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August 15, 2011

ERP Software Could Drive Opportunities for Third-Party Support Providers

By Susan J. Campbell, TMCnet Contributing Editor


The demand for ERP software solutions has grown over the last few years as the global economy continues to try and recover. While some companies are launching on-site solutions, others are leveraging hosted ERP software platforms. According to new data captured by Constellation Research, a growing number of users are investigating the potential of jumping to a third-party support provider.

This information was shared in a recent Computer World report. Of the 244 individuals participating in the Constellation Research survey, more than half – or 57 percent – indicated interest in third-party support. In last year’s study, only 42 percent had indicated an interest and less than 20 percent indicated an interest in 2009, according to Ray Wang, CEO for Constellation Research.

During an ERP software webcast sponsored by Rimini Street, a company that supports Oracle and SAP (News - Alert) applications, Wang shared key information from the report, including the fact that more than 90 percent of respondents interested in investigating a switch are doing so as a result of cost pressures. Another 80 percent have expressed their dissatisfaction with the support value they are receiving from their vendors.

These figures could be disturbing for ERP software providers such as Oracle (News - Alert) and SAP, simply because these companies drive a great deal of revenue and profits from the maintenance fees they charge their ERP software customers. Such companies tend to pay Oracle and SAP for a year in exchange for technical support and product upgrades.

While companies such as Rimini Street cannot provide upgrades for the ERP software, they can offer customer effective hands-on help. In fact, this provider promises that their support, regulatory updates, customization work and tweaks are more effective than those offered by the vendors.

Wang highlighted that most ERP implementations were installed prior to Y2K. Now, companies are feeling the pinch and moving quickly to update their ERP software implementations. The challenge for providers in this space is the fact that many of these companies leveraged great deals on software licenses at the time of implementation. Such systems have now turned into expensive shelfware, according to Wang.

Companies are also dealing with the increasing demands from users for consumer-like experiences and tools. Enterprises are increasingly feeling the pressure to do something more with their SAP and Oracle backbones. Money could be saved by moving to a third-party support provider, which could free up cash for needed add-on products.

As the demand for ERP software continues to increase, there will be battle over customer spend. Those companies offering the best value for the investment are likely to lead the pack.

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Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Tammy Wolf



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