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Enterprise Resource Planning

Outlook, 4th Quarter, 2003

To understand how to buy or invest in the ERP market in the late 2003, you need to be aware of four things:

  • The products are commoditized. Even though there are significant differences in design and ability to deliver value among the 100 or so ERP software products, these are almost impossible for an intelligent buyer to detect. Decisions, therefore, will be for other reasons besides product quality or product capability.
  • Current users are underpenetrated. Even people who have paid for company-wide licenses for their products have still not fully implemented their systems. This means that most ERP companies can make money and deliver value simply by selling into their installed base. There is little incentive for innovation, therefore, and not much for improving the product.
  • People have yet to realize value. Bottom line, many users of ERP feel that they have not gotten their money's worth. Say the word, "business case," to the typical ERP'ed CFO, and you'll get a snort of derision. The potential for value is still there; now, CIOs who want to keep their job are spending most of their cycles on extracting the potential that is there.
  • The products are aging. Most ERP products were designed originally to replace COBOL main-frame systems with 4GL-based client-server products. The 4GL model for managing business processes was always particularly strong at tracking transactions and reporting on them, but much weaker at supporting more fluid business processes or supporting decision making. New ways of managing information have emerged, but for the most part, the ERP products are only pretending to use those new ways.

How should you invest in ERP companies and products, given the current environment? Cautiously.

B2B Analysts, Inc., can help you make more informed decisions. We have a large library of research on ERP products and companies that is available only to customers. Our staff has been tracking ERP companies for 10 years, and we have somebody on staff with good practical knowledge of each of the major vendors' products.

Among the titles that were most popular in 2003 were SAP Netweaver: a Review and JD Edwards Fades Away, one of many pieces we issued on the mergers and acquisitions in the space.

In 2004, our research calendar contains at least one and possibly more items on each of the following companies: SAP, PeopleSoft, SSA, QAD, and Lawson.

If you are interested in getting more information or becoming a research client, please contact us.