ERP/Accounting System Comparison Analysis Vendor Survey

For the last 10 years, we have prepared an analysis of ERP systems on behalf of CAmagazine. We issued surveys to all the ERP vendors we know, collated the results and wrote an accompanying article.

Link to ERP Article and survey results published in the CAmagazine

September 2009

ERP System Comparison Charts in Excel format

September 2008 Article

Believe it or not, we’re now in our 10th year for our annual CAmagazine software vendor survey. As always, we have added new functionality and new systems. This year we have 54 systems, 17 more than last year. The results can be viewed at www.camagazine.com/ERPsurvey08.

Last September, in an effort to simplify things, we merged all the enterprise surveys — business intelligence (BI) / corporate performance management (CPM), customer relationship management (CRM), enterprise resource planning (ERP) and professional services automation (PSA). But we found vendors and readers preferred a more focused approach. So this year, we combined ERP with just PSA (which is ERP for professional service-based organizations). Since many ERP vendors have extended their systems for this market, a combined survey makes sense. We will publish the results of the CRM survey in November and the BI/CPM in December.

The ERP products have been segregated into tiers based on customer revenue and employees and product cost. This is a convenient, albeit not perfect, means of differentiation. This year, we have reduced the number of tiers from five to three. We have found that many of the systems scaled beyond one tier and with our new approach, we don’t think there should be much overlap.

On the above vendor comparison chart, we slotted all the products into what we believe are the appropriate tiers based on cost and target market. Be cautious if you’re trying to calculate the costs for a system, as these numbers are just averages.

The charts include both large, well-known vendors and small ones that are most likely unfamiliar to you. Don’t rule out small vendors that might be able to respond more quickly to your needs and focus on just your industry. A small vendor does not have the same overhead as the major players and can succeed with only a few new clients a year. However, some of the larger vendors are also focusing on specific industries. For example, Microsoft has recruited business partners to extend the Microsoft Dynamics platform into specific industries.

This year, we heard about a number of ERP failures. For example, on March 27, 2008, ITBusiness.ca reported: “The trash disposal giant Waste Management is suing SAP over an ERP implementation it dubs ‘a complete failure.’ In its court complaint, Waste Management said senior SAP executives, including SAP Americas’ president and CEO Bill McDermott, participated in the ‘rigged and manipulated’ demos.”

It’s hard to fathom that SAP would intentionally rig or manipulate a demo. If a demo was canned, that would become obvious if you were asking questions. The demonstrator would be able to show only what was planned. It’s also unlikely SAP would have answered specific functionality questions dishonestly. That would pose a big problem in court. It would also harm SAP’s chances during the selection process, as intentional misrepresentation would quickly destroy trust. But maybe the requirements were not well defined. And maybe SAP was not forced to be specific in responding to requirements. A “yes” can mean many things, including out-of-the-box functionality, third party, customization or workaround.

That’s not to say the vendors are always blameless. We have recently heard about several failed implementations. In these cases, the problem lay with the value-added reseller who promised the world and failed to deliver. This raises an important question: to what extent should developers be responsible for the failures of their value-added resellers? Many of the developers have certification processes, but those cannot act as a guarantee.

We looked at the top 10 selection and implementation mistakes in the December 2007 and January 2008 issues of CAmagazine. In the end, failures are caused by people who did not do their job properly. It could be they didn’t know what they were doing, but it’s more likely they didn’t get sponsorship from their bosses to spend the time and money to do things right. (Next month, we will look at what we believe to be the roles, responsibilities and impact of a steering committee, project manager and subject matter experts, all vital to the success of an ERP implementation.)

Despite some bad press, SAP keeps on truckin’. As its airport ad says, “The best-run businesses run SAP.” Decision-makers are risk averse and think if the system works for the best companies, it will work for them.

SAP had the vision and ability in the early ERP days to build systems that would work across large organizations with complex business processes and infrastructure. It effectively won the first ERP war, which was about automating processes with one system while accommodating a variety of in-house computer databases and networks. SAP beat out combatants such as Oracle, PeopleSoft, JD Edwards, Baan, Lawson, GEAC and mainframe systems. Actually, mainframe systems, which dominated the landscape before ERP, were the biggest losers in the first ERP war.

