What's next for ERP?
Salesforce.com showed what could be done with a hosted software model. In the ERP world we are seeing new entrants like Intacct and Ataoi, which while they are small so far are making solid inroads into their chosen markets. At present this approach may appeal more to SMEs, but remember that salesforce.com started this way as well, only later taking on Siebel more directly. I know the CEO of one of these emerging hosted ERP vendors, who was amused to be in a competitive bid with SAP at one prospect. His company’ bid was less than one-tenth that of the behemoth. I’m not suggesting that these hosted ERP systems compare in functionality with SAP and Oracle, but perhaps that after all is the point. Traditional ERP systems have become so bloated that large parts of them remain unused and having systems hosted avoids all the environmental installation problems that ensure with traditionally installed software, where there are so many combinations of operating system, DBMS, transaction monitor etc that the vendors have to spend as much time testing combinations of software than actually writing new functionality.
It may take some time but I think the next change in the ERP market will be via this hosted model. When you start to see defensive market offerings by the giant vendors, just as Siebel started an on-demand offering (but too late), then we will know that this prediction has been fulfilled.