Channel will be key to ERP dominance for vendors

A 'resellers' market' over the next two years

The mid-market channel will be key to the battle for dominance in the enterprise resource planning (ERP) market, according to analyst AMR Research.

And as the ERP market consolidates with fewer vendors, resellers with experience in selling ERP to medium-sized businesses will be coveted by market leader SAP and Microsoft, which recently bought Navision.

At its annual conference last week, Nigel Montgomery, European research director at AMR, said the mid-market is key for SAP to scale down its technology and for Microsoft to scale up its ERP capabilities.

"The whole strategy of Microsoft and SAP is about capturing channel. It is not about products," he said. "It is a resellers' market over the next two years and those in the channel with a strong business knowledge and capability will pick up attention from the big players."

SAP has already announced its intentions to increase its presence in the small-to-medium sized (SME) market with its Business One product and by increasing the number of resellers it uses.

Montgomery said SAP will also be looking at Microsoft's Navision resellers able to scale down SAP's enterprise-level ERP products and scale up its SME offering.

"Microsoft has to cuddle resellers of Navision and Great Plains really well but both SAP and Microsoft are going to have to spend a lot of money."

AMR also expects Microsoft to make another acquisition within the next two years to push it into the high-end ERP market.

"As it grows it doesn't have a bigger product, so I see Microsoft buying a bigger product. One could be Peoplesoft. JD Edwards is also a possibility although there are architecture problems over Java."

Steve Barker, sales director at SAP reseller Intelligence Business Solutions, said vendor consolidation will be good for the channel.

"Microsoft are launching a fairly hefty challenge and SAP are pushing down. It is all in motion already," he said.

"The resellers with these skills will make a lot of money out of the consolidation. People are revaluing their ERP implementations to get that return on investment and there will be a lot of projects but they will be smaller," he added.

But Gordon Smilie, group director for enterprises and partners at Microsoft, said acquisition is not its strategy for gaining market share in the high-end.

"I couldn't say how things would look in five years time but in the enterprise space our strategy is to work with partners, including SAP."