New Business Model for the ERP Dinosaur

November 11, 2009
By djohnson

Carl Mortished, World Business Editor for The Times, published an article entitled “Evolutionary clock is ticking for dinosaur model” (full article here).

“SAP has cut 3,300 staff and is asking the rest to be more nimble and opportunistic. A key project is to use “cloud” computing, software delivered over the internet as a service to adapt ERP to small and medium-sized companies. SAP has a product, BusinessbyDesign, but it’s had teething troubles.”

A key takeaway is that somewhere out there, a better model exists. And SAP is searching for it. Is the model a web-based product, a cloud product, a SaaS product or something else?

To answer this, let’s look further in Mr. Mortished’s article where he points out how SAP became successful.

“The idea was to integrate lots of different bits of business software (payroll, manufacturing, customer service, supply chain) into a seamless whole so that managers can see into the different parts of a business and quickly find out what is going on.”

Today, the need for a single-view of data exists alongside the need for cost cutting. Can new SaaS and cloud technologies provide a single-view of data or do SaaS technologies limit customization and integration and thereby limit themselves to point applications?

A customizable SaaS solution with a viable value added reseller model is certainly possible. Further, the advent of web technology has simplified integration so geographically dispersed systems can communicate.

If it’s possible, why hasn’t it been done?

Perhaps it’s due to large investments in existing systems. The natural course of action is to maintain your existing solution instead of paying the massive expense of building, configuring, and training people on a new system.

Perhaps it’s due to fear. What happens I move my business to SaaS and then want to move back for regulatory or compliance reasons? Most vendors use different codes bases for their SaaS solution and their on-premise solution, thereby locking customers in to one model or the other.

Perhaps the incentives are too small. SAP and Oracle do not want to sabotage current revenues. Customers do not want to risk upfront money for future operational, development, and management savings.

Perhaps it’s due to another reason. Feel free to suggest and comment.

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2 Responses to “ New Business Model for the ERP Dinosaur ”

  1. uberVU - social comments on November 12, 2009 at 12:31 am

    Social comments and analytics for this post…

    This post was mentioned on Twitter by ProjectClouds: Newer Business Model for the ERP Dinosaur – ERP Cloud News (blog)

  2. Chip Hayes on November 12, 2009 at 7:30 am

    It’s going to be up to smaller ERP companies to build the of the ERP space. CRM was easier to crack because integration and customization was not as important as it is with ERP.

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