ERP Software Customer Market Segments
The criteria below are not exhaustive but are the most common criteria used to categorize the ERP software market into a continuum of customer segments.

	Small Business Market	Mid-Market	Enterprise
Annual revenues:	$5 million (M) to $100M	$100M to $1B	Over $1B
Staff:	Less than 100 staff	101 to 500 staff	Over 500 staff
ERP user count:	5 to 30 users	31 to 250 users	Over 250 users
IT staffing:	One or a few; many times a single person with multiple responsibilities	Small group of several people; often lack executive participation and long term strategy	Full IT line of business staffing; normally with executive participation and CIO with board participation
IT skills:	Very modest; often learning on the job	Generalist skills; generally lack specialty skills	A portfolio of broad and specific skills
Propensity to use SaaS:	Very high. This market routinely uses outsourcing for HR, payroll and administrative functions. This grop is willing to outsource ERP information systems management to competent resources with greater skills.	High. The SaaS concept is nothing new or novel for this group.  SaaS is viewed as an extension of traditional outsourcing services. SaaS generally doesn't replace an internal IT department, but is used for specific applications, niche tasks or competencies.	Medium to high. While this customer market doesn't use outsourcing with the same frequency of SMB or middle market companies, it has shown a surprisingly high propensity to use SaaS business applications.
SaaS objectives:	Eliminate a complex function, reduce the requirement to hire IT resources to administer networks and business applications, reduce capital expenditures for hardware and software, and increase overall information systems capability and reliability.	Leverage higher-end CRM software than would be afforded via procurement and offload business systems maintenance and management to dedicated specialists so that generally overwhelmed internal staff can refocus on more pressing projects.	Offload systems maintenance and management to specialists in order to achieve better SLAs (service level agreements), superior uptime and an improved user experience; Relieve internal IT staff to focus on core competencies and strategic tasks.
SaaS buy criteria:	Ease of use, acquisition cost (subscription cost) and cost avoidance. This market segment greatly values the pay as you go software subscription model.	Software depth, capabilities, functionality, reporting, SLA (Service Level Agreement), guaranteed uptime and TCO (Total Cost of Ownership).	Software breadth (increased number of modules or software scope), software depth, SLA, guaranteed uptime, information security and TCO.
Customization preferences:	More willing to accept a generic or less customized ERP system, although this community views user-configured customization as a big plus. This group normally does not achieve competitive advantage with systems.	This market expects a high degree of integration and customization for their business requirements.  The majority expect the SaaS software company to customize their hosted application.	This market also expects a high degree of integration and customization for their requirements and normally have technology preferences - such as SOA (service oriented architecture), XML web services, etc.

Business Software Market Segments

Software analysts, publishers, Value Added Resellers (VARs), consulting organizations, systems integrators and industry media organizations use a continuum of terms and definitions for describing either the same or slightly overlapping business software customer market segments. We've put some definition and understanding to the three most commonly used business software tiers.

• SME or SMB. SME (small and medium enterprises) and SMB (small or medium sized businesses) are often used interchangeably. SME is more of a globally used term (and is the official market phrase for internationally-based enterprises such as the United Nations, World Bank, World Trade Organization and the European Union (EU). While several EU member countries have varying SME market size definitions, the EU is near in creating a recognized standard market segment definitions. Per the EU's new convention, 'Small' companies have fewer than 50 staff and 'Medium' companies have between 51 and 250 staff. In North America, the terms SME and SMB are used as equals. However, North American definitions for Small and Medium sized enterprises are larger than in the EU. By North American standards, a small business has less than 100 staff and a medium sized business is generally defined as between 101 and 500 employees. The term SOHO (small home / home office) is also commonly used in North America to describe companies with less than 10 staff. In the United States, there are over 5.1 million owner-operated, self-funded small business companies that employ about half of the US worker population and create the majority of new jobs. Most of these small businesses do not use a central ERP system and instead operate a number of manual and disjointed systems which include bookkeeping software, small custom built databases, spreadsheets and paper files. This inefficiency leads to repeated errors, longer cycle times and a lack of data for analysis and business decision making.

• Mid-Market, Middle Market or Mid-Range. Any one of these customer market terms may be randomly used depending upon the speaker or industry. While some market segments and industries simply categorize themselves as either SME/SMB or Enterprise, several other industries - including the business software industry - recognize the significant customer differences between small business and big business and therefore use this in-between category. From a ERP software perspective, there are several profound differences (e.g. software scope, software functionality, software utilization, system integration, customization, support, etc.) between 'small' and 'medium' customer segments so the term 'middle market' is frequently used (and the SME or SMB terms are frequently replaced with just the 'Small Business' term).

• Fortune 1000, Global 5000 or Enterprise Market. The terms to describe 'big' enterprises have evolved as big businesses keep getting bigger. Several years ago, the term 'Fortune 1000' was frequently cited. As those companies grew and more large companies came into the fold, the term 'Fortune 2000' became commonly used as that next 1000 companies were unquestionably businesses beyond the middle market category. As big business growth continues unabated, the term 'enterprise' has become the de facto standard for many in the ERP software industry and other technology industries.

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