ERP battle of the giants
A couple of months ago, AccountingWEB asked “whither ERP?”. One predictable answer came back from BusinessCloud9.com: “The Cloud”, but recent industry research suggests that the established players are not giving up their market share without a fight.
There’s still a big market to play for, according to SAP. In a recent poll the German ERP giant found 64% of companies planned to implement enterprise resource planning (ERP) systems in the next couple of years, with a sharp rise in demand for mobile technology support. SAP UK and Ireland managing director Tim Noble said companies realise they need to implement ERP in a bid to remain competitive in the difficult economic climate.
Industry analyst Gartner confirmed this by noting an 8.5% growth rate for the global ERP market last year. With young upstarts taking on the giants, the mid-market is probably where the ERP fight is most intense, with Cloud newcomer NetSuite taking on Infor, Epicor, Microsoft and now SAP, which is moving down market with its own Cloud ERP offering, Business ByDesign.
1. SAP - ERP market leader with wide range of industry solutions and technology tools; “high end” pricing.
2. Oracle - highly flexible solutions tied to Oracle database;d high end prices
Infor - Multiple product families with strong manufacturing capabilities; competitively price.
Microsoft Dynamics - multiple product families focused on mid-market; moderately priced, but “questionable” ERP roadmap
Epicor - competitively priced, good reseller channel, but subject to $1bn bid from Apax Partners
SAP’s head of small business and channel operations in the UK, John Antunes, added some local colour to these observations in a recent interview with AccountingWEB.co.uk.
The credit crunch set of a wave of cost-cutting, which is now receding, he explained. “Talking to prospects and customers, there’s been a change from cost reduction to becoming more efficient,” he said.
“As opposed to cutting IT infrastrucure costs, it’s now about how to maximise it and what bets are they going to play to get the maximum return from their investment.”
Different parts of the ERP market are developing at different rates, he continued. Demand remains strong in mid-market and high-end companies who as growth returns are looking to integrate multiple finance and operations systems. “They need to have fully a integrated business suite to help them see everything in one place,” Antunes said.
Small companies competing against larger suppliers need agility and are beginning to adopt SAP’s Business ByDesign Cloud ERP suite. “Fast-growing businesses are looking at it becasue time to value cycles are very, very short. It’s more of a pay as you go type of model, so it doesn’t require as much investment up front as on premise does. The adoption rate is very, very good.”
Of course, the same arguments work for Cloud specialist Netsuite, where CEO Zach Nelson is developing a strategy to woo mid-size and larger companies. But NetSuite has not made significant inroads yet to the kinds of companies that have sustained traditional ERP software sales.
Instead, NetSuite is focusing on what it calls Services Resource Planning (SRP) and Professional Services Automation (PSA), where Netsuite now claims market leadership with a 20% share.
Yet standard operational and financial software functionality may not be where the next crucial battle takes place. Whether on-line or on-premise, the suppliers agree that sales and implementation channels and analytical/business intelligence (BI) applications will be key to future growth.
To counter the traditional vendors’ reseller networks, NetSuite has signed up the likes of accountancy firms Baker Tilley and McGladry & Pullen in the US, while Accenture is building a global ERP practice around NetSuite.
At the high end, SAP and Oracle are more focused on BI and analytics. Business planning and consolidation are the primary drivers for corporate investment in this area, explained SAP’s Antunes, as companies are looking for tools that will help ensure they invest in the right areas.
But even smaller companies are interested in information systems and KPI that will help them make more intelligent decisions. “They are looking at things like how they can increase the efficiency of their manufacturing cycles, being able to procure materials based on real-time market data and having sales reps out on road able to check on their iPads whether the products they are selling are in stock,” Antunes said.