UNIT 4

ERP Marketplace and Marketplace Dynamics

ERP Market

• The ERP market is a very competitive and fast growing market.

• According to AMR Research, the enterprise resource planning (ERP) market is

experiencing double-digit growth in 2007, and is expected to continue to grow at an
average of 10% over the next five years.

• The ERP market continues to benefit from a widespread acceptance of the idea that
business must have integrated information systems to be competitive.

• SAP continues to be the biggest player in the market with an estimated 43% of the market
share, or about $12.5 billion in revenue in 2006.
 • The top players of the ERP market are SAP, Oracle, Sage Group, Microsoft Business
Solutions, Infor Global Solutions, Geac, Intentia, QAD, Lawson Software, etc.

• The ERP market is supposed to grow at 6–7 percent during the period 2006–2009.

• Replacement of ageing ERP systems will be the major factor driving sales of new ERP
licenses at mid-size and large companies, as many mid-size companies are still using
applications developed in the 1980s that are technologically obsolete and do not support
current and emerging business practices.

• The popular operating systems for ERP software are Windows and Unix.

• The most popular databases for ERP software are Oracle and MS-SQL Server.

Indian ERP Market

• In India, the small and medium-sized businesses are the major force that pushes the
growth.

• There is greater demand for componentized solutions with standard modules and specific
functionality to address the unique processes.

• There is demand for customized solutions for sales and operations planning, tactical
planning, demand management which are not served by traditional ERP systems.

• The major Indian ERP vendors are Ramco Systems, 3i Infotech, Godrej Infotech, Eastern
Software Systems and Base Information, etc.

• Over the next five years, the ERP market in India is expected to reach Rs 1,550 crore
($341 million), according to IDC.

• The USPs of the Indian ERP vendors are competitive price points and higher return on
investments. Indian players have products that are cheap, can be implemented quickly,
are flexible and need lower IT dependence and support.

• Indian ERP vendors have a better understanding of the local landscape and are in a better
position to provide solutions with the right mix of functionality, technology and pricing
for the Indian customer.

ERP Vendors

1. SAP (http://www.sap.com/)

2. Oracle (http://www.oracle.com/)

3. Oracle JD Edwards World (http://www.oracle.com/applications/jdedwards-world.html)

4. Oracle-JD Edwards-Enterprise-One (http://www.oracle.com/applications/jdedwards-
enterprise-one.html)

5. Oracle-PeopleSoft (http://www.oracle.com/applications/peoplesoft-enterprise.html)

6. Sage Group plc (http://www.sage.com/)

7. Microsoft Dynamics (http://www.microsoft.com/dynamics/)

8. Infor Global Solutions (http:// www.infor.com/)

9. SSA Global (http://www.ssaglobal.com/)

10. Geac (http://www.geac.com/)

11. Epicor (http://www.www.epicor.com/)

12. Intuitive Manufacturing Systems (http://www.intuitivemfg.com/)

13. Invensys (http://www.invensys.com/)

14. Lawson (http://www.lawson.com/)

15. QAD (http://www.qad.com/)

16. I2 (http://www.i2.com/)

17. IFS (http://www.ifsworld.com/)

18. Mapics (http://www.mapics.com.com/)

19. Ramco (http://www.ramco.com/)

20. Ceecom Software Solutions (http://www.ceecom.com/)

21. Friedman Corporation (http://www.friedmancorp.com/)

22. Verticent Corporation (http://www.verticent.com/)

23. Visibility Corporation (http://www.visibility.com/)

24. Made2Manage Systems (http://www.made2manage.com/)

25. Macola (http://www.exactamerica.com/macola/)

26. ProfitKey International (http://www.profitkey.com/)

27. Glovia (http://www.glovia.com/)

 28. 3i Infotech (http://www.3i-infotech.com/)

29. Godrej Infotech (http://www.godrejinfotech.com/)

30. Eastern Software Systems Pvt. Ltd. (http://www.essindia.com/)

31. Base Information Ltd. (http://www.baseinformation.com/Home.htm)

Introduction to ERP:

Overview of ERP Systems

SAP - The Company

• Founded in 1972 in Waldorf, Germany

• 4th largest software supplier in the world

• Revenues over $5 billion in 1998

• SAP growing over 40% a year

• 18,330 employees worldwide (9/98) 1997 market share was 31% of the worldwide

• client/server enterprise application software

• Over 9,000 installations at 6,000 companies with

• more than 2,500,000 users in over 50 countries

• An average of 25% of revenue invested in R&D

SAP – The Product

SAP - Control Features

• SAP standard delivered automated enablers

– Document balancing, database integrity, automatic

• posting, match codes.

