Reshuffle in ERP market sees Oracle drop to third place

The merger of PeopleSoft and JD Edwards, and the sale of Baan last week, point to a trend toward consolidation among the...

The merger of PeopleSoft and JD Edwards, and the sale of Baan last week, point to a trend toward consolidation among the suppliers of enterprise software.

Large businesses are no longer planning complex ERP roll-outs over several years. The response from suppliers has been to simplify their products and minimise customisation.

SAP

While its R/3 ERP software has been the dominant package for large businesses, SAP has been trying hard to make its software easier for small- and medium-sized enterprise users.

It has tried the application service provider route and offers a simplified version of its MySap software. But in March the company introduced an entirely new product called BusinessOne, designed to provide SMEs with accounting, reporting, logistics and sales force automation.

SAP says it is designed for small companies that require less complex industry-specific functionality from their IT software.

At the other end of the scale the company is now pushing what it called the Enterprise Services Architecture, "a blueprint for complete, services-based business solutions". The architecture is based on web services and will form the foundation of all SAP products in the future.

The company reported a decline in software sales of 12% in its first quarter results for 2003 compared to the first quarter 2002, despite increasing its share of the ERP market to 54%.

Baan

There has been a mixed reaction from the analysts about the acquisition of Baan by SSA GT. The £82m sale to US-based equity groups General Atlantic Partners and Cerberus Capital Management will result in Baan merging with ERP supplier SSA GT, which is owned by General Atlantic.

Baan will operate as a division of the company with dedicated sales, marketing, development, consulting and support teams.

While some analysts predict that SSA GT will exploit licence revenues and fail to develop the product, others think it will be forced to develop or die.

AMR Consulting views SSA GT as a "voracious acquirer of vintage ERP companies". It said, "It will need to follow through on a strategy to maximise the return on General Atlantic's investment. Simply riding a declining maintenance revenue stream into the ground will not provide this leading venture firm with the type of return on investment it requires."

Oracle

Recently, Oracle has been making much of the consolidation of the IT supplier community. However, the latest round of market shifts has seen it pushed into third place in the market by the merger of PeopleSoft and JD Edwards. In terms of revenues, it is being nudged from behind by top four debutante SSA GT and Baan.

In reality, it shares a major strength with SAP: it is truly one company with an integrated portfolio of modules where the others are stitched together collections of software brands.

Oracle continues to push a very simple message: a database-centric architecture running Oracle modules with Linux on Intel as the preferred platform.

Some 3,000 users have upgraded to Oracle 11i, the company's latest ERP incarnation, after a number of teething problems, though 10,000 are still to make the switch.

To try and kickstart revenues Oracle has released a handful of new products and put marketing muscle behind others. Its latest offering is its Collaboration Suite. This database software sells for just $60 (£36) per user and stores e-mail, voice mail, calendar items and documents in one place.

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