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Leader: ERP consolidation matters
And the role of SAP's not-so-secret weapon

By silicon.com

Published: Wednesday 30 May 2007

Some of the largest costs for user organisations are far-reaching applications that go by the catch-all term enterprise resource planning (ERP). And those costs often signify their importance.

A few years back, when Oracle was making its audacious bid for PeopleSoft, which had in turn only just bought an ERP rival in the form of JD Edwards, regulators knew as much and scrutinised the deal closely.

Oracle then went on to buy another large enterprise apps vendor, CRM giant Siebel.

In short, there has been a lot of consolidation at the top of the ERP market. Even second-tier players such as Intentia and Lawson went on to marry.

But given the importance of the market and the way it is now dominated by the twin beasts of Oracle and SAP - Microsoft isn't in the same league yet, though it's trying hard - it is easy to see how the fight has stepped up a gear.

In March, Oracle served a lawsuit against SAP and its subsidiary TomorrowNow, alleging some dirty tricks, to paraphrase. (See the full complaint here.)

That will work its way through the courts. SAP's CEO has already talked down the chance of any early settlement, saying his troops have done nothing wrong.

silicon.com caught up with TomorrowNow recently. The company was bought by SAP about two years ago, which caused some consternation in the ERP world. Here was a third-party service provider, specialising in JDE and PeopleSoft support (though not only those packages), now owned by a rival to Oracle.

Let's just say the Oracle-TomorrowNow relationship isn't the warmest. It's probably not even right to refer to it as a relationship.

The TomorrowNow CEO answered a range of questions - though questions about the ongoing legal action were understandably batted away - and his views on software as a service were interesting. He said: "If companies in large number support and value those [SaaS] software solutions they're going to want them supported and opt to have a third-party option."

It's not clear how that would work - he did say the TomorrowNow model would have to be tweaked - and it is of course likely there will always be a long tail of installations featuring old, there-to-be-maintained packaged software.

But let's ask this question: if, 10 years from now, TomorrowNow's business fell through the floor, maybe because of SaaS, maybe for another reason, would it or SAP care if in the meantime it had scuppered a large part of Oracle's business?

There's an obvious answer to that - no. In the meantime, all the many users that care about ERP should care that the supplier base remains competitive - and that might just mean looking beyond the current big boys. (And this is one occasion where suggesting open source as an approach just isn't useful, not yet anyway.)