ERP: Yesterday's news

ERP is no longer fashionable. To be an ERP vendor is like admitting you still eat prawn cocktails and are partial to the odd glass of Asti.

To be hip these days, your food needs to be pukka, your drinks wicked and your technology needs to be e'd - ecommerce, ebusiness, e-enabled.

Gary Cooper, analyst at Butler Group, said: "If it does not have an 'e' in front of it then people do not look at it. If companies don't make the move towards the internet then they will be isolated. Everyone is looking towards the web and even if a company is not willing it will be pushed down that route."

But just how well have the big ERP players such as Baan, JD Edwards, Oracle, Peoplesoft and SAP adapted to their new environment?

The battle is being partially won on the marketing field but the fight to deliver products has only just begun.

Cooper said: "Oracle is certainly one of the front runners in the race to move towards internet-based applications and solutions. But there is some truth in the fact that they are not perhaps winning in delivering products."

SAP has lost out to Oracle in the race for eyeballs but unlike its rival, it is delivering products.

Joyce Bonham, analyst at Gartner Group, said: "It is a battle of the marketeers. Oracle is very aggressive in this area even if it is not delivering. It is still very early days for many of these companies to deliver."

Oracle has been hindered by its late entrance into ebusiness claimed Robin Bloor, managing director at Bloor Research.

He said: "If you don't have the full portfolio of products delivered then it does not matter if it is ERP or ebusiness. Oracle is the one with the most coherent start. But they came into applications quite late so they have quite a lot of ground to catch up in terms of functionality."

However, one of the biggest problems is convincing users that ERP companies are ebusiness providers.

Butler Group's Cooper added: "The ERP tag has a lot of baggage attached to it and puts a lot of users off. A lot had bad experiences of putting in ERP systems and failed."

Simone de Bruin, analyst at IDC, agreed. "ERP is not sexy and it does not sell. They want to be e-enabled enterprise resource management companies. Users now want ebusiness functionality and link their applications to ebusiness applications so they can automate the supply chain."

But this is wrong, claim other analysts.

Gartner Group's Bonham said: "ERP still exists but we are now in the ERP II philosophy stage. It is the back bone of these types of business processes and it gives a much better start for delivering applications."

She reckons ERP companies have had to adapt to the web as businesses rush that way. In fact, at the moment the market does not perceive ERP to be a new economy endeavour.

"It is hard to shake off the ERP title," she added.

Yet, the race to web-enable products left many ERP vendors overwhelmed, claimed Butler's Cooper.

"The other problem is that the systems are so huge with finance, HR and manufacturing applications, you're really talking about a huge solution. I think the problem is they have to market test to see which one is the real direction to target and where to put the focus for web enabling," he said.

Add to this the pressure of finding space in a saturated top-level ERP market, and many vendors are looking further afield for customers. However, this puts companies such as Baan in the hot spot.

It has come under increasing pressure from SAP and Oracle whose moves towards web-enabled products has allowed them to expand their market reach.

"Baan, now owned by Invensys, has come under pressure from these players who are looking further down the food chain at smaller areas, e-enabling their products to appeal to the middle market, warned Butler's Cooper.

The likely winners will be those that adapt not just products but company partnerships to a web environment.

IDC's de Bruin said: "SAP has revamped its partner structure to create more opportunities to move forward into the ebusiness arena. They have restructured the programme in such a way that they focus on the web savvy partners rather than those still in the old fashioned R/3 environment. The partners now bring them ebusiness leads or ebusiness MySAP.com applications."

Baan's partnerships are not considered strategic.

However, de Bruin predicted it would be a long while before the newly positioned ERPs realised any revenues.

"SAP and Oracle are not so well known in the middle market, they have had to find partners to help them gain recognition in that area and build a reputation as many know them for expensive, large applications that need a bus full of consultants to install."

Bloor claimed the established ERP houses would also come under pressure from new entrants.

"The problem is there are people out there in the ebusiness game with compelling packages and applications that are actually useful. They offer the ebusiness capabilities that people want - merging email, marketing and sales information together without any of the conflict that ERP applications can give, for example."

Whether the competing ebusiness companies will last against the money of the big players is open to debate.

When all the marketing fluff is taken away, ebusiness boils down to making computer systems interact with each other and whether it is called ERP, CRM or ebusiness top level vendors have deep enough pockets to sell the average organisation a good idea - even if the products are slow to arrive.