At the same time, the needs of many companies of various sizes have become more similar, another factor driving smaller companies with big company aspirations to buy up when it comes to tech. For instance, with an increase in global operations, even among companies with revenues of $500 million and below, more midsize businesses are becoming multinational in scope and demands. Sarbanes-Oxley and other reforms are also narrowing the various technology needs among large publicly traded companies and more midsize ones. "Midsize companies don't have the same requirements as Procter & Gamble, but they have a lot of the same legal and regulatory requirements," says Jim Shepherd, vice president of research at Boston-based AMR Research Inc. "They have different numbers of users and volumes of data transactions…but they have to do accounting and order management and inventory controls and manufacturing and human resources. And they have to have an integrated business system in order to do that."

One of the first choices any company has to make is to what extent it wants a Web-based, or hosted, solution. In the workstation market, some assume that Web systems are more affordable than more traditional installed, PC-based systems, but that's not always the case. The longer the length of service expected from a system, an installed solution may be more affordable, especially since the costs can be amortized annually. Many of the latest PC-based systems either come with or can be expanded to include Web-access, taking away one of the key advantages of a hosted-only system. "The key qualifying difference is a company's culture, not the technology," says Scott Coffing, senior vice president and managing director of the Americas at SunGard AvantGard. "It's really a question of their time horizon, how much IT outsourcing they do and what are the company's previous experiences and comfort in making large capital purchases."

In general, middle market companies still harbor fears that any major system will get their finance departments entangled in endless implementations and unforeseen costs. "Middle market companies are afraid of the big ERP vendors, mainly because of the time involved for implementation," says Dave Rudzinsky, chief information officer at Hologic Inc., a $288 million maker of mammography and biopsy systems. Something of an early pioneer given the size of his company, Rudzinsky led an installation of a single-instance Oracle ERP system in 2002 at three locations in the U.S. and one in Europe. The installation took eight months and the Bedford, Mass.-based company spent $4.4 million on system hardware, software, consulting and internal labor. Although he admits "the implementation never ends, because they are always upgrading and adding new modules," Ruzinsky can point to a number of important paybacks. The finance department alone has been able to trim its monthly closing cycle in half to five days, and a jump in productivity allowed Hologic to reduce its finance and accounting staff at two manufacturing facilities by 17%.

But implementing large systems does not always mean major downsizing of departments. At Vancouver-based gold mining company Goldcorp Inc., the decision to subscribe to Treasura, the Web-based workstation from Thomson Financial, allowed Goldcorp's treasury department to cut down on time-consuming manual processes and direct its energies toward more value-added activities. "We have much better cash forecasting in terms of the amounts and the timing of the payables and receivables," says Tina Wang, senior treasury analyst.

Another key to the increasing success of tech vendors in the middle market is how much easier the latest generation of solutions integrates with older systems. That was a selling point for Hardiman at TQL when he chose the Microsoft ERP system, which integrates seamlessly with not only Excel and other Microsoft software used throughout the company, but also TQL's proprietary software used to track shipments on a daily basis.

Such synergies between vendors, through partnerships as well as outright acquisitions, are changing the level of support and product breadth available to smaller customers. Last year Trema Group, the London-based producer of sophisticated treasury and asset management applications, acquired Richmond Software in a move directly targeting middle market companies trying to develop their treasury automation. "These companies are looking for the same type of functionality…but they need different support around their treasuries and they need another type of architecture," says Thomas Bergqvist, chief marketing officer at Trema. He adds that pairing a larger vendor with a smaller one has big advantages for midsize customers. "They are not just buying Richmond software. They are buying Trema support, R&D, a much larger pool of consultants and 50-partner network around the globe. This is a much, much bigger resource tool."

KNOWING WHEN TO KICK THE TIRES

A similar bundling was behind the acquisition of Selkirk Financial by Thomson. "A lot of what has changed in recent years is people want a one-stop shop, and we offer cash and liquidity management with market analysis and trade execution, some of which comes from Thomson and some from the Selkirk side," says Justin Brimfield, vice president of corporate treasury services at Thomson Financial. He agrees that small and midsize companies have become more complex in their technology needs, having much to do with rising cash pooling, international currency and regulatory requirements. "The Web has made that seamless," says Brimfield.

For companies faced with new or evolving compliance requirements, adding automation that can create valuable audit trails as well as other efficiencies can prove to be invaluable. Two years ago, Dart Group PLC, an aviation services and distribution company based in the U.K., added a PC-based Richmond Software treasury workstation to add a layer of sophistication the company's growth was requiring. "The beauty of this [system] is that every time you amend or input new treasury data, it flows into the cash flow forecast automatically," says Gary Coleman, group accountant at Dart, which has annual revenues of about $600 million. Now, Coleman is hoping for even bigger efficiencies as the company prepares to comply with mandatory international accounting standards that are being gradually introduced in the coming year. The new standards will require Coleman to verify on a regular basis the effectiveness of currency hedging procedures, something the Richmond system is able to do automatically. "It could be quite fundamental to our bottom line," says Coleman.

Even though Web-based or hosted solutions have opened up the market to new customers, they require a careful review. According to a recent survey by Forrester Research, integration and security issues are the top concerns among small and midsize companies considering ERP installations. ""Companies should make sure [the vendor] has a robust, secure infrastructure in place and look for a vendor to make guarantees on response time," says Paul Hamerman, vice president of enterprise applications at Forrester.

SunGard's Coffing adds that companies should consider only vendors that can demonstrate Type II SAS 70 compliance. "It provides a level of comfort for [a customer's] risk mitigation." Such documentation, of course, won't get the company off the hook with regulators should outsourced IT problems occur, but it provides a point of differentiation.

"The big questions for providers are: 'Are you running the server farm' and 'are you running it 24/7?" says Jeff Wallace, managing partner at Greenwich Treasury Advisors. "'Is it a dedicated server or shared with somebody else so that your service might go down if another user is running a large project?" Surprisingly, vendors will tell you, not everyone asks.