This second prediction for 2010 is bound to generate some controversy (read the first here). After all, ERP providers have lost one opportunity after another to consolidate the Spend Management market in recent years, giving best-of-breed providers like Ariba, BravoSolution, Emptoris, and Zycus lease after new lease on life. I believe, however, that 2010 could signal a major inflection point for ERP’s software in the Spend Management sector. Indeed, 2010 may very well be the year ERP gets it right.
Consider: Oracle is driving new flexibility in deployment models — not to mention breaking new functional ground and surpassing best-of-breed competitors in emerging areas (more on that in the coming weeks) — and SAP is embracing its BPO channel-partner ecosystem as well as a suite of home-grown On-Demand capabilities to get around the forklift-upgrade challenge. Looking at this, it becomes pretty clear that, for the first time, ERP is playing with a full deck of Spend Management cards — or the fullest set it’s been dealt to date. Add to this the fact that Infor, a dark horse in the ERP race for business application suites, could very well make its first major procurement acquisition in 2010, and the ERP Spend Management market is looking more interesting than ever.
Why might 2010 be the year ERP breaks out? Let’s first tackle ERP’s own worst cost and deployment nightmare — ERP itself. Historically, you had to budget roughly 3-4X the cost of the software when factoring in all of the implementation, customization, integration, and process-change components of a deployment or major upgrade. This meant that a major ERP move that crossed business units and functional areas could easily mean a nine-figure proposition for most Fortune 500 companies. Since ERP business suite capabilities were (until now) tied to the underlying back end, such limitations also greatly handicapped functional areas of the business (such as procurement) that wanted to upgrade or purchase individual components of the broader suite of business applications, but couldn’t. So in short, even if procurement wanted the latest that SAP or Oracle could deliver in procurement, sourcing, contract management, and supplier management, chances are they couldn’t get it.