A New ERP Model
InfoWorld’s Pete Babb in his article “Is ERP as we know it dying?” explains that the battle on the ERP front has changed from fighting over new implementations (where relatively few opportunities exist) to fighting over add-on applications. He quotes Paul Hammerman, VP of enterprise applications at Forrester Research,
“I think the battleground is in the hundred-million-dollar to billion-dollar space. SaaS does need to evolve to have more extensibility in order to be able to serve large companies with ERP, but SaaS solutions will continue to grow in the middle section.”
Naturally, the statement from Hammerman leads to a discussion of how SAP and Oracle will adapt to compete against SaaS solutions. In the short term, Babb claims that the battlefield will be in the area of add-on solutions such as CRM. SAP and Oracle will try to convince customers that they should purchase customizations and vendor add-ons instead of integrating a third-party SaaS solution.
The Inevitable Cloud
The worst outcome for traditional ERP vendors is to win some of the initial battles against the SaaS providers. Initial wins will validate the legacy model and cause more resources to be deployed defending that turf instead of developing cloud and SaaS-ready architectures that are being demanded by the market. As the new technology vendors push forward, the old will fall further behind.
The sooner the legacy battle is lost, the sooner the industry will begin working towards SaaS and cloud interoperability which will benefit all users. See our previous article on the benefits of rewriting ERP.
There is a business perspective to this also.
Large organisations with a huge investment in legacy ERP will continue their support for these old systems. New startups (with no legacy systems) will be able set up and grow rapidly using cloud technologies. They will therefore be more flexible and adaptable to respond to business change.