A couple of observations I am seeing about the state of the ERP market – is it now end-of-life?
I have noticed in more than one ERP vendor’s VAR/dealer list that there seems to be consolidation now in the VAR space. The larger ones are able to get business easier by virtue of their name and presence, and have a better guarantee of revenue from their existing customer base, which is usually large. Smaller VARs don’t have such a name or presence for getting new business, and their smaller number of customers means they can’t rely on annuity revenue so much.
The other observation comes from two recent blogs – by Joshua Greenbaum and Vinnie Mirchandani. Vinnie calls the growth of Indian ERP services an end of life phenomenon, Josh refers to the ‘mistaken’ hype around the SMB market for ERP.
My Syspro contact believes that the big ERP vendors over-estimate the ERP SMB market potential, and will not be able to earn sufficient revenue, given their enormous size, to make it profitable for them. For a smaller SMB ERP vendor, $10 million from new business is good annual revenue, for SAP it hardly registers.
I am leaving the ERP arena.
We merged our company with a larger ERP VAR, and while they took our technical staff, they didn’t want the sales/marketing/admin side – which means I was left looking for another job.
Like the consolidation of the ERP vendors, it seems that the same is happening in South Africa with the VARs. In the small-medium business space, new customers are choosing software based on price and perception of the supporting VAR. The SMB market for ERP is definitely in Geoffrey Moore’s late majority/laggard end of the adoption curve. So I am beginning to believe that the age of ERP is coming to an end. ERP VARs will survive on the basis of occasional new business, but additional work for existing customers will become more important, and other business areas will need to be developed
I am moving to a software company that started as a Syspro VAR over 10 years ago, but it has also developed a sophisticated project management solution for large manufacturing organisations; that’s where I will be working. More on that once I get into it.