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Top ERP Industry Predictions

Privacy Policy Top 10 ERP Industry Predictions for 2008

December 31, 2007 by Julian Peterson and Terry McCarthy

  1. Web 2.0, CRM 2.0 and Enterprise 2.0 Become Universally Accepted
    Accepted, but not fully endorsed. Social media has been a bottom-up evolution and has only recently reached most CIO's. The majority of CIO opinions we hear suggest that while Web 2.0 is recognized, the hype still exceeds the substance. Further, many CIO's haven't been able to connect the dots between consumer collaboration and enterprise applicability. Social media universal acceptance also should not imply that ERP software manufacturers will make social media tools an integrated part of their business applications; they won't (in 2008). However, do expect some dabbling with social media by ERP start-ups, on-demand players and the more pioneering ERP makers in 2008 with some form of product releases in 2009 (hopefully).

  2. ERP Market Grows 6%; SaaS Market Grows 22%
    Market growth will be bolstered by both an increase in the number of ERP sales as well as a slight increase in deal size. Once anticipated price pressures on ERP manufacturers have not been realized and due to SAP and Oracle maintaining an oligopoly at the enterprise market, ERP software pricing will continue to stay elevated.

  3. IBM Enters the ERP Market
    We're going out on a limb on this one. However, we've been reading the IBM tea leaves which demonstrate a visible strategy. For several years, IBM has marginalized its hardware business while at the same time growing its margins with software. While IBM has shown demonstrated progress in this direction for just over two years, the recent Cognos acquisition announcement seemed to the first event of enough value to get the market's attention. For the record, IBM denies growing their business via enterprise software. However, it was just over four years ago that the company stated it was not moving toward acquiring business applications and has since acquired Ascential, iPhrase, FileNet, MRO and most recently Cognos. IBM has the same pressures for growth as any other public company. However, as a $90 billion enterprise it must look to much grander projects to achieve the same acceptable growth figures. Enterprise software is one of the few business growth categories available for IBM to meet and exceed shareholder expectations.

  4. Google Remains Irrelevant in the Enterprise
    Notwithstanding Google's money, resources, strategy and hollow talk, the Search giant fails to make inroads to the ERP and enterprise software market. As Google does not have internal resources that truly understand ERP and enterprise business systems, and as time to market considerations suggest that creating their own solution(s) is not practical, expect an enterprise software acquisition by Google in 2008. If Google becomes rumored toward an M&A event, expect most Industry observers to predict a acquisition. If fact, expect to predict their own acquisition. The hosted CRM software company is positioning itself to the best of its ability to be acquired by Google. In fact, in 2007 Salesforce changed the name of their popular low end CRM software edition from Team Edition to Group Edition simply so they could include Google AdWords in the solution and have a business reason to pay Google friendship money. Unfortunately for, Google's no evil culture doesn't mix well with CEO Marc Benioff's gorilla marketing practices.

  5. SaaS Market Segments and Goes Vertical
    The software as a service (SaaS) market is no longer the pioneering space reserved for start-ups and early adopters. ERP stalwarts such as SAP - who originally admonished the on-demand model - have now gotten on board with their own hosted software. With mainstream market acceptance comes increased competition and the market demand for segmentation and industry solutions. One-size-fits-all SaaS vendor solutions will be dispelled by right-sized solutions that truly meet the business and technology demands of varying sized organizations. Vertically focused SaaS software will increase in availability in 2008, however, will only begin to see real sales success in 2009.

  6. Skills Shortage Hampers ERP Success and Momentum
    There is an ERP human resources and skills shortage that will increase in 2008, thereby, increasing consulting costs and decreasing the number of ERP implementations. More alarmingly, the competition for skilled implementers will result in many engagements using less than skilled resources. While the infamous ERP implementation failure rate will not grow in 2008, it will also not decline as it has in years past.

  7. NetSuite Accelerates Growth
    NetSuite is at the sweet spot of the small and midsize business (SMB) market. The company has acquired approximately 5,400 customers which is nothing more than a drop in the bucket when compared to market size. Surprisingly, NetSuite faces little direct competition. Aplicor and Intacct, which also offer hosted ERP systems, both target the middle market far more than small businesses. Expect NetSuite to grow small business market share big time in 2008.

  8. Microsoft Dynamics CRM Disappoints
    After a number of pre-release market announcements and missed delivery deadlines, Microsoft will finally release its Dynamics CRM (previously code named Titan). Unfortunately for Microsoft and the small business CRM market, the product fails to impress, and will be a loser in 2008. Microsoft itself seems convinced of the CRM product's inferiority and has in response lowered the price multiple times (now standing at $15.00 per user per month to VARs) even before the release date in order to leverage price to compensate for lack of value. Due to the size of Microsoft's massive customer base and a trained VAR (value added reseller) channel, the product will see a fair number of customer acquisitions, however, will achieve only lackluster sales progress in 2008 by Microsoft standards and not achieve respectable sales progress outside its customer base. We cannot take first credit for this prediction. You may recall that's Marc Benioff first referred to Microsoft's SaaS product called Titan as Titanic and later commented "When you have an inferior product you have to have an inferior price. That is why Zune is priced below iPod. And why Windows CE is priced below BlackBerry. And why Microsoft CRM is priced below" Perhaps this is one Benioff soundbite that is on the money.

  9. ERP Merger & Acquisition Activity Accelerates
    Oracle's Larry Ellison once predicted there will only be five software vendors left following the ongoing industry consolidation. Larry's certainly done his part to see his prediction come true. While Larry's forecast was a bit exaggerated, 2008 will see an increase in mergers and acquisitions in the SMB, midmarket and enterprise business systems markets. The period for best of breed vendors and piecemeal solutions is passing. Narrow software solutions such as Hyperion, Business Objects, Cognos, RSA, Noeware, WatchFire, Knightsbridge and others are being merged into broader ERP systems. Expect Infor to both make additional middle market ERP acquisitions while out the same time complete a few divestitures.

  10. Open Source ERP Fails to Gain Traction
    With the exception of open source Customer Relationship Management (CRM) which has begun to trickle into the SMB market, open source ERP systems made no measurable progress in 2007 - and that lack of progress will continue in 2008. This isn't to say that the market is not interested in open source solutions, only that the market is void of any open source ERP systems that meet the demands of middle market and enterprise organizations. The security, cost of ownership and lack of professional support arguments against open source solutions can largely be responded to and sufficiently answered. However, until open source ERP systems approach the level of functionality, feature sets and capabilities of their commercial counter-parts, they will not bring enough value to drive wide spread adoption.