The market for ERP software is dead. Computer Associates is crediting itself with having spotted this fact, but in reality, the death throes of ERP as we know it have been plain for all to see for at least a year.
Two main problems have been eating away at the market. The first is that ERP products are still too expensive to buy and too complicated to use.
All ERP vendors will tell you they have been working on this problem round the clock, and that their products are now suited to users of all sizes and all budgets. They are, for the most part, deluding themselves.
The second problem is perhaps more pertinent to readers of PC Dealer - the failure of most ERP vendors to build a meaningful third-party channel to take their products to different classes of user. Again, all the big names in the market will claim to have bent over backwards to forge relationships to address the crucial mid-sized company sector. They have only enjoyed modest success.
Take SAP, for example. Having humiliatingly failed to entice more than a handful of regular resellers to take its wares on board, it has now taken a very different tack. It has decided that the future of the market for medium-sized enterprises lies with ASPs. To this end, it has inked in three big ASP deals in the past few weeks, all in the US, which give advance warning of its current thinking. One with eOnline, a start-up created to cash in on perceived ASP demand; one with Qwest, a small telco; and one with EDS, a company that needs no introduction. We can assume that the company has lost faith with the conventional IT channel, and the feeling may well be mutual.
It will be interesting to see just what sort of fist a company like EDS will make of wowing mid-sized corporates with delights of R/3, but surely the smart money must be on an underwhelming response. Such buyers know what they want - maximum functionality for the least cost and hassle.
Put EDS and SAP together and there are the makings of something rather different.
So, can ERP ever recover? One indicator of confidence is the mass exodus of senior executives from ERP vendors. SAP has lost several top names recently to companies such as Siebel and Oracle. The ERP glory days are gone for good, and resellers will need to look elsewhere for a system that gives them an entree into the heart of the enterprise.
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