June 14, 2004. Call in at 10:55 a.m Eastern Time Paul Hamerman  Byron Miller Vice President  Principal Analyst Forrester R...
Theme ERP is a long-term investment. Drive out support and integration costs for better ROI.
Agenda <ul><li>ERP challenges and deployment trends </li></ul><ul><li>Market size and maturity </li></ul><ul><li>Vendor la...
Definition: ERP <ul><li>ERP  —  a set of applications for core business operations and back-office management </li></ul><u...
ERP challenges <ul><li>Functional gaps, supplemented by bolt-ons </li></ul><ul><li>Costly to maintain </li></ul><ul><li>Cu...
Trends in ERP deployment <ul><li>Single ERP vendor versus multiple vendors </li></ul><ul><li>Fewer instances or single ins...
One global single instance  —  when and why
Market trends <ul><li>Shrinking to flat license revenues </li></ul><ul><li>Fewer large new deals, more sales to existing c...
ERP market forecast
A closer look at Big 3 revenue mix Combined revenue percentages for SAP, PeopleSoft, and Oracle (applications)
Vendor Landscape
ERP vendor perspective  —  key points <ul><li>SAP’s dominance continues to gain strength </li></ul><ul><li>Vendor consolid...
ERP market leaders by revenue 1994-2003
The DOJ vs. Oracle case  —  what to look for <ul><li>Context: Market definition semantics and the prospect of higher price...
ERP market segments by customer size
Microsoft’s growing presence <ul><li>Current products focused on midsize companies </li></ul><ul><ul><li>Axapta moving to ...
The Future: SOAs will transform the market
SOA stages for ERP <ul><li>Integration of heterogeneous applications across multiple platforms </li></ul><ul><ul><li>Time ...
Components and SOA Service-based integration
SOA and Components = Flexibility Human Resources Customer relationship management Financials Service-based integration Com...
Smaller components add more flexibility Human Resources Customer relationship management Service-based integration Compone...
…Across an extended enterprise The extended enterprise The enterprise Bus extension Bus   extension Finance HR CRM PLM SCM...
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 suite without redundant/conflicting functionality Process execution Common tec...
SOA for ERP  —  What it means to you <ul><li>Message-based integration  —  easier connections using standards </li></ul><u...
Recommendations <ul><li>Invest for the long term </li></ul><ul><li>Consolidate disparate ERP applications, especially HR a...
Thank you Paul Hamerman [email_address] www.forrester.com Entire contents © 2004  Forrester Research, Inc. All rights rese...
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Paul Hamerman Byron Miller Vice President Principal Analyst

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Paul Hamerman Byron Miller Vice President Principal Analyst

  1. 1. June 14, 2004. Call in at 10:55 a.m Eastern Time Paul Hamerman Byron Miller Vice President Principal Analyst Forrester Research ForrTel: ERP Applications: Market Maturity, Consolidation And The Next Generation
  2. 2. Theme ERP is a long-term investment. Drive out support and integration costs for better ROI.
  3. 3. Agenda <ul><li>ERP challenges and deployment trends </li></ul><ul><li>Market size and maturity </li></ul><ul><li>Vendor landscape — leadership, consolidation, and the midmarket </li></ul><ul><li>The future: SOAs will transform the market </li></ul><ul><li>Recommendations </li></ul>
  4. 4. Definition: ERP <ul><li>ERP — a set of applications for core business operations and back-office management </li></ul><ul><li>Applies to a wide variety of businesses and government </li></ul>
  5. 5. ERP challenges <ul><li>Functional gaps, supplemented by bolt-ons </li></ul><ul><li>Costly to maintain </li></ul><ul><li>Customized </li></ul><ul><li>Multiple vendors, multiple installations </li></ul><ul><li>Integration — numerous internal and external interfaces </li></ul>
  6. 6. Trends in ERP deployment <ul><li>Single ERP vendor versus multiple vendors </li></ul><ul><li>Fewer instances or single instance </li></ul><ul><li>Using integrated modules instead of bolt-ons </li></ul><ul><li>Deeper vertical functionality </li></ul><ul><li>Better integration capabilities </li></ul>
  7. 7. One global single instance — when and why
  8. 8. Market trends <ul><li>Shrinking to flat license revenues </li></ul><ul><li>Fewer large new deals, more sales to existing customers </li></ul><ul><li>Accelerating growth in maintenance </li></ul><ul><li>Focus on midmarket </li></ul><ul><li>Moderate recovery expected in 2004 after declines last three years </li></ul>
