Just a few years ago, hundreds of software vendors and thousands of consultants were battling for enterprises’ ERP (enterprise resource planning) dollars. Whether business was booming or belts were tightening, the cost savings companies could gain by implementing ERP systems created a robust marketplace.
Now, however, a massive industry shakeout has left many small vendors out of luck — and often out of business. Amid the carnage, the remaining ERP titans, SAP, PeopleSoft and Oracle, are battling for customers even as Oracle fights to acquire PeopleSoft and narrow the field even more.
Fierce competition has led to convergence among these companies’ software suites, erasing many of the differences that once made them stand distinctively apart from one another. With the industry in turmoil, how can a buyer choose the best vendor for its specific needs?
Virtually Speeding Implementation
At PeopleSoft, it’s all about the Internet. The company’s suite of products is based on pure Net architecture, allowing every user to conduct business in real-time, PeopleSoft spokesperson Steve Swasey told the E-Commerce Times.
“This allows our clients to improve productivity and lower costs,” Swasey said. “Plus, it allows employees to access the information they need from virtually any Web browser.”
Because of this Internet base, PeopleSoft applications are installed only on the server side, with no code residing on individual PCs or laptops. Therefore, installations and updates can be completed much faster than with competing products, which Swasey said require IT personnel to work on each and every machine in a company.
“This automatically reduces implementation time from a couple of years to a couple of months,” he added.
Playing the ‘Safe’ Card
For its part, SAP touts its scalability, open platform design and case studies showing positive return on investment.
In addition to these selling points, the company’s primary focus of late has been stability in a changing industry. SAP’s main competitors are waging war as Oracle attempts a hostile takeover of PeopleSoft. Allegations, lawsuits and fur are flying.
Potential customers no doubt are on edge because of allegations that if the takeover is successful, Oracle will shelve PeopleSoft’s products in favor of its own suite. Such a move would force thousands of customers to migrate to a new platform.
For buyers taking a wait-and-see approach, SAP beckons. Unsurprisingly, the company has moved to capitalize on its neutral status amid the turmoil. Its brocure proclaims, “A partner you can count on.”
Focusing on the Data
Meanwhile, Oracle is staking its future in the ERP market on data management. The company’s suite is designed so that all corporate data resides in a single place. According to Oracle vice president Mike Rosser, competitors’ products depend on multiple databases that must pass data from one to another, preventing users from working in real-time.
The Oracle suite is also designed to be highly modular while still operating off of a set of core processes. After a company installs its first Oracle module, more modules can be added quickly and easily, Rosser told the E-Commerce Times.
“We’ve certainly had good success in high-tech and most major discrete manufacturing,” he said. “We’ve recently come out with some strong functionality in the aerospace and defense industries.”
What’s the Difference?
When all is said and done, many companies could achieve a successful ERP installation and implementation by working with any of these three top vendors, David Alschuler, senior vice president of e-business and strategy at Aberdeen Group, told the E-Commerce Times.
“There are exceptions where business process functionality may be missing if you pick the wrong vendor,” Alschuler said. “But for many enterprises, once you get down to the solid citizens in the vendor community, the choice between vendors is not as important as the choices you make about how to implement software.”
Of course, each company does have traditional areas of strength. SAP performs well in manufacturing, Alschuler said, while PeopleSoft targets the service industries, and Oracle is better known for financial services and consumer products.
Still, he added, “These differences are becoming less pronounced as each company brings its products up to parity. To choose a vendor, it all comes down to the unique requirements of specific businesses.”
Alschuler recommends that companies hire third-party consultants who have implemented major ERP systems in their sector. Such consultants often can make the best choice about which software solution would best fit a particular business.
Name Your Price
Although making a final decision about a vendor can be tough, economic conditions have produced a buyers’ market. Hyper-competition between the top ERP vendors has led to competitive pricing, with new guarantees, package deals and promotions rolling out each quarter.
Of course, companies still should use caution when evaluating their options. By taking advantage of discounts to buy more ERP functionality than it otherwise would have purchased, an enterprise can lose control of its rollout and find itself in a bind as recurring maintenance and upgrade costs add up. In fact, out-of-control spending on ERP implementation can destroy the return on investment for any vendor’s software, Rebecca Wettemann, vice president of research at Nucleus Research, told the E-Commerce Times.
Nucleus conducted an in-depth study of return on investment for SAP implementations. Excessive customization and large consulting bills sometimes added up to twice the cost of the actual software, Wettemann noted, effectively killing any positive return.
“Sometimes companies spend way too much time on the software before they roll it out to users,” she said. “This big-band approach doesn’t work very well with ERP. It ends up being a big explosion, rather than steps toward creating value. It also leads to buying more licenses than you need. Don’t let your investment sit on the shelf while you work out every little integration and consulting detail.”