ERP category doomed?

Since the 2003 sale of Denver’s J.D. Edwards & Co. to PeopleSoft Inc. Colorado no longer has a significant homegrown player in the enterprise resource planning (ERP) software business.

That may be a good thing.

Julie Smith David, an associate professor of information systems at Arizona State University’s W. P. Carey School of Business writes in the school’s latest newsletter that “ERPsystems — those monolithic software packages that evolved to tame companywide data — may be heading the way of trilobites and dinosaurs.”

The problem, says Davis, is that once an organization goes through the massive time and effort to install an ERP system, it becomes quite rigid, compromising their ability to rapidly adapt to changing situations. Also, the article notes, ERP upgrades are expensive and no longer deliver as much bang for the buck.

Davis and other industry experts weighing in on the topic see on-demand platforms, or software-as-a-service solutions, as likely alternatives to today’s ponderous ERP systems. “ERP is at a breaking point,” she says. “For the first time in a long time, it’s vulnerable to other options.”

PeopleSoft’s $1.8 billion friendly purchase of J.D. Edwards was overshadowed later that year by Oracle’s hostile takeover bid for PeopleSoft. The lengthy dispute dragged on until January 2005, when Oracle concluded the $10.3 billion deal and fired thousands of former PeopleSoft employees.

Oracle and SAP are now the industry’s dominant companies, followed by IBM and Microsoft. Niel Robertson’s Parallax blog mused recently, however, about why the “Most Important Battle in IT” is now for fifth place.

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One response to “ERP category doomed?

  1. I think the reports of ERP’s death are highly exaggerated. Consider the importance that mainframes still play in most enterprise orgs. ERP is not going anywhere anytime soon. However, i do think the SOA panacea that Shai (SAP) et al would like to say is coming will be more of a pain that people expect. The news is finally reporting some bad SOA stories as opposed to the hype of 2006.

    Also – CRM does not an ERP market make so be careful to extrapolate the dynamics of why SFdC was successful in CRM to the general marker:

    Non-IT buyer with budget
    Compartmentalized functionality
    Little compliance restrictions on CRM systems

    Try and find another department in an org that works this way. If workday is successful then people may start to worry.

    Niel

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