ERP vs Automation Platform: Do You Need Both?

One of the most consequential technology decisions a growing business faces is whether to invest in an Enterprise Resource Planning (ERP) system, an automation platform, or both. ERPs promise to be the single system that runs your entire business. Automation platforms promise to connect and streamline the systems you already have. The reality, as always, is more nuanced. This guide helps you understand what each approach actually delivers and when you genuinely need one, the other, or a combination.

What an ERP Actually Does

An ERP system is a monolithic platform that aims to centralize all core business functions: accounting, inventory, order management, procurement, manufacturing, HR, and CRM into a single database. Products like NetSuite, SAP Business One, Microsoft Dynamics 365, and Odoo are the most common options for small to mid-sized businesses. The core value proposition is a single source of truth: every department works from the same data, eliminating the need to sync information between separate systems.

ERPs excel when your business has complex, interdependent processes. A manufacturing company that needs to track raw materials through procurement, production, inventory, sales, and accounting benefits enormously from an ERP's unified data model. The challenge is that ERPs are expensive, slow to implement, and often require significant customization to fit your specific workflows.

What an Automation Platform Actually Does

An automation platform (iPaaS) like Make.com, Zapier, or n8n connects your existing best-of-breed tools and automates data flow between them. Instead of replacing your accounting software, e-commerce platform, and shipping tool with a single ERP, an automation platform keeps each specialized tool in place and ensures data moves between them automatically and accurately.

The automation platform approach lets you use the best tool for each function: Shopify for e-commerce, QuickBooks for accounting, ShipStation for shipping, HubSpot for CRM. The platform then orchestrates data flow: orders from Shopify create invoices in QuickBooks and shipments in ShipStation, all without manual intervention.

ERP consolidates everything into one system; automation platforms connect specialized best-of-breed tools

Cost Comparison

The cost gap between these approaches is substantial, especially for small businesses. A cloud ERP like NetSuite typically costs $25,000-$100,000 in year one including licensing, implementation, customization, and training. Annual recurring costs run $15,000-$50,000+ depending on user count and modules. SAP Business One and Microsoft Dynamics 365 have similar cost profiles, though Odoo's open-source model can reduce licensing fees.

An automation platform approach using Make.com or Zapier combined with best-of-breed SaaS tools typically costs $3,000-$15,000 per year all-in, including subscriptions for each tool and the automation platform itself. Implementation can happen in weeks rather than months, and there is no need for specialized ERP consultants. For a detailed cost analysis, see our cost of switching ERP guide.

Implementation Timeline

ERP implementations are notoriously long. A typical small business ERP deployment takes 3 to 12 months from contract signing to go-live. This includes requirements gathering, system configuration, data migration, customization, user training, and testing. During this period, your team operates in a transitional state that often reduces productivity.

Automation platform implementations are measured in days to weeks. You can connect your first two systems and have data flowing automatically within a single afternoon. More complex, multi-system workflows take one to four weeks to design, build, test, and deploy. This rapid time-to-value means you start seeing ROI almost immediately rather than waiting months.

When an ERP Makes Sense

• Complex manufacturing with bill-of-materials, work orders, and production planning that requires tight integration between procurement, production, and inventory
• Multi-entity organizations that need consolidated financials across subsidiaries, currencies, and regulatory environments
• Heavy regulatory compliance where audit trails, access controls, and data governance must be centralized in a single system
• Your business has outgrown QuickBooks and you need advanced inventory costing methods (FIFO, LIFO, weighted average) or lot/serial tracking
• You have the budget and timeline to invest $50K+ and wait 6+ months for full implementation

When an Automation Platform Is Enough

• Your existing tools work well individually but data does not flow between them automatically
• You need quick wins: eliminating manual data entry, syncing orders to accounting, automating invoice creation
• Budget is limited and you need automation ROI within weeks, not months
• Your processes are straightforward: order comes in, gets fulfilled, gets invoiced, payment is recorded
• You want flexibility to swap individual tools without rebuilding your entire system

When You Need Both

Many mid-market businesses end up using both. The ERP handles core financials, inventory, and order management, while an automation platform extends its reach to tools the ERP does not natively connect with. For example, a wholesale distributor might run NetSuite for accounting and inventory but use Make.com to parse incoming PDF purchase orders, sync data with their e-commerce store, and send shipping notifications through their email platform.

The automation platform fills the gaps that every ERP has. No ERP connects natively to every tool your business uses, and building custom ERP integrations is expensive. An iPaaS layer on top of your ERP extends its utility at a fraction of the cost of custom development.

A simplified decision framework based on business size, budget, and operational complexity

The Bottom Line

Do not buy an ERP because you think you should. Buy an ERP when your business processes are genuinely complex enough to justify the investment. For the majority of small businesses processing under $10M in annual revenue with straightforward order-to-fulfillment-to-invoice workflows, an automation platform connecting your existing tools delivers 80% of the value at 10% of the cost.

Start with automation. If you outgrow it, the processes you have mapped and automated will make your eventual ERP implementation faster and smoother because you will already understand exactly how your data flows. For a step-by-step approach to building this foundation, explore our SMB automation roadmap.

An ERP is a destination. An automation platform is a bridge. Most small businesses need the bridge first, and many discover it is all they ever need.