When it comes to enterprise software, the concept of “choice” has become quite a relative thing.

I keep coming back to this thought as each day it seems like another business apps vendor is acquired, merged or otherwise subsumed by a more well-capitalized entity for a pretty penny—and shareholders rejoice!

Are companies really free to choose their business software? Or does the specter of vendor lock-in or M&A create a situation in which there’s little choice?

You’ve got the steaming Infor-Lawson-Oracle love triangle (I think I’ve seen this one before) and the news today that a private equity firm is acquiring Epicor and Activant.

In the ERP universe, these are all household names—not fringe, small-time players with little clout or customer importance. Billions of dollars and tens of thousands of customers are at stake. This means something.

It all leaves me with a lingering feeling (which feels more like a bad hangover, actually): Are companies really free to choose their business software these days? Or do the technical complexities, fiscal realities, functionality trade-offs, “displacement politics,” and specter of vendor lock-in or M&A create a situation in which there’s very little actual choosing going on?

Perhaps I’m just playing around with the semantics of it all. But, eventually, the number of viable ERP choices (including cloud vendors, which will inevitably commence consolidation at some point) will likely be able to be counted on two hands, and maybe even one. (I mean, are any VCs funding ERP software startups these days?)

The facetious cynic in me thinks that eventually there could be just three choices in the world of pure ERP vendors (I put this in here so people don’t say, ‘Hey, what about Salesforce, dude?’): SAP (with some type of deeper partnership with Microsoft and what it picks off over the coming years); Oracle Conglomerate Corp. (it’ll eventually get Lawson when it buys Infor in future, so no worries there); and the rest of the so-called “independents” SageEpicorQADUnit4WorkdayDeltek Inc. (I envision this Transformers’-like beast of conjoined servers and Ethernet cables, with the accumulated vendors’ logos stuck on it, and some really aggressive sales tactics.)

ERP, as an industry, is still young. And consolidation has been as much a fixture as have haunting ERP failures, exorbitant maintenance fees and slick systems integrators.

But as the overall number of options dwindles and lock-in becomes more evident, just how much “free choice” will actually exist? It all may be just one big illusion.

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3 Comments for ERP Consolidation: Envisioning “Choice” in the Future

Mark Montgomery

You raise a good question (again) here Thomas– a related question we’ve been discussing internally and with a few of the larger customers in enterprise software, as well as a couple of larger vendors, is– what is the role of customers in the enterprise software market health– particularly relative to innovation?

As we’ve all seen over the past decade, consumer product innovations have been driving much of the innovation in the enterprise. When young innovative start-ups and/or creators of IP attempt to bring early stage innovation to the enterprise in a manner that is beneficial to the customer and the market, frankly customers rarely provide the minimal support necessary to protect their own interests.

I have concluded that multiple issues are at play, including-

1) Subsidies from venture capital during the boom years– unprecedented in the past dozen years.
2) Closer relationships between market leaders and academia– more outsourcing of R&D covered by governments at later stages than in the past. See the EU for applied/product development on a large scale.
3) Desire by many large customers to unify fragmented vendor ecosystems; for a variety of reasons– some appear valid to me, some do not.
4) Combination of relationships between CIOs and leading vendors, CIO churn, and lack of depth by CEOs on the details within the IT industry.

Some cultures are more proactive than others, but it’s pretty clear that if customers were serious about crisis prevention, improving innovation, reducing lock-in, and spreading interoperability, we’d see more aggressive farming in the marketplace at the early stages.

Freedom and liberty require proactive investment. Growing healthy markets requires willing and able farmers.

Thanks for the continued good work.

Mark Montgomery
Founder & CEO
Kyield

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Mark Montgomery

PS– related article I just posted to a familiar network:

Data Integrity: The Cornerstone for BI in the Decision Process

+ the dirty dozen fault lines to look for in structural integrity of data

http://www.enterprisecioforum.com/en/blogs/markmontgomery/data-integrity-cornerstone-bi-decision-process

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