Paul Hamerman Byron Miller Vice President Principal Analyst
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Transcript of Paul Hamerman Byron Miller Vice President Principal Analyst
ForrTel:ERP Applications: Market Maturity, Consolidation And The Next GenerationPaul Hamerman Byron MillerVice President Principal Analyst
Forrester Research
June 14, 2004. Call in at 10:55 a.m Eastern Time
Theme
ERP is a long-term investment. Drive out
support and integration costs for better ROI.
Agenda
• ERP challenges and deployment trends
• Market size and maturity
• Vendor landscape — leadership, consolidation, and the midmarket
• The future: SOAs will transform the market
• Recommendations
Definition: ERP
► ERP — a set of applications for core business operations and back-office management
► Applies to a wide variety of businesses and government
ERP challenges
• Functional gaps, supplemented by bolt-ons
• Costly to maintain
• Customized
• Multiple vendors, multiple installations
• Integration — numerous internal and external interfaces
Trends in ERP deployment
• Single ERP vendor versus multiple vendors
• Fewer instances or single instance
• Using integrated modules instead of bolt-ons
• Deeper vertical functionality
• Better integration capabilities
One global single instance — when and why
Market trends
• Shrinking to flat license revenues
• Fewer large new deals, more sales to existing customers
• Accelerating growth in maintenance
• Focus on midmarket
• Moderate recovery expected in 2004 after declines last three years
ERP market forecast
A closer look at Big 3 revenue mix
Combined revenue percentagesfor SAP, PeopleSoft, and Oracle (applications)
Vendor Landscape
ERP vendor perspective — key points
• SAP’s dominance continues to gain strength
• Vendor consolidation will continue
» Oracle/PeopleSoft case playing out in court
• The midmarket is the key battleground now
• Microsoft influence increasing
ERP market leaders by revenue 1994-2003
The DOJ vs. Oracle case — what to look for
• Context: Market definition semantics and the prospect of higher prices
• Possible revelations:
» Sales tactics
» Microsoft’s plans
» Customer experiences
» Technology stack vendors versus apps vendors
• Impact: The deal is still a long shot, faces other obstacles even if Oracle wins case
ERP market segments by customer size
Microsoft’s growing presence
• Current products focused on midsize companies
» Axapta moving to upmarket to some extent
» Strong reseller channel geared to the midmarket
• Project Green — next generation of product still a few years out
• Will Microsoft compete in the top end?
» Last week’s disclosure of SAP merger talks indicates that Microsoft would have to buy its way in
The Future:SOAs will transform the market
SOA stages for ERP
• Integration of heterogeneous applications across multiple platforms
» Time frame: Now
• Modular components within suites
» Time frame: Two to three years
• Market transformation to standards-based architectures
» Time frame: End of decade
Components and SOA
Service-based integration
HumanResources
Customerrelationshipmanagement
Financials
SOA and Components = Flexibility
Service-based integrationComponent arbitration
Component arbitration
Process integration
Process integration
Productlife-cycle
management
Supplychain
management
BusinessAnalytics
Humanresources
Vx.y
Businessanalytics
Vx.z
Smaller components add more flexibility
HumanResources
Customerrelationshipmanagement
Service-based integrationComponent arbitration
Component arbitration
Process integration
Process integration
Productlife-cycle
management
Supplychain
management
BusinessAnalytics
GL AP ARCNHuman
resourcesVx.y
Businessanalytics
Vx.z
…Across an extended enterprise
The extendedThe extendedenterpriseenterprise
The enterpriseThe enterprise
Bus extension Bus extension
Finance HR CRM
PLM SCM analyticsBusiness
EAI — message-based integrationComponent arbitration
Workflow/event integration
Component arbitrationWorkflow/event integration
Enterprise Portal
Enterprise Portal
CLP R NGA A
Enterprise Portal
Enterprise Portal
Start where we are
CRM
ERP
Componentize
Assemble/rebuild common components
Recruit other components
Common components become suite
Common components
A new application approach
Process-oriented suitewithout
redundant/conflictingfunctionality
Process execution
Common technology
Common components
SOA for ERP — What it means to you
• Message-based integration — easier connections using standards
» Lowers maintenance and integration costs
• Components — more flexibility
» Assembly of industry-specific and process-oriented solutions (e.g., order-to-cash)
» Fewer vendor choices but more deployment options
• Architecture transformation — large vendors may force major upgrades by end of decade
Recommendations
• Invest for the long term
• Consolidate disparate ERP applications, especially HR and financials
• Understand and reduce ownership costs —maintenance, upgrades, infrastructure
• Favor openness
• Extend but do not customize
Paul Hamerman
www.forrester.com
Thank you
Entire contents © 2004 Forrester Research, Inc. All rights reserved.
Byron Miller