ERP realignment coming?

By Staff -- Logistics Management, 11/1/1998

By the year 2003, nearly half of all Enterprise Resource Planning (ERP) software makers will quit serving so-called mid-market companies, whose annual revenues range from $250 million to $500 million. So says Bruce Bond, an analyst with market-research firm Gartner Group of Stamford, Conn.

ERP vendors provide software that handles a company's core operations, including manufacturing, accounting, and logistics. Although ERP providers dominate the software market for large corporations, they have only recently targeted mid-sized companies.

Competitive pressures will mean many ERP providers will be bought out or become resellers for other software providers, Bond says. ERP software prices are dropping at a time when developers need to invest more research dollars to expand the breadth of their applications.

Bond thinks Baan Co. N.V. is most likely to dominate the mid-market for ERP software. Baan recently acquired CAPS Logistics, a leading provider of transportation-management software.

Oracle Applications and J.D. Edwards also will fare well, Bond predicts. "Oracle's one-stop shopping value proposition and aggressive discounting will enable it to thrive," he says. As for J.D. Edwards, Bond adds, "[The company] has emerged as the clear winner in the AS/400 enterprise application war."

Other companies he expects to succeed include PeopleSoft, JBA International, and Glovia International. SAP AG, which controls the high-end market for large companies, will have trouble in the mid-market, Bond predicts. "The market believes [SAP's] product is too costly and too complex to implement," he explains.