Top Banner
Teleconference Next-Generation ERP Strategies Paul Hamerman R “Ray” Wang Vice President Principal Analyst Forrester Research September 17, 2007. Call in at 12:55 p.m. Eastern Time
34
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Paul Hamerman R "Ray" Wang

TeleconferenceNext-Generation ERP StrategiesPaul Hamerman R “Ray” Wang

Vice President Principal Analyst

Forrester Research

September 17, 2007. Call in at 12:55 p.m. Eastern Time

Page 2: Paul Hamerman R "Ray" Wang

2Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 3: Paul Hamerman R "Ray" Wang

3Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Theme

Despite all the SOA hype, ERP strategies

should focus on business users and the processes they support

Page 4: Paul Hamerman R "Ray" Wang

4Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 5: Paul Hamerman R "Ray" Wang

5Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Packaged applications remain a top IT priority in 2007

8%

6%

7%

11%

14%

11%

19%

17%

22%

24%

24%

27%

25%

31%

31%

33%

Redesigning / redeploying IT’sarchitecture (like implementing a

services-oriented architecture)

Mobility initiatives

Internet and eCommerceinitiatives

Replacing or upgrading serverhardware

Significantly upgrading disasterrecovery capabilities

Replacing or upgrading existingapplication systems

Significantly upgrading yoursecurity environment

Consolidating IT infrastructure

Critical priority Priority

Rank

2007 2006

1

2

3

4

5

6

7

8

2

1

4

3

N/A

5

N/A

6

“Which of the following initiatives are likely to be one of your ITorganization’s major IT themes for 2007?”

Base: 318 decision-makers at European enterprises

Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey

Page 6: Paul Hamerman R "Ray" Wang

6Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Packaged apps spending shows continuous growth

22%

24%

26%

36%

38%

42%

51%

53%

55%

39%

41%

42%

19%

16%

12%

18%

15%

7%

7%

7%

7%

6%

6%

8%

Platform software

Packaged applications

Collaborationapplications

Infrastructure software

Web applications

Security software

More About the same Less Don't know

“How does your company’s 2007 planned spendcompare with its actual spend in 2006?” Index

2007 2006

35%

23%

18%

14%

8%

3%

32%

20%

-1%

N/A

8%

-9%

Base: 218 decision-makers at European enterprises(percentages may not total 100 because of rounding)

Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey

Page 7: Paul Hamerman R "Ray" Wang

7Entire contents © 2007  Forrester Research, Inc. All rights reserved.

The state of software investments 2007 — North America: ERP upgrades are a major priority

“The volume of application software purchases will increase in 2007”“In 2007, will your company purchase any of the following?”

“In which vendor’s ERP software will you invest?”

2%

6%

13%

6%

6%

4%

4%4% 19%

8% 21%

10% 25%

5% 6% 28%

18% 25%

10% 27%

16% 31%

14% 45%

15%

25%

7%

22%

33%

22%

26%

27%

N/A†

41%

44%

56%

Percentage of enterprises last year

purchasing or upgrading*

Base: 227 application software decision-makers at North American enterprises that will make purchases of ERP software in 2007 (multiple responses accepted); Base: 471 application software decision-makers at North American enterprises*; Base: 379 application software decision-makers at North American enterprises; Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey

First-time purchase Major upgrade Minor upgrade

Messaging, email, and collaborationsoftware

Customer service and support software

Business intelligence (BI) software

Enterprise resource planning (ERP)software

Sales force automation (SFA) software

Marketing automation software

Sell-side eCommerce software

Procurement or sourcing software

SAP

Microsoft

Oracle

Other

Page 8: Paul Hamerman R "Ray" Wang

8Entire contents © 2007  Forrester Research, Inc. All rights reserved.

The state of software investments 2007: Europe“Procurement and sourcing software purchase volumes will grow most in 2007”

“In 2007, will your company purchase any of the following?”

“In which vendor’s ERP software will you invest?”

