Tuesday, January 20, 2004

Executives hesitate to recommend their ERP vendors

Yankee Group, in collaboration with Monitor Group, has published a very interesting study regarding customer willingness to recommend their ERP systems, and the news isn't good for any of the major ERP vendors. The study says,
"No single ERP company stood out as a brand of choice. The share of respondents inclined to recommend a particular supplier was starkly lower than scores for similarly complex business products. It's typical in a healthy business category to see about 50 percent of decision-makers recommending a market-leading brand. The highest recommended rating in the ERP category was 32 percent."
Across the board, the results are stunningly dismal. According to a TechWeb summary of the study, the highest position went to Oracle (32%), followed by PeopleSoft (29%), and SAP (26%). Microsoft, which just entered the ERP marketplace in the last two years with its acquisition of Great Plains and Navision, comes in at only 14%. Scraping the bottom is SSA Global, which only had 1% of its customers recommending it.

The study should be a wake-up call for ERP vendors:
ERP vendors thrive on maintenance revenue and installed-base sales. As the market consolidates and competing products mature, repeat-customer revenue becomes even more important. Yet ERP brand loyalty and distinctive corporate characteristics, qualities that mature industries use to lock in customers, are weak.
Clearly, there is an untapped market opportunity for ERP vendors that want to seriously focus on the things that, according to the study, really matter to customers: high integrity, fast return on investment, inexpensive operation, easy implementation and excellent service. In the TechWeb summary, Yankee analyst Jon Derome says, "You have this disjoint where vendors are marketing speeds and feeds, pushing technology innovation in the marketplace; and buyers aren't interested in those attributes. They're interested in practicalities, such as understanding my business and delivering what you promised."

The Yankee Group report can be found on Yankee's web site.

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