I think the best way to look at this question is to ask a few other questions. Why is Oracle buying everything under, over, and including the SUN? Why did SAP’s licensing revenues decline 31%? Why are CIO’s getting “Suite Fatigue”?

• Oracle is only able to achieve 0%-5% licensing growth by making dozens of acquisitions each year. This is about financial engineering – not innovation.
• With the tremendous corporate political power possessed and well leveraged by SAP – it is hard to imagine their licensing revenues falling 31%. Something is seriously wrong!
• As I travel the world meeting CIO’s – I have now heard the term “Suite Fatigue” in three different continents. I think the ERP vendors are even confused by their dozens of three letter software modules.

There is no question corporations are running out of patience and frothy IT budgets to implement ERP systems – which are only really useful for processing transactions. My belief is right now they are dying a slow death.

However, in my opinion, when corporations are offered a disruptive option (10X more efficient) for what is essentially “add a record – delete a record” – we will see a fast and massive ERP blood bath like no other in history of the hi-tech industry. One smaller hi-tech analogy which I witnessed as a young man was the overnight disappearance of the multi-billion dollar Mini-Computer market. The workstations and PC annihilated what was once a robust business.

My guess is a new Internet-based paradigm (platform) for processing transactions combined with emerging SaaS-based enterprise offerings will cause the death of traditional ERP systems (and their alphabet soup ecosystems). Large corporations are figuring out that customizing SAP and Oracle ERP systems is killing them in multiple ways (implementation cost, consulting, training, user adoption, etc.).

The ERP vendors of today will likely not be the ones who “eat their own children”. My guess is an Amazon (or Google) coupled with SaaS companies offering configurable enterprise applications will spoil the ERP Boondoggle.

In 1994, before Amazon was “Amazon” – I was on a financial talk radio show with Jeff Bezos. I can tell you he is very smart and not afraid of any sized vendor. In fact, he views them as a larger market opportunity.

Stay tuned and stay clear of the blood!

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Tags: Enterprise resource planning (ERP), On-demand (SaaS), Supply chain management software
Posted in CEO viewpoint
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