Percentage of enterprises last year

purchasing or upgrading*

Base: 99 application software decision-makers at European enterprises that will make purchases of ERP software in 2007 (multiple responses accepted); Base: 196 application software decision-makers at European enterprises *; Base: 204 application software decision-makers at European enterprises

First-time purchase Major upgrade Minor upgrade

Messaging, email, and collaborationsoftware

Customer service and support software

Business intelligence (BI) software

Enterprise resource planning (ERP)software

Sales force automation (SFA) software

Marketing automation software

Sell-side eCommerce software

Procurement or sourcing software

Oracle

Microsoft

SAP

Other

16%

11%

17%

41%

33%

18%

27%

30%

31%

43%

N/A†

50%5% 15% 33%

7% 17% 27%

8% 13% 26%

6% 15% 19%

7% 9% 22%

3%9% 20%

6% 9% 16%

4%3%

14%

43%

SAP leads bya wide margin

in Europe

Source: Forrester’s Business Technographics® November 2006 European Enterprise IT Budgets And Spending Survey

Page 9: Paul Hamerman R "Ray" Wang

9Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 10: Paul Hamerman R "Ray" Wang

10Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Enterprise apps vendor and market trends

• Apps vendor consolidation continues

» Oracle and Infor are the biggest acquirers

• Saturation at the upper end

» Most enterprise deals are with existing customers

• Customer retention is the top vendor priority

• Architectural evolution

» SOA and middleware being used to drive customer lock-in

• Transition to recurring and variable revenue models

» Maintenance is driving industry growth

Page 11: Paul Hamerman R "Ray" Wang

11Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Maintenance continues to drive market growth

$0

$10,000

$20,000

$30,000

$40,000

$50,000

2006 2007 2008 2009 2010 2011

Services

Maintenance

License

Base: Worldwide revenues

8.0

8.4

4.8

Source: Forrester

Page 12: Paul Hamerman R "Ray" Wang

12Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Top 10 ERP vendors by total revenues ($ millions)$11,837

$6,304

$2,200

$1,873

$1,017

$664

$384

$327

$304

$298

SAP

Oracle

Infor

Sage Group

Microsoft (MBS)

Lawson

Epicor

IFS

Exact

Agresso

Source: Forrester Research. •These revenues are for the vendors’ fiscal quarters that most closely correspond to calendar year 2006. Vendor revenues calculated in currencies other than US dollars have been converted to US dollars using the average daily exchange rates. •*Infor revenues based on vendor estimate following SSA Global, Extensity and Workbrain acquisition announcements.•**Lawson annual revenues based on last four quarters as of Feb., 2007

**

*

Page 13: Paul Hamerman R "Ray" Wang

13Entire contents © 2007  Forrester Research, Inc. All rights reserved.

ERP vendor competitive positioning

Largeenterprise

Midmarket

Smallbusiness

SAPmySAP

ERP

OracleEBS and

PeopleSoft

NetSuite

Lawson

SAPBusiness

One

MicrosoftDynamics

AX

MicrosoftDynamics

NAV, GP, SL

OracleJDE E1

Epicor

SageGroup

Infor

Exact

Agresso

SAPAll-In-One

SAPA1S

(future)

Page 14: Paul Hamerman R "Ray" Wang

14Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 15: Paul Hamerman R "Ray" Wang

15Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Next-generation architecture strategies — the road to SOA

Batch

On-linemidrange

Client/server

Web client

Service-oriented

architectures

1970s 1980s 1990s 2000s 2010s

Page 16: Paul Hamerman R "Ray" Wang

16Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Business drivers need to be linked to SOA

Business drivers

• Adapt system to processes, not vice versa

• Improve usability

• Deliver relevant analytics

• Connect to external data and services

• Leverage best practices and industry knowledge

Technology drivers

• Reduce custom coding through configuration

• Adopt open standards to reduce integration costs

• Enable end users self-sufficiency

• Provide more flexibility to use best-of-breed and composite apps

Page 17: Paul Hamerman R "Ray" Wang

17Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Customer challenges with the SOA direction

• Expensive and disruptive upgrades required

• Lock-in to middleware platforms, fewer apps vendor choices

• Messaging doesn’t resonate with business users

• Unclear time frames

• Difficult to verify vendor success in achieving SOA milestones

Page 18: Paul Hamerman R "Ray" Wang

18Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 19: Paul Hamerman R "Ray" Wang

19Entire contents © 2007  Forrester Research, Inc. All rights reserved.

SAP’s application strategy — overview

• SAP announced SOA strategy in 2004

• Leading vision in the industry on SOA transition, but marketing messages remain arcane

• SAP ERP 6.0 is on the critical upgrade path

» New incremental approach for future releases

» Sticking to 2007 completion of SOA enablement

» NetWeaver 2004 is critical for enhancement packages

• Considerable amounts of proprietary ABAP will be retained

• New midmarket product features model-based design

• IVN’s, xApps drive vertical development on NetWeaver

Page 20: Paul Hamerman R "Ray" Wang

20Entire contents © 2007  Forrester Research, Inc. All rights reserved.