We are now just entering the second ERP world, where systems are easier to use, collaborative, Web-based and offered not just on a licence basis but also by application service provider — the pay-as-you-play model, where you don’t need to invest in the infrastructure. NetSuite was one of the first to enter the new world but others are following big-time into the fray.

Unfortunately, some vendors, including Oracle, failed to respond to the survey this year. You would think vendors recognize CAs as key decision-makers and users of their ERP and PSA systems across all industries. If your system is not included, please contact your vendor and ask those responsible to participate next year.

The analysis in the charts at www.camagazine.com/ERPsurvey08 is based on the vendors’ responses. Although we tried to correct any obvious errors, we cannot validate every line item. As always, however, we do believe the vendors are inclined to be honest, especially if the questions are very specific. And as we said last year, vendors usually need to jump through hoops to win your trust during the selection process. Trust is hard to win but easily lost.

September 2007 Article

Our annual CAmagazine software survey is back and this year it’s bigger than ever. We combined all our surveys — accounting/ERP, customer relationship management, business intelligence/corporate performance management and professional services automation — into this issue.

Accounting/ERP systems automate what is called the back office, including financials, manufacturing and human resources. CRM automates the front office: contact management, sales force automation, etc. ERP and CRM systems both generate lots of data and that is where BI comes in. It turns the data into information useful for making decisions. CPM includes BI along with other tools found lacking in most ERP systems, such as consolidation, budgeting and forecasting, strategic planning and scorecarding. PSA is the same as ERP but was designed specifically for professional service organizations that manage projects and track their time.

The big trend today is to merge ERP and CRM with BI/CPM. In March 2007, Oracle purchased Hyperion. In May, SAP followed suit with the acquisition of Outlooksoft. Many wonder whether Cognos (another leading BI/CPM vendor) will be purchased — and if so, when. By the time this article is published the answer may be clear. PSA is also being swallowed up by ERP, as vendors extend their footprint to professional service organizations.

As always, we segregated the ERP products into tiers based on customer revenue and employees and product cost. This is a convenient, albeit not perfect, means of differentiation. For example, an organization with low revenue may have complex business processes that place it in a higher tier.

On the accompanying ERP chart, we slotted all the products into what we believe are the appropriate tiers based on cost and target market. Be cautious if you’re trying to calculate the costs for a system, since these numbers are just averages. For example, the licence fees for a Tier 3 product should range from $50,000 to as much as $150,000. Assuming the licence fees are $100,000, the implementation fees could be anywhere from $125,000 to $150,000, depending on the complexity of the implementation. SAP and Oracle are Tier 1 vendors that initially targeted the Fortune 1,000. Those implementations would cost millions for the larger customers. SAP and Oracle are now targeting smaller companies. We have not broken down the other products into tiers because they can generally be implemented by a wide range of both small and large companies.

Every year, we also add more information to the surveys. This year, our changes to the ERP survey include a lot of construction-specific questions. We also added budgeting and forecasting to the CPM survey, and made a number of smaller additions to both the CRM and PSA surveys.

The charts include both large, well-known vendors and small vendors that are most likely unfamiliar to you. Don’t rule out small vendors that can potentially respond more quickly to your needs and focus on just your industry. A small vendor does not have the same overhead as the major players and can succeed with only a few new clients a year. However, one of the big advantages for industry-specific vendors may be short-lived, since some of the larger vendors are also focusing on specific industries. For example, Microsoft has recruited business partners to extend the Microsoft Dynamics platform into specific industries.

We spoke to several vendors to get a sense of what is happening from their perspective. Exact Software has recognized the importance of integrated CRM and business intelligence. Its ERP systems share the same database as its CRM system and some business intelligence/online analytical processing has been built into the base system. OLAP is a great tool for analysing information across multiple dimensions. Rather than generate 150 reports, OLAP gives you an online cube to get it all with a few drags and clicks.

Another vendor that has embedded BI in its product is Multiview, which we wrote about a couple of years ago (see “Multiview’s well-kept secret,” www.camagazine.com/multiview). The company’s BI tool includes OLAP, financial reporting and generic report writing, which for some vendors are three different products.

We also spoke to Deltek, one of the leading PSA vendors, which has recently opened a Canadian office. A few years ago, it released Vision, which it now calls its flagship product. Vision is one of the few PSA solutions that includes all the operational functionality required by professional service organizations (project management, time and expense management, etc.), as well as financials.

