ERP software survey 2011

By Michael Burns

We are now in our 13th year for CAmagazine’s annual enterprise resource planning software survey. That is a very long time in software years. But while other programs come and go, ERP just keeps getting bigger, sweeping up more and more functions. This year, we added budgeting and forecasting, asset management and document management.

The survey includes 62 systems, up from 40 last year. Vendors have come to realize that CAs are often the decision makers for ERP. Most of the major firms that develop software for small, mid-sized and large organizations are on our list, as are some representing specific industries. We have also included products that are licence based and others that are available as Software as a Service (SaaS), where you don’t install the system on the premises but just pay as you use it. The one notable missing vendor is Oracle. We are not sure why Oracle chose not to participate.

As always, we have segregated the ERP products into tiers based on customer revenue and employees and product cost. This is a convenient, albeit not perfect, means of differentiation. Be cautious if you’re trying to calculate the costs for a system, since these numbers are just averages.

Criteria	Tier 1	Tier 2	Tier 3
Customer revenue	>$200M	$10M-$200M	<$10M
Customer employees	>500	50-500	<50
Licence fees	>$300K	$50K-$300K	<$50K
Implementation fees: Licence fees	>2:1	1:1-2:1	<1:1

Now for the big trends. As with other types of software, the clouds have been gathering over ERP this year. Major vendors have announced their products are now available in the clouds or will be soon. For example, on April 11, 2011, Microsoft announced that in 2012 it would be releasing a cloud version of Dynamic ERP solutions using multitenant architecture.

Cloud computing refers to accessing your data and programs over the Internet or having computing delivered like a utility. (For more info, visit www.camagazine.com/Still foggy on cloud computing?.) Multitenant architecture allows multiple organizations to use one instance of the software. This is a requirement for SaaS -- a type of cloud computing where you can access the software service or application (such as ERP or CRM) and store your data on the cloud (i.e., at the service provider’s). Cloud computing includes accessing any program and storing any data in the clouds and does not require multitenant architecture. Cloud computing could provide a software system for just one organization – a private cloud.

If you’re confused by cloud computing, you’re not alone. In 1969, Joni Mitchell prophetically wrote “Both sides now”:

“I've looked at clouds from both sides now
From up and down, and still somehow
It's cloud illusions I recall
I really don't know clouds at all.”

To understand clouds, it might help to look at the pros and cons. On the plus side, clouds make it unnecessary to:

invest in computer/network infrastructure to support the system;
invest in people to support the infrastructure;
upgrade the software, as you are always using the current version;
install the software on your PC, because you only need a browser and a high-speed connection;
ramp up for a busy time that is just temporary. Instead, you can get instant access to computing power as needed;
secure financing for the acquisition of the software.

On the negative side, some organizations are concerned about:

having their data hosted in another country where the laws of the land might not provide sufficient security and confidentiality. Others do not want to have their data/crown jewels stored off site;having fewer systems to choose from as a substantial investment will be required to make existing systems cloud ready;
whether the Internet will be available;
slowing down some memory-intensive processes;
being unable to customize the software inside of source code if other organizations are using the same system;
seeing costs accumulate over a period of time to the point where they exceed a license based/ on premises approach.

Another big ERP story this year is really just another chapter from the ongoing saga about consolidation. Infor announced plans to acquire Lawson for about US$2 billion and Apax Partners announced they intend to acquire both Activant and Epicor for the same amount. It makes perfect sense to acquire ERP systems because of customers’ reluctance to change systems and because of the annual maintenance fees -- 16% to 22% of licence cost.

Yet another ERP trend is to have business intelligence embedded in ERP. In the past you needed to acquire a business intelligence system and build the integration. Today business intelligence is often built in and could include dashboards and online analytical processing (OLAP). Also, ERP is now becoming available in the palm of your hand on a handheld device. You will soon be able to approve purchase orders or review reports right from your cell phone. Finally, document management is starting to attract attention from ERP vendors. In the past, the best you could hope for was to attach a document such as a scanned supplier invoice to an invoice transaction or include a picture of an item in the inventory master file. But organizations also want to create documents that include data from the ERP system. You can expect to see ERP tools to create, control and share documents in the near future.

The survey results are available in the form of an interactive chart as well as a pdf. You can also have 180 Systems select the top 10 ERP systems that meet your requirements based on percentage fit calculations. For all of these options, visit www.camagazine.com/ERPsurvey11.

Michael Burns, MBA, CAºIT, is president of 180 Systems (www.180systems.com/), which provides independent consulting services, including business process review, system selection, business case development and project management. Contact 416-485-2200; mburns@180systems.com