A1S is a departure from SAP’s traditional licensed strategy

Source: February 12, 2007, “SAP Bolsters Midmarket Focus With Two New Offerings”

SAPAll-in-One(A1N) A1S

mySAP ERP 2005code base withSAP EnhancementPackages

Redesigned ERP based on a subsetof SAP functions

Simplified UI based onProjectMuse initiative

Unknownat this time

“By evolution”: serviceenablement of themy SAP ERP2005 suiteover time

“By design”: delivery ofcomponentservices with guidedconfigurationtools

On premise, licensed SaaS (hosted, subscription)

Midmarket businesses withrelativecomplexity and maturity

Midmarket businesses needinggreater flexibilityfor change

SAP NetWeaver SAP NetWeaver

ERP functionality

User interface

SOA strategy

Deployment

Middleware

Target market

Page 21: Paul Hamerman R "Ray" Wang

21Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Oracle’s application strategy — overview

• Project Fusion announced in January 2005, clarified a year later

• Transition to Fusion Middleware starts with upcoming releases of current products

» Existing products are being enhanced and supported indefinitely via Applications Unlimited

» Acquisitions now focus on industry-specific apps

» Products will adopt Fusion Middleware over time

• Fusion Apps will be largely based on the EBS schema and design concepts

• Legacy apps will assume more middleware components

• AIA provides a framework for partnership in verticals

Page 22: Paul Hamerman R "Ray" Wang

22Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Microsoft Dynamics strategy — overview

• Backed away from its commitment to deliver a converged product line

» Promoting UI and technology consistency across existing products with Microsoft standards

» AX and NAV products will receive more development effort

• Likely to move up market aggressively, starting with business performance/analytics and CRM

• SaaS beginning to factor into development plans

• Partner strategy delivers key micro-vertical last mile solutions

• Usability and user experience remains the industry standard for enterprise software

Page 23: Paul Hamerman R "Ray" Wang

23Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Infor’s application strategy• Infor continues to be an aggressive aggregator of overlapping and

complementary solutions

» Acquisitions focused on AS/400 (System-I) and .Net based vendors

» Undervalued players acquired for economies of scale

• Huge ERP product portfolio must be rationalized

» Legacy products continue to generate maintenance revenues

» New development offered as extended solutions

» Promise to never sunset a customer may be hard to keep

• SOA development efforts enable cross-application

» Future capabilities centered around a non-proprietary SOA platform

» SOA strategy may lead to overall lower TCO

• Acquisitions will continue

» Horizontal holes (e.g., Workbrain)

» Vertical expansion

Page 24: Paul Hamerman R "Ray" Wang

24Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 25: Paul Hamerman R "Ray" Wang

25Entire contents © 2007  Forrester Research, Inc. All rights reserved.

2007-2009: Technology convergence creates dynamic applications

Portals,collaboration,

andcontent

Businessprocess

management

Service-oriented

architectures

Businessintelligence

Dynamicapplications

Page 26: Paul Hamerman R "Ray" Wang

26Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Dynamic applications will provide new levels of flexibility and user relevance

» User-centric — accessible and role-specific

» Process-oriented — targets a business goal

» Flexible — driven by changeable models and rules

» Collaborative — enables work across space and time

» Context-driven — responds to business events

» Dynamic — changes in business time, without programmers

» Information-rich — all the information needed to make decisions and take actions, assembled in context in one place

» Built for SaaS — can be deployed quickly and supported as hosted services

Page 27: Paul Hamerman R "Ray" Wang

27Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Solutions-focused software and services ecosystemA hypothetical software vendor’s digital business networked ecosystem

Customer

Hardware platformsDell, EMC,

HP, IBM, and Sun

Middleware platform BEA, IBM, Microsoft,

Oracle, SAP, Sonic, Tibco

Analytics and reporting platform

BOBJ Cognos, Hyperion, and SAS

Office productivity/ information

management IBM and Microsoft

DatabaseIBM DB2, Microsoft,

Oracle, and Sybase

Storage technologies EMC and

IBM

Managed application

services provider

Business process

outsourcing

OEM:solutions provider

Third-party financing

Key Financing and Siemens

ISV partner or resellers

Applications from ISVs

Agresso, Deltek, Epicor, Exact, Infor, Lawson, Microsoft,

Oracle, SAP

Last mile solutions

Accenture, IBM, Infosys, Satyam, TCS and Wipro

Implementation partnerships

Accenture, BearingPoint,

Capgemini, Deloitte, EDS, Fujitsu, Hitachi,

Infosys, Satyam, TCS and Wipro

Sup

plie

rs

Dis

trib

utor

s

Page 28: Paul Hamerman R "Ray" Wang

28Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Emerging ERP vendor landscape

