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As the ERP Market Cools, Its After-Market Heats Up

  • December 10 1999, 1:00am EST
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Anyone paying attention to developments with enterprise resource planning (ERP) packaged applications over the course of 1999 cannot help but notice that the number of new installations coming online has been in steady decline. Indeed, ERP packages are entering a life cycle stage representing market saturation. Most large companies and other organizations that are prospective users have already implemented an ERP or have made a definitive decision not to. This is especially true among Global 1000 companies in which sales of ERP packages are down sharply compared to recent years. In this sense, the ERP software market is cooling noticeably.

Even so, a burgeoning ERP after- market is currently heating up. As companies deploy their ERP implementations to enterprise-scope user bases, they are discovering that an ERP cannot fulfill many software functions -- or cannot fulfill them on a truly enterprise level. To satisfy requirements that their

ERP packages cannot meet, many companies are keeping older systems online and adding new ones that complement their ERPs. These complementary systems typically provide data warehousing, e- commerce, customer relationship management and extranet or portal capabilities.

THE HURWITZ TAKE: Despite the cooling ERP market, the ERP after-market presents opportunities as it heats up. Software vendors should note that user demand will soon peak, so now is the time to provide functions that popular ERPs cannot, packaged as applications that integrate deeply but easily with one or more ERPs.

IT departments should look for packaged solutions (not generic tools) that provide functionality specifically for the ERPs they have already implemented. Since integrating a non-ERP product with an ERP is quite challenging, IT departments should look for solutions that have prebuilt mechanisms for integration.

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