Last year was the year of big deals in enterprise software. IBM bought Cognos, Oracle bought Hyperion (and in January this year, BEA) and SAP merged with Business Objects. The traditional flurry of speculation on the market in 2008 seems to have a common, if surprising, prediction.
SAP itself may be bought out, perhaps by Microsoft if the anti-trust issues could be worked out, perhaps by Google, which is pushing the kind of 'cloud' platform that seems tailor-made for ERP, but most likely by IBM, which would then have a position of strength against Oracle if it could convince the US government that a German company tinkering at the heart of the federal infrastructure is a good idea. Even if this deal doesn't happen, there are numerous smaller players with specific niches waiting to be snapped up.
The success of an ERP project is really all to do with implementation.
Martin Vipond, partner, KPMG
The reason is that ERP is no longer about a specific core competency: it's being increasingly forced to embrace Web 2.0, telephony, community-based software and consumer technologies as companies try to fit them into an overall view of their information and processes. (See the round table discussion for some opinions on functionality consolidation.) More companies want those technologies to fit into a single system using a services-based model. According to a December survey by AMR Research, the US mid-market is very interested in pure software-as-a-service (SaaS) and on-demand purchasing models. Thirty-nine percent of larger mid-size companies (500 to 999 employees) are planning to purchase SaaS or on-demand software in 2008, says the report. And the numbers are rising.
AMR Research predicts that over the next three years, these new purchasing models will become a mainstream purchasing method. In addition, by 2010, 43% of companies would like to employ a single, global financial and shared services ERP system.
"Growth in ERP spending was fuelled by several factors," says AMR. "As mid-sized organisations fight for market share against increasingly diverse global competition, increased profitability, revenue growth and customer satisfaction become priorities. And, with globalisation, the pool of potential customers is ever-growing, creating a need for streamlined processes to help meet demand."
Managing what you've got
According to Martin Vipond, partner at KPMG in Johannesburg, the important part is not the ERP system, but the information it contains.
Vipond doesn't do implementations, but rather advises his clients on how to get the most value out of their systems. He says there is a large gap between perceived importance and the actual abilities of today's CIOs.
"The success of an ERP project is really all to do with implementation," he says. "Systems integrators are good at some things, bad at others. There are more than enough sites out there where we can improve the alignment of the business processes and the technology."
As more and more technology strands get pulled into the ERP web, it's hard to see anything other than more business for those good at making existing sites work better.
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