With many companies’ IT budgets being tailored to suit a more favorable economic climate, ERP is shaping up to be the “next generation ” solution of choice,     -------writes Neil Hayes

 

ERP is not what it used to be. Smaller, flexible, cost effective solutions are set to revolutionize the field. As companies begin to re-new IT spend in line with a more optimistic economic outlook, some experts are predicting that ERP could prove the “next generation” solution of choice for many.

Vendors and consultants operating in the ERP field will welcome this sea-change. Early developments in the ERP field did not always go according to plan, earning the developing technology some bad press.

If recent reports are to be believed, however, global interest in ERP has since increased markedly. According to one report, the global ERP industry was worth $20.6 billion last year alone. This figure is expected to rise to $24.6 billion by 2006.

John Woods, head of enterprise solutions with Bearing Point, agreed that market interest in ERP is picking up across the board.

According to Woods, connectivity is becoming a key issue for first-time ERP investees who want to use emerging technology in the field to integrate “everything” –from financial and supply chain management processes to customer relationship management and internal human resource systems.

“While many companies made hurried investments in ERP systems in the past, the slowdown of the last few years has meant that people have taken the time to look for cost reductions, real value for money and return on their investment in ERP systems,” said woods.

According to William Dolan of Deloitte, the ERP market has changed almost beyond recognition in recent years.

“Yes, the market has picked up, and companies are looking to spend money on both new and existing ERP sites, but it is a tougher market, with companies still looking to make more savings,” said Dolan.

“The concentration is on the value end, with customers considering what benefits can be had from this investment. We are finding that clients want specific things from our enterprise value map-the bottom line is cost.”

Customers have moved away from what Dolan terms “portfolio management”, to instead concentrate on investment and appraisal. “Many ERP applications are easy to source today, but the differentiator is to put best practice in place that delivers value,” he said.

A recent report by Oracle found that, in a European business environment characterized by “cost-cutting and margin improvement rather than revenue growth,” 15 per cent of the Irish SMEs surveyed were in favour of “consistent IT across the organization ” as a means of gaining an edge in a competitive marketplace.

Commenting on the findings, John Martin of Oracle said: “One unique factor of the Irish market is that, although there are a high proportion of small companies, there is also a high level of export activity. This has been the driver for SME companies to reconsider their position.

“They are now competing with major international companies that have been enjoying the benefits of ERP, such as increased teal time and accurate visibility of their operation. These companies can make instant business decisions based on real data, and this is making them competitive.”

 

According to Alan Connor of Exchequer Software, ERP is enjoying a renaissance among a wide range of Irish companies that are keen to benefit from the newer technologies on offer.

“Expanding SME, distribution, or manufacturing organizations are looking o expand past the limitations of their existing business software, to solutions that offer greater functionality and comfort going forward,” sad Connor.

“Additionally, many pharmaceutical or related industry companies are under industry or regulatory pressure regarding traceability, storage, reporting and so on. This requires dedicated and industry-specific solutions to cater for these needs, without incurring greater overheads on manual recording, or wasted time and effort.”

A number of next generation ERP technologies are now available on the market, increasing efficiencies in the field and offering customers and expanding array of options, said Connor.

“Emerging technologies that have ERP benefits include the use of industry standard XML for electronic trading and transfer of data,” he said. “Remote technologies that have come into their own now offer affordable solutions for remote order processing, warehouse and dispatch hand-held solutions and a variety of e-business and web integrated front ends for customer and supplier automatic trading and visibility.”

 

Such advancements allow ERP solutions to do more for less in a variety of industries.

Charlie Donnelly of Cisco Software Systems agreed, saying that market demand for ERP has risen noticeably in the past six months. Companies are now replacing older, legacy systems with newer upgrades designed to provide seamless connectivity and improved integration, he said.

According to Donnelly, the sluggish ERP marketplace of recent years has also meant that many of the larger ERP software vendors have moved into the market space previously dominated by smaller resellers. They have developed ERP solutions specifically targeted at smaller companies. In some cases, this has blurred the strictly demarcated lines between tier one and tier two solutions.

An estimated 85 per cent of the global ERP market is based in America. The major players in the ERP market are SAP and Oracle, followed by Peoplesoft, which recently acquired market competitor JD Edwards.

Market consolidation remains the order of the day in the ERP field, with Oracle still intent on buying out Peoplesoft. Although US regulators remain unhappy with aspects of Oracle’s takeover plan, the EU Commission is set to deliver its verdict on the suitability of the proposed takeover, under current competition law, in May.

If the takeover goes ahead, this would leave the global ERP market dominated by just two major players – Sap and Oracle.