• SAP configurable enablers

– Credit checking, tolerances, document matching,

• document blocking, change documents, release

• strategy

• SAP Work Flow

• Application Security

– Access definitions, transaction locks, user locks,

• system parameters

• Reports

– ABAP, ABAP Query, Report Writer

Overview of ERP Systems

PeopleSoft - The Company

• Revenues over $1.3 billion in 1998

• 2nd largest ERP supplier in the world

• Growing over 60% a year

• 7,000 employees worldwide

• 2,900 clients worldwide

• 1997 market share was 8.4% of total ERP

• software license market

 • International growth and expansion will be focus

through 2000

PeopleSoft - The Product

• HRMS

– Payroll, Benefits, Human Resources, Pension Administration,

• Time & Labor

• Accounting and Control

– General Ledger, Payables, Receivables, Asset Management,

• Projects, Budgets, Expenses, Cash Management

• Treasury Management

• Materials Management

• Supply Chain Planning

• Service Revenue Management

• Procurement

• Enterprise Performance Management

• Project Management

PeopleSoft - Control Features

• PeopleSoft delivered automated enablers

– Document balancing, edits and validations

• PeopleSoft configurable enablers

– Required fields, audit trails, trial mode vs. final mode,

• workflow approvals, control data, correction access,

 • statistical auditing, positive pay banking

• Application Security

– Menu/panel security, row level security, workflow

• security, field security, preferences

• Reports

– Query, PS/Vision, SQR

Oracle - The Company

• Founded in 1977

• 2nd largest software supplier in the world

• Revenues over $8 billion in 1998

41,000 employees worldwide, 16,000 U.S.

– Reflects total company - not just applications business

• More than 6,000 customers in 76 countries

• 1997 ERP market share was 8.3% of total ERP

• license revenue

– 50% of applications revenue comes from services

• Oracle’s applications license revenue is growing

at 18% a year; significantly less than its rivals.

Oracle - The Product

• Financials

– Planning (G/L, Analyzer)

– Analysis
 – Consolidation

– Expenditure Management

– Billing and Cash Collection

– Cash Management

– Asset Management

• Supply Chain

– Strategic Procurement

– Non-production Procurement

– Strategic Souring

– Catalogue Management

• Projects

– Costing

– Billing

– Time and Expense

– Activity Management

• Gateway

• Human Resources

• Materials Management

– Inventory

– Purchasing

Oracle - The Product

• Manufacturing

– Factory & Item Definition

 – Planning & Simulation

– Materials Management

– Production

– Cost Management

– Integrated Technologies

Oracle - Control Features

• Oracle standard delivered automated application enablers

• Oracle standard delivered configurable enablers
• Oracle “Work Flow” configurable enablers
• Oracle “Alert” configurable enablers
• Application Security
• Reports
– standard delivered
– newly developed
Baan - The Company

• Founded in 1978 in the Netherlands 5,500 employees worldwide

– Announced 20% headcount reduction in Oct. 98

• Revenues over $684 million in 1997

• 3,000 clients in 5,000 sites worldwide

• 1997 ERP market share was 5%

• Sales strategy changed in 1997 to drive 50% of

• sales through channels and value-added resellers

• BaanERP

– Sales order management

 – Procurement

– Inventory

– Warehousing

– Project Management

– Manufacturing

• BaanFrontOffice

– Sales Management

– Marketing Management

– Call Center

– Product Configuration

• BaanMaintenance

• BaanService

• BaanCorporateOffice

– Accounting

– Finance

– Human Resource Management

• BaanSCS

– Supply Chain Management

– Demand Forecasting

– Manufacturing Execution

• BaanDEMse

• BaanEngineering

• Baan-On-Board
ERP Market Outlook

• General Outlook Through 2002

• 1997 worldwide enterprise applications market grew at 20.2% to $14.4 billion (licenses

and maintenance)

• Top 10 ERP vendors growth rate was 32.9% collectively and they have a > 40% share of

the total market

• ERP industry remains healthy and growth rate

• projections are 30-33% annually for the next 3-5 years

• This represents a decline from the 60-100%

• Growth rates some vendors have experienced in the past few years.

• Aggregate ERP Revenues

• Growth Trends Through 2002

• Vertical focus

• Down-market emphasis

• NT server

• Suite expansion

• E-commerce and Internet

• Channels

• Euro/EMU

• International expansion

• Pressures Contributing to ERP

• Industry Decline Through 2002

• Asia economic concerns Year 2000

 • Slow down in high end of ERP market Industry pricing

• ERP stock valuations too high

• Earnings declines in ERP industry

• Weakness in global economy

Top 10 ERP Vendors

• SAP

• PeopleSoft

• Oracle

• Computer Associates

• Baan

• J. D. Edwards

• System Software Associates

• Geac Computer Corp.

• IBM

• JBA Holdings

Which Vendors Will Pull Away From The Pack by 2000?

