Fifa freezes and platform shakeups

Last year was a year that ERP vendors want to put behind them. Thanks to budget freezes in the customer base, many ERP implementations and even upgrades were put on hold or cancelled. But will 2010 be where the action ticks up again? That depends in which sector of the market the vendor is playing.

Paul Marketos, director at Bluekey, says there's already an upturn at the low end.

"There's only so long that people can put projects on hold and last year's pipeline just got stretched out for seven or eight months," he says. "The delays in 2009 might make for a good first half of 2010, but then again we might have a double dip."

Ian Huntly, CEO and MD of Rifle-Shot Performance Holdings, has also seen an improvement in his market for industrial process control.

"We've seen a huge upturn in the last quarter; 2009 wasn't that bad - we had some of our biggest projects go in but very few enquiries."

Fabio Taddei, business solutions consultant at Fujitsu, sees a lot of interest for dedicated ERP, especially in the public sector.

"But although there's a demand, a lot of funds have been diverted into stadiums and other infrastructure because of the World Cup. So we're going to have to get quite creative in terms of financing, shared services and using subscription-based models. Post-tournament, we're hoping some of the funds will come back."

Robert Hawley, CEO of SIS, agrees the mid-market will see a bit of an upturn and that the large enterprise side will suffer because of the World Cup.

"Government will be the same. It will be looking but there won't be a lot of action."

And the drain on funds isn't the only way the World Cup has affected the market. Alvin Paules, chief technology architect for SAP, says although SAP experienced growth last year over 2008, it's going to be harder this year. Fifa has put a freeze on some of the major industries in the run-up to the tournament.

"There are some industries here that cannot put in any new projects before the World Cup for stability reasons," he says. "Fifa is effectively running the country at the moment. I know it's affected banking. To get through this period, organisations can be proactive and get their houses in order before the freeze period happens. During the freeze period, those organisations that plan and work towards the post-World Cup period will be successful."

Brendan Peo, GM of Hansaworld, points out that although governments don't have money to spend, it doesn't mean that there will be fewer projects in 2010.

"Most of the delayed projects from 2009 will get going this year, especially the sponsored ones like those driven by the World Bank. Governments are tired of being pulled into projects with large maintenance fees - they would rather be putting in more flexible platforms. Companies that are getting projects today are putting in more bottom-up solutions because the results are faster and more visible."

Taddei says Fujitsu will be using the time constructively.

"For instance, the systems at a municipal level are just not up to the task and there's a recognition that they need to be upgraded. But affordability will be key. Local municipalities have needs that are slightly different from the private sector. We will be using the time to bolster our product set and prime ourselves for when they're ready."

Fifa is effectively running the country at the moment.

Alvin Paules, chief technology architect, SAP

And there's traction in the NGO market, notes Jacques du Buisson, director of Maconomy SA, as non-profits want for themselves the kind of core deliverables that ERP gives the private sector.

"One of our key markets is the research vertical and we've seen much more demand for ERP in the NGO space. Much as the private sector has had to improve transparency and accountability, so in the non-profit space there's demand for more transparency. In one HIV relief project we're helping with in KZN, for example, there's no granularity in the reporting. There's a huge drive to look into systems and improve their processes. There isn't huge margin, of course, but there's definitely demand."

ERP has continually experienced pressure on implementation times and methodologies, perhaps more than any other kind of enterprise software. Marc Gower, divisional director of AccTec, says he's seen a lot of changes in the implementation approach, from the time it takes to the amount that's delivered.

"In the past there was needs analysis and reams of documentation. Customers come to you now and say, 'You will have this working in eight weeks and if you can't do it, then we'll find someone else who can.' So we're throwing a lot more consultants at projects and we're engaging the customer a lot more and a lot earlier. There's less tolerance for junior consultants and people who are perceived to be learning on the job."

SAP's Paules says at least customers are prepared to change.

"The big shift that has happened is that customers ask for best practices and we can give that to them out of the box, but they're then prepared to change their organisations to align themselves so that they get the systems in as quickly as possible. Best practices are typically used in non-competitive processes. The rest needs to be agile because the customers' own processes are where they're competitive. So it's best practices for the mundane, SOA for the competitive stuff."

