SAP users aren't keen on upping spending right now The German-speaking SAP user group has released data showing the region's appetite for budget increases in spending is diminishing, casting a shadow over the prospects for cloud transformation projects. The Investment Report 2024 for DSAG, which represents SAP users in Germany, Austria and Switzerland, has shown some IT and …
Then it needs a disruptor that can't be bought.
If its an industry consortium, then it will be sold as soon as it has a viable product.
ERP is a serious product and one that probably can't be knocked up over night with some vb code. It needs a serious fleet of trucks full of cash.
"Hey, Mr Pottering, Sir. There is a whole industry using 1970's technology that needs disrupting. Have at it". (Two birds, one stone).
"Sadly, any potential candidate is likely to be bought and dismembered by one of the incumbents."
That's the broad trend. Interesting although years out of date view of this here:
http://www2.erpgraveyard.com/tombs.html
Since that was done, as one example Oracle have undertaken more than 70 reportable acquisitions and spent somewhere north of $70bn dollars.
The graveyard shows that it's not just the big two, but that there's multiple tiers and within each there's bigger fish eating little fish, and that's mostly how ERP companies grow. The problem here is that for customers, changing your ERP is costly, disruptive, expensive and risky, so they're highly averse to changing. Most growth probably comes as customer companies themselves grow to achieve the scale of needing an ERP, they might then do one ERP change before realising that changing your corporate operating system has a really poor cost/benefit ratio. Obviously if your customer grows, the ERP provider generally benefits from increased licence sales and greater cross sell potential. Once a company is at a certain size then the complexity and risk of that change can be life threatening - I worked for a UK business with turnover of £4bn, and a botched SAP upgrade in about 2012 had long term consequences that destroyed the company.
With hugely sticky customers, being better isn't a recipe for growth amongst existing ERP users, so the supply chain acquire companies and integrate their products - the customers conclude they have little choice but to go along with this and hope for the best. Sometimes it works out that the overall ERP offer is improved through integrating the better performing aspects of the acquired company's suite, sometimes it's not so good. The really interesting thing about these industry dynamics is that for the biggest players, complex, costly and risky change is a good thing, the implosions at organisations that try and change ERP vendor act as a warning not to do it, thus reducing competitive pressure.
You might think that regulators could or should intervene, but the challenge is that the barriers to competition exist largely within customers, not so obviously with the supply side. And you can be sure the EU won't be looking to hobble one of it's few tech titans, and Leisure Suit Larry owns enough senators to ensure Oracle is untouchable.
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