Innovators

• Workday

• SAP

• NetSuite

• Microsoft

• Epicor Software Corporation

Consolidators

• Oracle

• Infor

• Sage Group

• Private equity firms

Page 29: Paul Hamerman R "Ray" Wang

29Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Application software selection process

*Optional tasks

Decide

• Develop project charter

• Assemble project team

• Define high level requirements

• Identify candidate vendors

• Refine requirements

• Narrow choices

• Determine selection criteria

• Configure Forrester Wave™*

• Develop demonstration scenarios

• Orchestrate scripted demos

• Analyze vendor offers

• Score vendors

• Conduct contract negotiations

• Choose vendor

• Validate choice via proof-of-concept (POC)*

• Transition to implementation

Evaluate RefineOrganize

Page 30: Paul Hamerman R "Ray" Wang

30Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Recommendations to business and IT apps professionals

Business process professionals

• Choose applications that are designed for process flexibility

» Acquire proficiency in apps configuration and reporting tools

• Use SaaS for point solutions that can be managed by the business

• Collaborate with IT to optimize use of ERP packages

IT apps professionals

• Stay current on releases to keep migration options open

• Base upgrade decisions on business needs and IT risk

• Consolidate disparate ERP applications

• Reduce maintenance fees and support costs

Page 31: Paul Hamerman R "Ray" Wang

31Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Agenda

• Market trends and survey data

• Overview of the ERP market

• The on-going technology evolution

• Key vendors and product strategies

• The future of ERP

• Questions and answers

Page 32: Paul Hamerman R "Ray" Wang

32Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Paul Hamerman

[email protected]

Ray Wang

[email protected]

www.forrester.com

Thank you

Page 33: Paul Hamerman R "Ray" Wang

33Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Selected Bibliography for Paul Hamerman

• (In process) October 2007: Forrester Wave, Business Performance Solutions, Q4 2007

• July 20, 2007, Application Vendor Selection: Making The Process Work For You

• June 8, 2007, ERP Applications 2007: Innovation Rekindles

• March 30, 2007, “Learning and Talent Management Join Forces:

• March 20, 2007, “Segregation Of Duties: A Building Block For Enterprise IT Controls”

• February 7, 2007, “Business Performance Solutions: The Competition Heats Up”

• December 18, 2006, “Application Upgrades: When And Why”

• September 28, 2006, “The Forrester Wave™: Human Resource Management Systems, Q3 2006”

• June 29, 2006, “ERP Applications — Market Outlook Improves Ahead Of The Architectural Battle”

• March 31, 2006, “Oracle Versus SAP In Enterprise Applications: Let The Battle Of Architectures Begin!”

• January 23, 2006, Market Overview “HR/HCM Applications: Strategic Processes Move To The Forefront”

Page 34: Paul Hamerman R "Ray" Wang

34Entire contents © 2007  Forrester Research, Inc. All rights reserved.

Selected Bibliography for R “Ray” Wang

• August 13, 2007, “Competition Intensifies For The SMB ERP Customer”

• May 31, 2007, “The Order Management Missing Link: A Single Process Owner”

• May 7, 2007, “Solutions-Centric Ecosystems Disrupt The Enterprise Software World Order”

• March 15, 2007, “Enterprise Applications Software Licensing and Pricing Quarterly Update”

• March 2, 2007, “ERP Software Upgrades in SMB and Enterprises”

• February 12, 2007, “SAP Bolsters Mid-market Focus With Two New Offerings:,

• February 7, 2007, “Be Not Afraid of ERP Instance Consolidation”

• December 18, 2006, “An Enterprise Software Licensee’s Bill of Rights”

• November 2, 2006, “The State Of Enterprise Software Adoption”

• October 30, 2006, “ Enterprise Applications Vendor Selection”

• September 20, 2006, “Comparing The ROI Of SaaS Versus On-Premise Using Forrester's TEI™ Approach”

• September 19, 2006, Quick Take “SAP Revamps Its Release Strategy”

• August 29, 2006, “Assessing New Vendor Financing Options”