Can Traditional ERP Vendors Keep up with Consumer Demand?

All Articles From Jennifer Aldrich February 15, 2013 0

battleThe enterprise software market has always been driven by heavy competition but recently, the ERP industry has been looking more and more like a vendor battleground as best-of-breed and SaaS solution providers swiftly seize market share. By some estimates, $1 trillion of market share has been transferred from traditional ERP vendors to cloud and SaaS vendors.

Salesforce.com is one of the most successful SaaS vendors in this dynamic battle. In just a few short years, the company has reached a multi-billion dollar valuation. The most obvious explanation for its success is that Salesforce’s offerings are in line with consumer demand.

While our research reveals organizations’ lingering fear of cloud and SaaS solutions, these vendors still appear to be seizing market share. Some industry experts say the market has shifted due to more and more companies migrating away from single, in-house ERP systems and gravitating toward more agile systems hosted off-site. Our research, however, shows that demand for SaaS systems is decent but not quite what it could be considering vendors’ high expectations.

Either way, there is no denying that a market shift is taking place, and if enterprise software giants like SAP and Oracle are to fight this battle valiantly, they will have to pay attention to consumer demand and quickly respond to the challenges ahead.

The smartest ERP vendors will always take time to assess the market situation and proactively respond to stay ahead of consumer demand; not just meet it. Following are five ways traditional vendors can keep pace with ambitious cloud and SaaS vendors:

  1. Building their own cloud or SaaS startup operations to face the competition without cannibalizing their main business.
  2. Understanding which areas are most SaaS-friendly. Web content management, for example, works well as an SaaS system since it enables marketing departments to quickly make website changes without IT help.
  3. ‘Cloudifying’ their on-premise offerings to provide a compromise between traditional ERP and SaaS. This hybrid offering can be customized and extended while most of the software administration can be outsourced.
  4. Designing a true SaaS offering that is scalable and secure and includes extensive support services.
  5. Acquiring smaller vendors and using their offerings to augment their own core ERP systems.

More and more SMBs are searching for cost-effective solutions that can easily be implemented. Concurrently, many big enterprises are finding compelling reasons to move all or part of their infrastructure to the cloud. As a traditional ERP vendor, the most logical response to this shift in customer demand is to be ready to do whatever it takes to keep a foothold in the market.

Learn more by downloading our new white paper, A Comparison of Five Leading SaaS and Cloud Vendors. Also, be sure to register for our upcoming webinar, What the Emergence of SaaS and Cloud ERP Technology Really Means for Your Organization . . . and Your Job.

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