• Industry analysts and market analysts believe these are the vendors to watch:

– SAP

– PeopleSoft

– J. D. Edwards

• Oracle, Baan and a host of mid tier companies will lose ground as the industry continues

to consolidate.
• Key difference - ability to execute!

• ERP Leaders Through 2002 Will develop an integrated application suite that is business-

centric yet flexible to clients’ needs

• Move from the role of software provider to business partner

• Be able to offer service bureau and

• Outsourcing operations (themselves or in partnership) which will stimulate demand for

• new solutions

• Make packages easier to implement and maintain

• SAP’s Focus Through 2000

• Continue to componentize R/3

• Expansion outside of non-manufacturing industries

– Retail

– Financial Services

– Public Sector and Higher Education

• Manufacturing industry segment specific functionality

– Aerospace & Defense – Oil & Gas

– Engineering & Construction Chemical

– Pharmaceuticals

• Focus on post-implementation support and tools Continued expansion for front office,

supply

• chain, business information warehouse

• E-commerce

• Small and mid-market expansion

• Speed of implementation

– Tools

– Turn key solutions

• Increased focus on trained and certified consultants globally (internal services and

partners)

• Outsourcing

• PeopleSoft’s Focus Through 2000

• The release of 7.5 will put PeopleSoft in the thick of the ERP market share race

• International expansion is key to increasing market share

– Until recently PeopleSoft has been US-centric

• Outsourcing

• Continued expansion of partnerships with global systems integrators

• E-commerce

• Vertical market focus will be:

– High Tech

– Consumer packaged goods

– Automotive

– Energy and utilities

– Higher education

• Continued investment in manufacturing applications

• Oracle’s Focus Through 2000

• Complete reorganization that began in spring of 1998

• Retraining of 2,000 sales people to focus solely on applications business

• Multiple language support

• Implementation of “Business OnLine” outsourcing and application hosting

• Development of a dealer network for the midmarket

• Improve relationships with systems integrators

• Industry focus will be:

– Telecom

– Consumer packaged goods

– Energy

– Manufacturing

• Expansion of technical architecture

• Dominate the Asian market

• Baan’s Future

• Industry and Wall Street analysts are taking a “wait and see” position

• Belief is if Baan’s recent reorganization (Q4 98) announcements yield results in the next

4-6

• months then the company will weather the current storm.

• Analysts say cause of Baan’s problems are:

– Baan is trying to establish untested, indirect sales

• model

– Integration of a number of acquired companies and

• products

– General slow down in the market

 • Belief is that traditionally Baan has been very decentralized but to resolve all of the

current issues, they need to centralize which will have a “drastic and costly short-term

effect” but ultimately it should let Baan recover.

• Continuing to see strength in sales of BaanFrontOffice Systems.

Key Risks and Controls

• Business Exposures

– Single Point of Failure

– Reengineering or Business Process Redesign

– Extensive Expertise Required

• Technical Exposures

– New Technology Environment

– Inexperience with System and Technology

– IS Organization Transition

• Control Exposures

– Controls Not Implemented During Implementation

– Difficult to Understand and Audit

Control Implementation Approach

To ensure that controls are addressed during the implementation, ERP control specialists
should be dedicated:

• Control Implementation Approach

– More Desired

– Less Desired

• Internal Audit involvement in design, implementation and testing

• Project team members design, implement and test while Internal Audit performs periodic

reviews

• Internal Audit perform pre- & post implementation review of control environment.

• Control Issues During Implementation

• Systems Development and Configuration

– Business Process Functionality Review

– Include Controls in Business Process Design

– Develop Solutions to Control Weaknesses

– Agree Controls with Functional Owners

• System Implementation of:

– Access Security

– Data Conversion Strategy, Plan and Execution

– Automated Interfaces

– Change Control (e.g., programs, objects, tables)

• Security - What to Cover

• Access Privileges = Job Responsibilities

• Appropriate Segregation of Duties

• Sensitive Data is Protected

• Third Party Access complies with Policies

• User IDs Populated Appropriately

• Consistent Security Naming Conventions

• Security - Ongoing Development

• Identification and Suspension of little used User ID’s

• Users who terminate, transfer are immediately identified and their accesses
canceled

• Documentation and Authorization of Change Requests for all security changes

• Functional Access changes approved by Owners before being activated in System

• Data Conversion - Essential Controls

• Strategy, Planning, Identify Dependencies

• Data Cleansing of Predecessor Systems

• Data Reconciliation and Validation Procedures

• Parallel Maintenance of Master Files

• Ownership and Sign-Off of Converted Files

• Internal Staff have Primary Responsibility -

• Contract Staff work subject to additional validation

• Special Controls for Automated and Manual Conversions.