ERP: Looking back, looking ahead

We are heading into a crucial year in ERP, thanks to a number of lingering and emerging trends, as well as a pair of highly anticipated product launches.


The global recession had a major impact on the ERP (enterprise resource planning) software market in 2009, leading to flagging license sales and delayed projects.

But 2010 will be different. Here is a look at the highlights.

2010 will remain buyer's market

Forrester Research is predicting that ERP new license revenue will have fallen 24 percent in 2009, as companies severely rein back implementation and expansion projects. While the firm expects ERP spending to rise slightly in 2010, vendors will be fighting hard for every available dollar, and that should translate into cost savings for customers, analyst Paul Hamerman wrote in a 17 December report.

Still, buyers should be aware of likely vendor tactics, such as a push to bundle more software than is actually needed, Hamerman said. In addition, "vendors will chase smaller deals from existing customers via add-on products and business intelligence tools, recognizing that most customers are not yet ready to fund major enhancements or expansions," he wrote. "Customers can expect to hear from their ERP account representatives early and often."

Buyers should also brace themselves for further consolidation in ERP. Vendors will focus on buying companies that extend their vertical expertise, according to Hamerman.

Free and open-source ERP options proliferate

Going into 2010, companies have more options than ever for free and open-source ERP software. There are at least 10 open-source products in the market, with some more mature than others.

Open-source ERP vendors typically provide a version at no cost, but charge for support and additional features, such as a manufacturing module.

Proprietary ERP vendors aren't in immediate danger of shutting down due to competition from open-source alternatives. But some players in the latter camp are reporting serious growth, which may only accelerate in 2010.

Microsoft bolsters its ERP strategy

While Microsoft still trails far behind ERP vendors like Oracle and SAP, it's nonetheless a significant player, particularly in the SME space.

This year, Microsoft made a series of moves meant to broaden its ERP portfolio's features and extend into more verticals.

While Redmond is still not talking about full-blown SaaS (software as a service) ERP, in the vein of NetSuite, it did announce a series of on-demand extensions, covering areas such as e-commerce.

The move was a reflection of its general "software-plus-services" strategy, which seeks to preserve revenue from traditional on-premises applications while adding features from the cloud.

Also this year, Microsoft purchased several pieces of technology that will extend its reach into verticals such as process manufacturing, services and retail.

Overall, "Microsoft is becoming more aggressive about its ambition to be the mid-market ERP leader by a clearer margin and is keen to attract new customers, whether migrating off older third-party apps or looking to move up from Intuit's QuickBooks," said 451 Group analyst China Martens.

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