More choice in ERP demands increased buyer caution: IDC

Companies wooed by enterprise application software vendors should investigate carefully before signing up, says IDC manager Graham Penn. With another distribution, manufacturing and financials software vendor setting up in New Zealand this week (BCM Systems), there is increasing choice for Kiwi companies. Penn says the "easy ground" in the market has already been taken.

Companies wooed by enterprise application software vendors should investigate carefully before signing up, says IDC manager Graham Penn.

With another distribution, manufacturing and financials software vendor setting up in New Zealand this week (BCM Systems), there is increasing choice for Kiwi companies.

Penn says the “easy ground” in the market has already been taken.

He says products like Geac’s Streamline sits at the bottom end of the market and that Geac is likely to “defend their turf” well. “At the top end SAP has pretty much got anyone that’s worth getting. You’ve got Baan, PeopleSoft and the others who are playing in the middle of the market.”

Penn warns the New Zealand market is very limited. “There are only so many companies who are hot prospects.”

SAP has now said it’s looking to smaller companies than it has previously targeted, something Penn says it has done worldwide.

He says there are only a very limited number of large companies here, and not even many in the medium-sized to large market. “They’re going to have to work very hard to capture that part of the territory.”

He says vendors will get sales if they have a “better mouse-trap”, but some will still find it difficult, because some organisations won’t move from what they’ve got, because of the cost. “The inertia of moving from what you’ve got is pretty strong unless you’ve got a compelling reason.”

He says the supply chain management area has become the hot new area. “Everyone’s put a hand up and is saying: ‘Hey, I’ve got a product’.” He suggests companies look “long and hard” before choosing a product.

“On the one hand they’re trying to get new efficiencies, but they could invest half a million, two million dollars or whatever is required — software plus services and training — to get it all up and running, and some of them, when they look back, may find it hard to justify.”

Penn says he’s not advocating that companies shouldn’t do it, just that they do it wisely. “It’s easy to get sold a beaut story and then find 18 months into the project that the promised gains aren’t being realised, and/or the cost of doing it is two or three times what you originally budgeted. You’ve got to be careful because the new software can do a lot of things, but whether it’s appropriate to the companies which are being wooed remains to be seen.”

He suggests companies talk to as many people as possible, check out reference sites, and ask vendor X what is wrong with vendor Y’s products.

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