The channel will be essential to vendor success in the mid-range ERP market, according to analyst Meta Group, which predicted further consolidation and flat revenues across the sector until 2005.
The analyst warned a greater focus on the mid-range market from high-end heavyweights such as SAP and Oracle will force mid-market vendors to consolidate to survive.
"From a vendor perspective, the winners in this market are the ones with the best channels," said Bruce Hudson, programme director at Meta Group.
"The only viable vendors are those with a pan-European approach, including support services, a channel, language capabilities and key functionality."
While Oracle and SAP are starting to build up their mid-range channel presence, Hudson said that Microsoft, with its Business Solutions division, which includes Great Plains and Navision, is poised to make the biggest impact on the ERP market.
He added that one factor driving sales was companies looking to upgrade their ERP systems to make themselves more attractive to potential suitors.
"A company's IT infrastructure affects its market value. In a mergers and acquisitions situation, if they have a lot of disparate systems, it's spaghetti trying to bring it all together and maintain it," Hudson said.
John Taylor, marketing manager at software reseller Trustmarque Solutions, said: "ERP has quite a long sales cycle compared with boxed products, so the element of support is vital.
"There's definitely a market for it, but there will be a learning curve for vendors. Managing smaller companies is very different to enterprise customers."
Sally Cuthbert, business development manager for SAP SMB, said: "SAP has prided itself on its partnership strategy from the very start. VARs have been selected for their vertical expertise and experience of the SME market."
The market is full of players, she added. "We have to be seen as the partners' choice by working with both clients and the channel.
"Microsoft is a big organisation but serious competition is healthy. Ultimately it's the customer that gains."
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