  9. 9. ERP market forecast
  10. 10. A closer look at Big 3 revenue mix Combined revenue percentages for SAP, PeopleSoft, and Oracle (applications)
  11. 11. Vendor Landscape
  12. 12. ERP vendor perspective — key points <ul><li>SAP’s dominance continues to gain strength </li></ul><ul><li>Vendor consolidation will continue </li></ul><ul><ul><li>Oracle/PeopleSoft case playing out in court </li></ul></ul><ul><li>The midmarket is the key battleground now </li></ul><ul><li>Microsoft influence increasing </li></ul>
  13. 13. ERP market leaders by revenue 1994-2003
  14. 14. The DOJ vs. Oracle case — what to look for <ul><li>Context: Market definition semantics and the prospect of higher prices </li></ul><ul><li>Possible revelations: </li></ul><ul><ul><li>Sales tactics </li></ul></ul><ul><ul><li>Microsoft’s plans </li></ul></ul><ul><ul><li>Customer experiences </li></ul></ul><ul><ul><li>Technology stack vendors versus apps vendors </li></ul></ul><ul><li>Impact: The deal is still a long shot, faces other obstacles even if Oracle wins case </li></ul>
  15. 15. ERP market segments by customer size
  16. 16. Microsoft’s growing presence <ul><li>Current products focused on midsize companies </li></ul><ul><ul><li>Axapta moving to upmarket to some extent </li></ul></ul><ul><ul><li>Strong reseller channel geared to the midmarket </li></ul></ul><ul><li>Project Green — next generation of product still a few years out </li></ul><ul><li>Will Microsoft compete in the top end? </li></ul><ul><ul><li>Last week’s disclosure of SAP merger talks indicates that Microsoft would have to buy its way in </li></ul></ul>
  17. 17. The Future: SOAs will transform the market
  18. 18. SOA stages for ERP <ul><li>Integration of heterogeneous applications across multiple platforms </li></ul><ul><ul><li>Time frame: Now </li></ul></ul><ul><li>Modular components within suites </li></ul><ul><ul><li>Time frame: Two to three years </li></ul></ul><ul><li>Market transformation to standards-based architectures </li></ul><ul><ul><li>Time frame: End of decade </li></ul></ul>
  19. 19. Components and SOA Service-based integration
  20. 20. SOA and Components = Flexibility Human Resources Customer relationship management Financials Service-based integration Component arbitration Component arbitration Process integration Process integration Product life-cycle management Supply chain management Business Analytics Human resources Vx.y Business analytics Vx.z
  21. 21. Smaller components add more flexibility Human Resources Customer relationship management Service-based integration Component arbitration Component arbitration Process integration Process integration Product life-cycle management Supply chain management Business Analytics GL AP AR CN Human resources Vx.y Business analytics Vx.z
  22. 22. …Across an extended enterprise The extended enterprise The enterprise Bus extension Bus extension Finance HR CRM PLM SCM analytics Business EAI — message-based integration Component arbitration Workflow/event integration Component arbitration Workflow/event integration Enterprise Portal Enterprise Portal C L P R N G A A Enterprise Portal Enterprise Portal
  23. 23. Start where we are CRM ERP
  24. 24. Componentize
  25. 25. Assemble/rebuild common components
  26. 26. Recruit other components
  27. 27. Common components become suite Common components
  28. 28. A new application approach Process-oriented suite without redundant/conflicting functionality Process execution Common technology Common components
  29. 29. SOA for ERP — What it means to you <ul><li>Message-based integration — easier connections using standards </li></ul><ul><ul><li>Lowers maintenance and integration costs </li></ul></ul><ul><li>Components — more flexibility </li></ul><ul><ul><li>Assembly of industry-specific and process-oriented solutions (e.g., order-to-cash) </li></ul></ul><ul><ul><li>Fewer vendor choices but more deployment options </li></ul></ul><ul><li>Architecture transformation — large vendors may force major upgrades by end of decade </li></ul>
  30. 30. Recommendations <ul><li>Invest for the long term </li></ul><ul><li>Consolidate disparate ERP applications, especially HR and financials </li></ul><ul><li>Understand and reduce ownership costs — maintenance, upgrades, infrastructure </li></ul><ul><li>Favor openness </li></ul><ul><li>Extend but do not customize </li></ul>
  31. 31. Thank you Paul Hamerman [email_address] www.forrester.com Entire contents © 2004 Forrester Research, Inc. All rights reserved. Byron Miller [email_address]
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