The softer details are where the devil is, notes Magix MD Hedley Hurwitz.

"What we've seen in implementation is that with more and more mid-market businesses wanting ERP, they want quick turnarounds, but the real issue is the readiness of the customer to adopt the system, extract the business rules and manage the scope. It's a bit of a balancing act to give them what they need, but also manage how long it's going to take. It probably won't take eight weeks; it might take double that."

There won't be a lot of action.

Robert Hawley, CEO, SIS

And that needs training and a closer relationship, points out Ashley Pillay, divisional director at Pastel Evolution.

"What we've found is we need to demystify ERP for our client base. We've cut down implementation times and gotten the client to work with us. Most of the time they have their own accountants so they don't need separate capturers. It's a different space to the enterprise offerings, but we're in a sweet spot providing off-the-shelf solutions."

For some industries, implementation times cannot go below a certain threshold. Comments Huntly: "A lot of projects coming up are replacing plumbing that is end of life. The process and utilities industries have three huge pressures right now. One is that demand has been down for the last while. Secondly, the rand is extremely strong so they're not competitive internationally. And thirdly, even if they solve those two, they may not have power to run their smelters. So we're seeing 'phase ones' go in very quickly but operational cycles are very long - three to four years - so the appeal of the quick fix isn't there."

The principles and practice of ERP are also moving faster because of changes in technology. Software as a service (SaaS) and cloud computing both have the potential to improve the ERP experience. There are concerns though, notes Marketos.

"Software as a service has been around for a while in various guises, but because of the bandwidth issues and people's scepticism about having all of their data off-site, it hasn't taken off."

Taddei agrees. "There's a huge amount of interest and desire in SaaS, but once you drill down, there's concern about relying on data and processes sitting at a service provider somewhere."

Gower says that despite this, he's had definite interest.

"Software as a service has had a definite uptake. We now have over 1 200 users at three different clients using it, which we've never seen before. I agree that to roll out operations takes a lot longer, but what customers say to us is, 'You specialise in process, come and put it in for us.'”

Gavin Kilfoil, sales director at Softworx, has also seen success using SaaS.

"We have seen software as a service as an opportunity, and yes we are doing a model that uses transactions, but that requires software to manage the licences and count the transactions. We've had some success with that. We've walked away from another one because of the bandwidth requirements. But on the data side, it's not just simply a case of installing the new ERP. In a number of instances the data is in such a mess that we're having to look at it as an entirely separate project long before the upgrade can take place."

Software as a service is an opportunity.

Gavin Kilfoil, sales director, Softworx

Craig Young, MD of Unison, has products and solutions that interface with ERP systems.

"The way we've looked at it from a SaaS point of view is transactional: paying for software. That's the first question: will enterprises pay for transactions on a piece of enterprise software whether they're hosted in the cloud or internally? I haven't really seen that in South Africa yet."

One of the reasons for that, says Paules, is accountability.

"The large organisations are very nervous about putting their operational environments into the cloud because they have accountability issues - their directors are accountable. You can't delegate accountability and they have more control over things that are on-premise. One of the mistakes we make in IT is to think that one size fits all. Somewhere between in the cloud and on site is a happy medium that would suit a government department, for example."

The other reason is change management.

"The other challenge is to manage transitions between processes and software implementations so that there's minimal disruption to the business. You might want to push something into the cloud, you might want to bring something back in. How do you manage that? You might want to upgrade a process. How do you do that without disrupting a business?" he asks.

Nevertheless, cloud computing is having an effect. SIS's Hawley says he's seen a strong uptake in non-core areas.

"There's a lot of scepticism about the core areas, but the younger generation is coming through and advising the older generation that it's not as hard as it looks. I think large industries will stay away from it for now though.”

If he's right, then ERP on demand, hosted in the cloud and charged for per transaction might just be a generational thing. By the time Gen Y is in middle management, no one will blink. And that's not too long to wait.