OpenAir is another PSA product, but it deploys the system as software as a service. SaaS, which is also called ASP (application service provider), allows you to rent rather than buy the software. You use the infrastructure and resources of the ASP to maintain the database. SaaS/ASP has now become mainstream with vendors such as salesforce.com for CRM and NetSuite for ERP.

For the past few years we have included a link to our customer survey of ERP systems. We did not do it this year, because last year’s results were insufficient statistically to draw any conclusions. We know some of the vendors that did manage to get their customers to respond were disappointed — in particular, SYSPRO, which scored well a couple of years ago. Perhaps some of the other vendors breathed a sigh of relief.

It’s impossible to include commentary on every product and we apologize if you feel your product of choice did not get sufficient coverage. We did try to include all the leading vendors in our survey, but some, such as Oracle, declined to respond.

The analysis in the accompanying charts is based on the vendors’ responses. Although we tried to correct any obvious errors, we cannot validate every line item. We do believe, though, that the vendors are inclined to be honest, especially if the questions are very specific. They do this partly because they realize trust is the most important factor in the selection of a new system. Vendors typically need to jump through hoops to win your trust during the selection process. Trust is hard to win but easily lost.

September 2006 Article

It’s hard to believe we are now in our eighth year for our annual accounting and ERP vendor survey. Interest continues to grow and most vendors want to be part of the survey. This year, we have new or updated responses for 50 systems as of June 2006. The systems cover the entire spectrum – from QuickBooks and Simply Accounting to mid-market systems from Sage and Microsoft to high-end products from SAP and Oracle.

There is still some confusion about the differences between an accounting system and an enterprise resource planning system. For me, an ERP system is one that automates business processes across most, if not all, departments within a company. Using that definition, even a system like QuickBooks or Simply Accounting can be considered an ERP system for a small company.

To make some sense of the huge array of systems, we placed each one in a tier based on customer revenue and employees and product cost. This is a convenient, albeit not perfect, means of differentiation. For example, an organization with low revenue may have a global vision or complex business processes that place it in a higher tier.

	Tier 1	Tier 2	Tier 3	Tier 4	Tier 5
Customer revenue	> $200M	$50M-$199M	$10M-$49M	$5M-$9M	< $5M
Customer employees	>500	100-499	50-99	10-49	1-9
Licence fees	> $300K	> $150K	> $50K	> $5K	> $100
Implementation fees : licence fees	> 2:1	>1.5:1	>1.25:1	>1:1	<1:1

On the accompanying chart, we slotted all the products into what we believe are the appropriate tiers based on cost and target market. Be cautious if you’re trying to calculate the costs for a system, since these numbers are just averages. For example, the licence fees for a Tier 3 product should range from a minimum of ,000 to as much as $150,000. Assuming the licence fees are $100,000, the implementation fees could be anywhere from $125,000 to $150,000, depending on the complexity of the implementation. SAP and Oracle are Tier 1 vendors that initially targeted the Fortune 1,000. Those implementations could cost millions for the larger customers. But since the market is limited to 1,000, SAP and Oracle are now going after much smaller companies.

The trend toward consolidation of software vendors continues. In November 2005, Infor acquired GEAC. In April 2006, Lawson Software and Intentia merged. In May 2006, Infor acquired SSA. Infor’s systems now include the former BPCS, Baan, Prism, Protean, Infinium, BRAIN, SCT, Lilly, MAPICS, and NxTrend.

What should this mean to a potential buyer? One concern is that your new system will be purchased and gradually phased out, requiring you to convert prematurely to a new one. So do you consider only the bigger companies that can’t be bought out? We think this is a mistake for a number of reasons. First, even some of the largest ERP systems such as PeopleSoft and JD Edwards have been acquired. Second, by focusing on a specific vertical, smaller ERP vendors can compete effectively, partly because the systems are tailored to the needs of the vertical and partly because the vendor’s employees are often extremely knowledgeable about the vertical. Third, some people would prefer to be a big fish in a small pond: they prefer to work with smaller ERP vendors where they think they will have a bigger influence and be able to speak directly to the owners. Finally, although small companies have fewer resources to invest in R&D, they don't have the same baggage as the big vendors that need to worry about all the systems they have acquired. Smaller companies can be more nimble in adapting to new technology.

