It isn’t just Oracle and SAP making hay in the enterprise application arena as companies upgrade, cross-grade and implement applications at a rate not seen since the late 1990s.
At the top end of town a slew of organisations are renewing or consolidating their enterprise software. Fonterra is standardising on SAP. The loyal crew of JD Edwards users, more certain of the future since Oracle announced its Applications Unlimited strategy, are upgrading and there are even new companies coming on board.
Among smaller companies, SAP, Microsoft and a host of specialist vendors are claiming success. Lawson, local developer Greentree and Aussie vendor Pronto among others are also claiming wins.
Then there is a vibrant government sector, especially in finance and reporting software, but also projects such as Kiwisaver, with SAP providing the software, and Inland Revenue implementing Seibel CRM, among many others.
Oracle New Zealand’s applications manager, Callum Ross, says solid economic conditions and business growth are driving the adoption and development of enterprise software. He says New Zealand companies are largely in the small to medium category in international terms. As they grow from small to medium they need systems to support that growth. This is particularly true of businesses focussed on international markets, he says.
Lawson software managing director Stephen Moore adds that the market for mid-range enterprise software is growing in part due to an injection of capital from private equity firms. In such situations it can be the intention to grow that drives adoption rather than the pressures of growth itself.
Moore says he is seeing activity in the replacement of “first wave” software, with users looking for more sophisticated functionality such as web-enablement. He says there is both a technology pull and a total cost of ownership push happening, as older systems can be expensive to maintain.
SAP’s local managing director, Ian Black, says fears of an economic hard landing have receded and this is leading to increased investment.“There was a bit of under-investment, I think. People are making good decisions and there’s far more rigour around IT projects,” he says. “The perceived risk is better.”
For SAP it’s all about expanding the footprint, moving into small and medium enterprises with its All-In-One and Business One packages and across application categories in CRM, supply chain, procurement, portals, HR and payroll.
For instance, Black says, SAP is providing CRM systems for organisations such as the Lotteries Commission, Auckland City and Rakon. He is also claiming wins at Livestock Improvement, the Department of Conservation and Waitakere City, among others. Meanwhile, at the small end of town, companies such as 42 Below and Home and Leisure Magazine are using Business One. Part of the attraction, Black says, is the software’s integrated CRM capabilities. Oracle’s Ross says another driver of activity is a constant need for supply chain improvement, particularly in mid-market manufacturing organisations. Closing the loop between the supply chain and the customer base is a priority for “people who make stuff”, he says.
Self-service applications are also in demand, he says, whether these be internal, for example in HR, or external, through self-service portals for suppliers, customers and partners. Such technologies can improve service and cut costs.
Ross says higher levels of integration are both required by customers and being delivered. He cites organisations such as Placemakers, which is implementing Oracle’s E-Business suite and using technologies such as BPEL (business process execution language) to integrate the back office with systems such as point-of-sale.
Organisations are looking for improvements in three areas, he says — “automation, integration and empowerment”.
SAP’s Black says a shift towards service-oriented architectures is another driver, while some user organisations are being forced to move simply because existing systems are reaching their end-of-life.
One big change from the 1990s ERP boom is the arrival of rapid implementation methodologies. All of the vendors spoken to acknowledge the need for quick ROI through low-risk and rapid implementation. Both Oracle and SAP emphasise rapid deployment through the ability to implement pre-configured, best practice modules.
“Almost all of them use this as a starting point,” Black says. “It cuts the cost and accelerates deployment.”
Lawson’s Moore says modules that fit the business tightly can “de- risk” a project through reduced requirements for customisation. He says Lawson is increasingly moving away from talking about industry verticals to talking about “sub-verticals” or “micro-verticals”. For instance, instead of talking about agribusiness, it will talk about fish farming or forestry.
“I’m seeing a requirement from the customer base to be more specific and for software to fit more tightly with the industry in which it is being deployed,” he says.
Moore says it is also important for software vendors to be close to the project during implementation and to have skin in the game.