The Month IT & ERP Permanently Changed

The Month IT & ERP Permanently Changed

Summary: It's been a busy month of software events. But, taken together, they point to several major and permanent changes that will shape IT and ERP for decades. This seven part look at these changes spans hardware, HR software, the ERP leaderboard, changing buyer sophistication and more.

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Part 6 – The Lack of Vision in Some ERP Vendors

At an interview session with some of my peers, I got really frustrated with an ERP executive who wouldn’t articulate a vision for his firm’s ERP products. This firm is continuing to invest in all of its native and acquired on-premise product lines as well as several native and acquired cloud product lines.  I wanted to know what they saw the future of ERP software to be. I wanted to know if they had more to their vision than just continuing to add more runway to all of these diverse products.

His response to my pointed question was “It would be suicide” to articulate such a vision to their customers. Beyond that, I got nothing.

His response is particularly telling. What he’s saying in effect is that his firm:

  • has made a bunch of bets and can’t decide which, if any, will pay off; and/or,
  • needs time to stall its current on-premise customers from switching to its own or competitors’ cloud solutions

That latter scenario is the really scary concern. If a customer decides to do a real software selection, they will likely open the door for competitors to possibly get into this account. If a selection can be deferred, then there is no competitive threat. If the selection can be replaced with an upgrade decision, the incumbent vendor wins again. Replacing a selection with an upgrade is really clever but it means that the vendor must provide:

  • functionality identical to (or better than) the on-premise products
  • a painless, riskless migration path to the new solution

Where all of this hits a wall though comes in how well a vendor has treated their customer in the past. If an ERP vendor has subjected a customer to a lot of surprise usage audits, forced maintenance price increases in a down economy, threatened litigation,  issued frequent incremental license fee (ILF) invoices, etc., I’ll bet their customer isn’t too inclined to continue to do business with them even if the cloud solution is just a painless upgrade.

And, this is where I start to get really uncomfortable. Some ERP vendors are financially motivated firms that are designed to delight their shareholders. Some are innovative firms that are motivated to delight customers. The difference is telling.

If an ERP firm can’t or won’t take a position on where the market is headed, then they are either clueless or disingenuous. A company with a solid grasp on the software market and its future would have known what to build and when to build it. They would have created applications that are at least on track with the market or ahead of it. The suicide scenario only applies to vendors with products that are still trying to catch up to the innovators.

The model most application software vendors should aspire to is Steve Jobs’:

 “Steve Jobs didn’t believe in market research or focus groups. He instilled the idea that Apple would create products that people hadn’t dreamed of yet. Jobs’ genius was to create experiences that people didn’t even know they needed.

Walt Disney had that idea before Jobs was even born.”

(source: http://27gen.com/tag/steve-jobs/ )

 

The real genius in ERP is not found in buying lots of other cloud solution providers and then running off their best and brightest talent. The real genius is in the delivery of products users haven’t dreamed of yet. Sadly, the vision today is limited to a lot of me-too fast following. UGH!

I liked how the folks at Workday did a lot of research on event-driven (REA) accounting prior to designing their new financials software line. That’s innovative!

I liked how the Intacct folks built CPA dashboards for their customers. That was cool.

I could go on and on. The real innovation is popping up all over in pockets of entrepreneurial firms.

Where it’s absent are in firms where the ERP vendor has been late to:

  • Social
  • Multi-tenancy
  • Cloud
  • Video
  • Etc.

Bottom line: If your vendor’s behavior has been less than admirable, their innovation has been me-too (and late), then why would you reward this vendor with additional business? I'm betting a lot of ERP buyers/users will be asking this question a lot in the next couple of years.

 

(Continue to Part 7 - Rising IT Buyer Smarts & the New Economics Every Buyer Needs)

Topic: Enterprise Software

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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  • An area where enterprise application vendors have missed the mark

    Hi Brian, Very good blog. I enjoyed reading it.
    Rkumarsmartrdocs