Jim Holincheck of Workday presented a slide last Fall which to me was striking. He showed small planning and testing projects around Workday’s 3 releases a year superimposed around much bigger, longer IT and other projects at customer sites. And it hit me, in a few years, when Jim presents a similar slide, the 3 Workday upgrades a year will look even more prominent. Because the long term ERP projects they are superimposed on will have shrunk or disappeared.
Oracle sent me a press release yesterday which announced 22 industry- and geography-specific Oracle Accelerate (read rapid implementation) solutions. The range of the 15 partners who helped create them (known names like Cognizant and geographic ones like HAND from China) is impressive.
NetSuite also announced yesterday that a growing number of VARs from on -premise world continue to join its ecosystem.
All these are growing signs of the end of an amazing two-decades long run for ERP service providers. It started in the mid-90s where ERP projects quickly got bloated with the promise of Y2K remediation, reengineering, and other nirvana. The fat benchmarks from those initial projects, and related overruns and delays along with the laissez-faire attitude of some of the software vendors have come to typify ERP projects. That then spilled over to hosting world which took advantage of the perception that ERP systems needed elaborate SLAs and infrastructure. God knows how many sites are paying for 24x7 coverage and $ 2 a g in monthly storage when the majority of them typically don't need more than 16x5 support or 20c a gb a month in storage costs. Next came offshore vendors which took over ERP apps management – break/fix, tuning, patching, routine queries and reports, etc. - and justified armies to do those tasks. The ERP upgrade cycles every few years turned in major projects in their own right. Finally, several companies were convinced to add to the apps management armies BPO extensions.
To twist an old Saturday Night Live phrase “ERP been berry berry good for outsourcing”
The good news is over the last 20 years we have created a global pool of ERP talent – now firms from India, E. Europe, China, S. America, S. Africa can be leveraged. We can leverage firms from the mid market world of MS Dynamics and Sage. They are much more used to short burst projects.
Even more importantly. SaaS vendors like Workday, NetSuite, the cloud versions of Fusion are cannibalizing hosting, apps management and upgrade cycles. We are moving to a world of bite size ERP projects with a short tail of follow up services from outsourcers. You can use the outsourcers for more strategic projects.
Cannot wait to see Jim’s updated slide in a couple of years.
