about creating a tech stack that fits precisely where you need it and costs what you can afford. When integration is planned around organizational needs, people aren’t stuck entering data manually or switching between disconnected systems—they can focus on the work that really matters.
What do SMBs need to get started?
Clean, accurate data is key here. Without a reliable foundation, no ERP system—no matter how it is designed or implemented—can deliver the insights a business needs to succeed.
For many businesses, moving to a connected, adaptable tech setup works best in stages. Rather than overhauling everything at once, leaders are starting with the essentials, integrating core areas like sales or customer data, and gradually expanding from there. Small manufacturing companies usually aren’t ready for software until they have established solid data streams. Working in a phased approach keeps things manageable and allows teams to adjust to each new function in stride.
The most important factor I think leaders need to consider before getting started is scalability. Beyond the ease of integration with other systems, scalability is what separates cloud-based, composable ERP tech stacks from traditional ERP platforms.
When a small company works in phases on a setup that’s designed to grow with its needs, it won’t have to constantly manage limitations or upgrade the system as demand grows. A scalable system means they’re prepared to handle the demand without scrambling for solutions, and that level of readiness is invaluable to the businesses I’ve worked with.
However, scalability can come at a surprising cost when ERP is deployed too quickly. Small business leaders benefit again from a phased approach, as it allows the time they need to understand pricing structures as they scale their ERP software.
Automation is transforming how SMBs work. But while automation can be an incredible way to eliminate repetitive tasks, artificial intelligence (AI) is the technology that is poised to change demand forecasting and inventory planning, which are practical, hands-on applications that add value to day-to-day operations. AI is also being deployed across customer-facing platforms, which means teams aren’t bogged down by customer service requests or inventory management. However the promise of AI-enhanced operations is only possible if you are running an integrated ERP system of some kind across your tech stack.
Ultimately, the power of ERP isn’t about having the latest tech. It’s about having a system that makes work simpler, more efficient and better equipped for the future. Real-time data and integration aren’t just tools; they’re part of a larger strategy that puts SMBs in control of their path forward. Whether you decide on a composable ERP, traditional cloud-based ERP or even an on-premise, desktop ERP solution, I urge you to take your time and plan the integration in structured phases.
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