SYSPRO has seen much higher demand for its ERP software over the past 18 months, according to SYSPRO Canada marketing manager Odete Passingham. That demand, she says, has been fuelled by an improved economy, a need to replace systems that were hastily and inefficiently implemented in response to Y2K, and the favourable exposure SYSPRO received in CAmagazine through the customer survey results published in April 2006 (see http://www.camagazine.com/index.cfm/ci_id/30457/la_id/1.htm.). In comparison to the late 1990s, says Passingham, companies are demanding much greater due diligence, including independent analysis and references, before making their ERP purchasing decisions.

Mark Canes, president of Blue Link, a software developer with about 600 customers, believes there is enough opportunity in the marketplace for smaller software developers. Blue Link would be happy with a small fraction of the new customers that the major ERP vendors need to be successful. By focusing on wholesalers and distributors in the food industry as well as apparel distributors, the company has been able to go up against the major ERP vendors. Canes did mention that Blue Link is getting more competition from vendors that offer an application service provider approach, which indicates that the ASP model is becoming more mainstream.

NetSuite seems to be leading the charge on the ASP front, and you can expect all the major players to follow. In a recent presentation, NetSuite CEO Zach Nelson pointed out that SAP and Oracle dominate in the enterprise marketplace with about 72% market share between them. But the mid-market is fragmented with no leader – an observation we also made in our April 2006 customer survey roundup in CAmagazine (http://www.camagazine.com/index.cfm/ci_id/30457/la_id/1.htm.). Nelson believes that to succeed in the ERP mid-market, a system must be easy to use and implement, have rich and integrated functionality, be easy to customize, and be available at a low cost. Nelson says the high-end systems don’t meet all these requirements, and will therefore have a difficult time in the mid market.

Another major trend is the merging and linking of ERP with customer relationship management and business intelligence. It doesn’t make a lot of sense to have a CRM system that can’t either place orders or at least have access to all customer transactions. Order processing has typically been considered a back-office function, while CRM has been considered front office. Ideally a lead in the marketing automation system (a CRM component) becomes a prospect in the sales force automation system (a CRM component), which in turn becomes a customer in the ERP system. This should happen with the press of a key. Also, the sales forecast should be updated based on information in both CRM (quotes) and ERP (orders).

Business intelligence has also become a hot topic over the past few years. BI means turning data into information useful in making decisions. The latest trend is to have a dashboard that is role specific. On the dashboard, you see all the essential information with drill-down to details. The dashboard will also contain your key performance indicators, or at least those that are based on data within ERP. Unfortunately, some KPIs (for example, measurements of customer satisfaction) are outside of ERP, and you may need additional software or customization.

Recently I attended the Microsoft Dynamics AX 4.0 Partner Readiness event, and heard Microsoft Canada president Phil Sorgen talk about the company’s vision and opportunity with its business management solutions. Sorgen made it clear Microsoft Dynamics is strategic to Microsoft, and the intention is to win. In just five years, Microsoft Dynamics has reportedly amassed 291,000 customers worldwide through acquisitions and new contracts, and sees a huge opportunity to increase market share. According to AMR Research, the business applications market amounts to US$62 billion, and Microsoft is driving to be a leader.

Sorgen talked about trends leading to opportunity in the Canadian market. One is the rise of third world economies such as China, India and Brazil. Human capital is more expensive in Canada than in these emerging markets, and one way to compete would be to improve productivity through technology. Sorgen also mentioned the strengthening Canadian dollar as another compelling reason for Canadian companies to become more productive in order to compete.

Sorgen also spoke about Microsoft’s strategy to bring together the two distinct worlds of software – business process automation (for example, Microsoft Dynamics AX and GP) and personal productivity (for example, Microsoft Word and Excel). Microsoft Dynamics already looks and works like these productivity solutions, and you will continue to see tighter integration with new versions of Microsoft Office and Microsoft Windows Vista. The company is spending $4 million in Canada this year to promote the Microsoft Dynamics brand through radio, print and the Internet. It is also making huge investments in R&D -- $7.6 billion this year across all of its products.

Each year, we expand the survey to cover more functionality. Our objective is to include functions that differ from one product to another. This year we have added service management, commitment accounting, project accounting, back order fulfillment, forecasting, freight calculations, warehouse management functionality and backflushing. Service management can be a big differentiator when comparing systems for companies that offer repairs or service. Commitment accounting is typically a requirement for not-for-profits, but I don’t know why other companies don’t use it to compare budgets not to just actuals, but also to commitments (open purchase orders).

