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Ten More ERP Trends: Open Source and Pricing Pressures: Page 2

By Drew Robb     Feedback
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ERP Trends

Change management focus

Change management is becoming popular as a way to get in control of costs — and one which will affect the ERP sector. With a renewed focus on risk management in play, change management is being looked upon by some as the best approach to mitigating and managing implementation risk.

"Due to general anxiety and concerns about implementation risk, look for a greater focus on organizational change management to help mitigate risk," said Kimberling.


More ERP failures coming

Despite these much-needed steps, bad news is probably unavoidable. This will show up in the form of lawsuits and project cancelations. Kimberling believes that slim IT budgets will create a conflicting pressure to cut costs in the wrong places, which will lead to a greater rate of ERP failures.

"Companies will be faster to pull the plug on troubled projects and file ERP lawsuits against their vendors if needed," he said.


Vendor ERP Upgrades Are Coming

Another side current of the surge of interest in open source ERP will be a shift in operating basis by the big vendors like SAP and Oracle (NASDAQ: ORCL), and tier two providers as well. On top of price cuts, they will be assailed by a fresh batch of rivals touting the latest architectures. Therefore, some of the old ERP behemoths are going to be coming in for a facelift — and sooner rather than later.

Kisker explains that over the past three decades, ERP has transitioned through several cycles to the point that it is now considered a mature market. But open source has upset the applecart and is the vanguard of a new wave of innovation. Consequently, many companies are looking for next-generation ERP solutions that have new capabilities and are easy to use and deploy.

"ERP vendors need to enhance their solutions based on new open architectures to meet increasing market requirements, secure their market position, and unlock further ERP market potential," said Kisker.


Light in sight

There is light at the end of the tunnel, though. Open source rivals, price cuts, lawsuits and project cancellations won't be enough to kill off the major ERP players, by any means.

"Signs in the latter half of 2010 pointed to increasing IT spending and pent-up demand for enterprise systems, which is likely to continue into 2011," said Kimberling. "This should give software vendors increased confidence to hold the line on software pricing, invest more in R&D, and provide more product enhancements. ERP vendors will get their mojo back."


Small business surge

It isn't the large enterprises, though, who could be the salvation of a stalled ERP market. Kimberling thinks heavy adoption at SMBs could resurrect sales and restore investor confidence.

"SMBs will look to enterprise software to provide their business foundations for growth," he said. "However, they aren't likely to have the capital funds for heavy up-front costs, so they will likely look more to SaaS ERP and CRM systems."


This article was originally published on January 27, 2011
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