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The Long Tail and cloud based ERP Solutions

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Chris Anderson, the editor of Wired magazine, conceptualized the long tail, back in 2004. According to the concept, retailers can make significant profits by selling large quantities of less popular products in addition to selling fewer quantities of most popular products. A typical example could be an online music store that sells large quantities of less popular albums that are priced very less, in addition to selling fewer copies of the most popular albums that are highly priced.

In simple words, the long tail concept guides businesses to concentrate equally on the vital few customers as well as the trivial many. This concept can be applied to ERP solutions as well. Let us see how.

At present, medium and large businesses who are more popular or top ranked are the considered to be the potential customers pertaining to their sales or turnover. Continuously improvising their process efficiency and serving their customers are the key reasons for their top ranking. These top ranked businesses are the vital few potential customers for ERP vendors as they are more willing to automate their processes and improve themselves in the long run.

But, according to the long tail concept ERP vendors can make significant profits by concentrating on the trivial many - low ranked or less popular businesses. These could be small businesses with less than 500 employees or high potential startups or small merchants having one or two branches within a state or a city. By developing customizable ERP solutions with affordable price tags, ERP vendors can tap in this market to make significant profits in addition to large corporate sales.

With cloud computing set to boost global economy this decade, ERP vendors can come up with solutions that can be delivered based on SaaS model. ERP solutions and related features can be priced differently for different business, based on their size. This way, the small businesses / less popular merchants can choose the packages s per their requirements and improvise their operations.

What do you think?

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