Project accounting is a must for any company that has projects spanning fiscal years. And why clutter up the general ledger with project details? Back order fulfillment can be an important requirement for companies that take many back orders and then need to fulfill them when the goods are ready, based on customer priority, requested ship date and other factors. I have seen Excel spreadsheets used to sort this out and it’s not pretty.

A lot of companies fall down in forecasting, partly because they don’t have the tools. Forecasting is not easy. It should be based on orders as well as quotes and their probability. It could be based on history, subject to seasonality and regression analysis; or on projections from marketing’s awareness of changes in the environment. There are also minimums, maximums and economic order quantities to consider. Some organizations even include sales directly from their customers to get a sense of what’s moving. For example, some distributors and manufacturers obtain sales data for their products directly from their retail clients.

Freight calculations can often be a differentiator between systems. Some systems will not only calculate shipping costs based on destination and method, weight, volume and dimensions, but will also recommend the shipper based on current rates. Ideally, there is integration with the shipping company’s system, and the tracking number is downloaded so that the status of the shipment can be easily accessed.

Advanced picking and put-away are typically associated with warehouse management systems, which can be very expensive. But there may be some relatively modest requirements that could make the warehouse a lot more efficient. For example, it might make a lot more sense to pick in waves (multiple orders at the same time) so that warehouse employees minimize the time spent walking through the warehouse. Finally, we come to backflushing. For those of you not familiar with this term – it has nothing to do with plumbing. Backflushing is an efficient way to update a system when the manufacturing is complete for a product. Finished goods are increased and all the components that were used to make the product are decreased at the same time.

This year, we are once again posting a customer survey of accounting and ERP systems to be completed by accountants across the country. The survey rates accounting and ERP systems, vendors and implementers, and provides statistics on potential benefits. We will publish the results in a future issue of CAmagazine. See last year’s results at http://www.camagazine.com/index.cfm/ci_id/30457/la_id/1.htm. Last year we received 264 valid surveys, and we hope to have even more responses this year. Please complete the survey at http://www.CAmagazine.com/ERPcustomersurvey06.It can be filled out in a couple of minutes. We can accept only one survey per organization, and it must be completed by an accountant (CA, CMA, or CGA) working for a Canadian company.

The analysis provided in the accompanying charts is based on responses from the vendors to the survey issued to them. Although we have tried to correct any obvious errors, it is impossible for us to validate every line item. However, we believe the vendors are inclined to be honest, especially if the questions are very specific. The vendors do this partly because they realize that trust is the most important factor in the selection of a new system. ERP systems are mission critical, and organizations will not rely on a vendor that can’t be trusted.

September 2005 Article

Welcome to our seventh annual survey of accounting and enterprise resource planning systems. The survey now includes new or updated responses for 55 systems as of June 2005. The systems cover the entire spectrum – from QuickBooks and Simply Accounting to mid-market systems from Sage and Microsoft to high-end products from SAP and Oracle. For the first time, both PeopleSoft Enterprise and JD Edwards are included.

Vendors realize CAs are often the decision-makers for ERP investments. Several see a big difference between selling in Canada and in the US. Canadians are a much harder sell, since they analyse a purchase every which way before taking the plunge, whereas Americans decide more quickly. The US decision-makers are often sales types, while the Canadians are often accountants.

Tier 1

Tier 2

Tier 3

Tier 4

Tier 5

Customer
revenue

> $200M

$50M-$199M

$10M-$49M

$5M-$9M

< $5M

Customer
employees

>500

100-499

50-99

10-49

1-9

Licence fees

> $300K

> $150K

> $50K

> $5K

> $100

Implementation
fees : licence
fees

> 2:1

>1.5:1

>1.25:1

>1:1

<1:1

We tried something new this time to get a more accurate answer from the vendors on the functional questions. In previous surveys, the vendors could respond with Yes, No, Third party, Customization and Future date. This year we asked each vendor to provide a number to indicate the degree of fit for each functional question with a 6=In current release; 5=In next 6 months; 4=Minor modification or workaround; 3=Third party; 2=In next year; 1=Major modification or workaround; 0=Not available.

