ERP Vendors Debate Customer Loyalties
Updated · Apr 27, 2004
A handful of large and mid-tier software vendors are rumbling about what customers really want as the enterprise resource planning (ERP) sector continues to define itself.
The marketplace, which includes collaborative suits such as Customer Resource Management (CRM), Human Resource Management or Financial Management Services is currently dominated by German-owned SAP and Redwood Shores, Calif.-based software giant Oracle .But mid-tier player Lawson Software CEO Jay Coughlan’s assessment this week that large business software providers are out of touch with customers is drawing criticism.”We have to categorically challenge the statement on its merits,” William Wohl, Sr. Vice President of Product & Solutions Public Relations SAP Global Communications told internetnews.com.
Coughlan based his statement on research sponsored by his company that reported that 75 percent of the customers of the largest three ERP vendors would prefer to switch to a different vendor if they had to rely on a single provider. The statements came Monday during the company’s annual Conference and User Exchange (CUE) in Atlanta. Lawson’s CEO said he views the statistic as a statement on customer loyalty and sees as it as opportunity for his firm.
“Business as usual is broken,” Coughlan said in a statement. “We see good companies brought to their knees trying to implement applications that are too complicated and too cumbersome and poor fits for the business at hand. We hear industry observers saying business applications vendors have an unusually weak hold on their clients’ hearts and minds.”
“As part of the announcement, we conducted comprehensive market research we talked to the industry experts, clients and analysts, what we heard essentially and what we’re presenting is that large business software providers today are out of touch with their customers,” Lawson spokesperson Terry Blake told internetnews.com. “What our research is showing us is that there are customers that are being underserved the bar has been set so long for expectation that there is an opportunity for a company like Lawson to being fulfilling the promises that the entire industry has made to software users.”
SAP, one of the world largest software providers doesn’t agree with Lawson Software’s stated opinions on a number of different levels.
“Sitting here at SAP where we have been building market leadership in almost every category one can only look at what customers are saying with their dollars. Customers are choosing to stay with vendors like SAP in larger and larger numbers primarily because of the business value proposition that we’re offering,” Wohl told internetnews.com. “If customers really believed the way Jay Coughlin says they believed they would be voting with their feet. The changes that they are making is that they are abandoning in larger number the smaller niche players in the industry to leverage the value proposition that comes with companies like SAP.”
Wohl pointed out SAP’s recently release first quarter earnings (last Thursday), which reported that their U.S. Software revenues increased by 45 percent and net income was up by 23 percent as evidence of SAP’s continued client loyalty.
“We also know from our own research, and very significant research from third parties that the value of the relationship with the vendor is something that customers rank very, very highly.” Wohl told internetnews.com. “There isn’t any indication in any research that I’ve seen that suggest that customers are looking to make a switch.”
A Lawson spokesperson did not discount SAP’s strong financial results though he didn’t see it as evidence of their success with clients.
“We have to recognize strong performance when its due,” Lawson spokesperson Terry Blake told internetnews.com. “What we’re saying is that at arriving at those numbers is the customers in the equation? That is, is the client to the level that they should be? Lawson is indicating that despite some of the strong numbers from our competitors generally lost in the equation is the focus on the client and their needs.”
The SAP spokesperson contended that with nearly 21,000 customers and thirty years in business, it’s unlikely they would have the kind of successful track record they have if customers were anxious to switch.
“I would challenge Lawson to talk to the marketplace from a position of credibility,” Wohl told internetnews.com. “Where they remain today is an obscure third, maybe second tier provider, while they have a strong value proposition for certain areas of the marketplace. I’m not sure that Jay [Lawson] is in any kind of position to speak with authority to speak for the entire industry.”
Wohl noted that they consider Lawson to be on the periphery of companies that they watch, but do not consider them to be a major competitor. He did admit that Lawson does show up on SAP’s customer map in certain mid-market US areas.
According to the SAP spokesperson, most of the competition in the industry is currently focused on things other than customers’ success.
“Oracle is busy trying to acquire PeopleSoft. PeopleSoft is busy trying to fend off that acquisition. JD Edwards is still trying to figure out if they’ll still exist after this is all said and done. Wohl said. “And Siebel is struggling to find an identity outside of CRM where they have seen SAP move from the number 2 slot to the number 1 position in just the last 18 months.”
Wohl sees Lawson as taking advantage of the current industry situation in particular the Oracle attempted takeover of PeopleSoft.
“They’ve been running a lot of advertising lately for thanking Oracle and PeopleSoft for putting a lot of focus on them. Which I think points to the trend we’re seeing,” Wohl said. “I think it’s caused Lawson to ratchet up their publicity to try and take advantage of this trend and we applaud them for that. But certainly not for this press release that throws a lot of unsubstantiated information around is not the kind of straight talk that we think customers are looking for today.”
Sean Michael is a writer who focuses on innovation and how science and technology intersect with industry, technology Wordpress, VMware Salesforce, And Application tech. TechCrunch Europas shortlisted her for the best tech journalist award. She enjoys finding stories that open people's eyes. She graduated from the University of California.