We also added 33 questions this year. One of these relates to application service provider costs. ASPs host the system on their Internet site, which is typically equipped with state-of-the-art technology and security. This allows clients to avoid the costs associated with managing the computer and associated database. You pay a monthly fee for each user on the system and access the ASP over the Internet. ASPs are still fairly rare but they are gaining a higher profile because of vendors such as NetSuite.

Business performance management
This year, we also asked vendors whether they offered business performance management , also called corporate performance management and enterprise performance management. BPM is an umbrella term encompassing all of the processes, methodologies, metrics and systems needed to measure and manage the performance of an organization. It includes strategic planning, scorecarding, budgeting, forecasting, consolidation and business intelligence. BI is simply a means of turning data into information useful for decision-making. It comes in many forms – from producing a traditional report on your desk every Monday morning to slicing and dicing information using online analytical processing.

One of the engines driving the growing interest in BPM is Sarbanes-Oxley. But even though BPM can help with compliance, it cannot compensate for a lack of processes or people ignoring procedures. Still, BPM offers a lot more than potentially helping with compliance. For larger organizations relying on spreadsheets for budgeting, forecasting and consolidation, BPM is a solution. For any organization, it offers valuable assistance in strategy and alignment with strategy.

How many people in your organization know the company’s strategy or critical success factors -- the things it must do well to be successful? Just as important, do you know how well you are doing in relation to those CSFs? BPM can be very helpful in providing tools to measure your performance using scorecarding. This is usually a balanced scorecard that measures important key performance indicators linked to the CSFs.

Microsoft
Nancy Teixeira, Microsoft product manager for ERP solutions, emphasized the importance of BPM when she talked about Microsoft’s ERP strategy. Microsoft conducted more than 2,000 interviews with users of accounting and ERP systems to determine what should be included in future releases of Microsoft Business Solutions. The company heard that users want a solution that delivers rich functionality combined with high adaptability, at a low cost.

Microsoft will use three guidelines for future development: tailoring the system to the user, collaboration and enabling insight on performance (a component of BPM). Tailoring a system to the user might mean letting different users see data differently depending on their role. Collaboration will be achieved using Microsoft SharePoint Services, which includes tracking document changes and assigning different version numbers for auditing and rollback.

By now, you have probably heard about Microsoft’s Project Green, which was initially a radical move toward a unified code base for all of the company’s business solutions. Now the project is being conducted in two phases. The first phase, now under way, will continue to 2007. It includes a common user interface, portals and business intelligence across systems. Phase two will lead to a unified code base built on the three guidelines discussed above as well as extracting the best practices from each of Microsoft’s existing business solutions.

Best practices
Have you ever wondered what best practices really mean? According to the usual definition, they are meant to improve efficiency and effectiveness and help achieve operational excellence. But what does that mean for any specific organization? You’re going to have a hard time finding anything specific to your industry. Even if you do, be careful. A best practice may be great for another company but a disaster for you. The implementation costs could also be prohibitive. It’s not best practice if the costs outweigh the benefits. Teixeira said Microsoft’s adaptable business solutions will allow companies to configure the system to their own particular needs.

Best practice also refers to learning from others. It’s about measuring how you are faring compared to previous years or to others – and even more important, doing something about it.

Sage
According to Craig Downing, Sage Software’s VP and GM for ACCPAC, mid-market companies don’t choose an ERP system based solely on financials. One of the trends today is to provide end-to-end functionality. This includes the back office (financials, distribution, manufacturing, etc.), the front office (CRM, eCommerce, portals, etc.) and business performance management.

Downing also says some big changes are happening at Sage, starting with their name. Best Software adopted the Sage Software name in May 2005 for consistency with its parent firm and the Sage brand used everywhere outside of North America. The full transition is to be completed by March 1, 2006. Sage offers a plethora of software solutions, with some products overlapping. The plan is to focus on verticals: ACCPAC Advantage, while still broadly applicable to a wide range of businesses, will be targeted toward professional service-based organizations, MAS 90 and MAS 200 to distributors and ACCPAC Pro Series to manufacturers. However, BusinessVision will still be sold mostly in Canada, as a horizontal solution. BusinessWorks targets a market similar to that of BusinessVision in the US.

Consolidation
Another big trend is the continuing consolidation of ERP vendors. The biggest ERP story in the past year was Oracle’s acquisition of PeopleSoft by in December 2004 for US$10.5 billion. Compared to that price, Microsoft’s acquisition of Navision in 2002 for US$1.3 billion and Great Plains in 2002 for US$1.1 billion look like bargains. Best Software (now called Sage) purchased ACCPAC, including ACCPAC Advantage and Simply Accounting, for a mere US$100 million. In June 2005, Lawson software (an ERP vendor not included in our charts) offered to purchase Intentia for about US$480 million.

AMR Research recently pointed out that in 1999, SAP, Oracle, PeopleSoft, Baan and J.D. Edwards accounted for 59% of the total ERP industry revenue; in 2005, the top five vendors (SAP, Oracle, Microsoft, the Sage Group and SSA, which acquired Baan) now control nearly three-quarters of ERP revenue. There are huge advantages to being a market leader, but also a number of disadvantages. It’s possible to develop a new system much more quickly when you don’t have the baggage of existing code and can benefit from new technology. The competitors of the Big 5 will also offer niche products and services to compete with the giants.

More trends
Vendors have realized the fight for more customers is not won by adding more financial features. They come up with new features to win new clients. This year, many vendors released components of work flow, which automates business processes such as routing purchase orders for electronic approval or alerting management when shipments are late or quotes do not make allowance for a prescribed gross margin. In the past, only the top-tier vendors offered this function. Work flow speeds up business processes, provides improved control and manages by exception.

Another trend, according to John Fahey, president of SYSPRO Canada , and Dale Kehler, the company’s professional services manager, is to take ERP to your point of work using portable devices such as PC tablets and handhelds. You can query the database for information, process transactions or just check your e-mail while in the warehouse or on the shop floor. Portable devices can include integrated bar code scanners. Fahey and Kehler have seen prices drop by half in the past few years for these handheld devices. Matthew Bather, general manager of Exact Software, sees a big push toward Web-based applications and integrated CRM.

Matthew Bather, general manager of Exact Software, sees a big push toward Web-based applications and integrated CRM. Exact’s strategy is based on its e-Synergy system, which is a Web-based application that includes workflow management, CRM, human resource management and eCommerce. The product is tightly integrated with Exact’s back-office systems, so you don’t have any integration issues, and all your information is up to the second (real-time).

Customer survey
This year, we are once again posting a customer survey of accounting and ERP systems to be completed by CAs across the country. The survey rates accounting and ERP systems, vendors and implementers, and provides statistics on potential benefits. We will publish the results in a future issue of CAmagazine. See last year’s results at www.camagazine.com/index.cfm/ci_id/24120/la_id/1.htm. Last year we received 129 valid surveys, and we hope to have more responses this year. Please complete the survey at www.CAmagazine/ERPcustomersurvey05. It can be filled out in a couple of minutes. We can accept only one survey per organization, and it must be completed by a CA.

Bottom line
ERP was originally supposed to automate all business processes within an organization. That did not happen partly because new technologies such as CRM and BPM emerged. CRM and BPM vendors offer a best-of-breed approach, meaning selecting the best system for the application rather than choosing one system for everything. ERP vendors are now giving the best-of-breed vendors a run for their money. This is good news since it increases competition, which leads to better products and lower costs.

The battle for mid-market companies also continues unabated. The big players are prepared to buy market share and if they need to offer big discounts, they will do so. Today, you should expect to keep your accounting or ERP systems for at least 10 years, and a decade of maintenance and services adds up to a compelling business case for vendor discounts.

Even without any Y2K-type threat encouraging companies to invest in new accounting and ERP systems, there are still lots of reasons to do so. Companies grow and change. And many companies still rely on legacy systems. These are often supported by baby boomers who know COBOL and and other computer languages that are no longer used to develop new systems. As the baby boomers approach retirement, a bigger investment will be made in new accounting and ERP systems.

Ironically, some of the ERP systems that were brought in to replace the legacy systems because of Y2K have become legacies in their own right. These systems were often highly customized to meet specific needs. Now, the companies are held back from moving up to the latest release because of the huge upgrade costs. And they have to shell out a lot just to maintain the systems. These companies are finding that it can be less expensive to purchase a new mid-market system than to upgrade and maintain their legacy systems. Mid-market systems have evolved a lot since Y2K and, as you will see from the charts, offer substantial functionality at competitive pricing. This provides an opportunity for both buyers and sellers of ERP systems.

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