Thursday, June 11, 2009
Back in 2007, I noted that Gartner had retired its mid-market ERP Magic Quadrant (MQ). As my source said at the time, the reason was that as a result of consolidation there were not enough vendors left in midmarket ERP to populate the quadrant.
Well, apparently Gartner found some more vendors and has now brought the mid-market ERP MQ back from retirement.
As soon as Gartner had issued its latest Magic Quadrant for Midmarket and Tier 2-Oriented ERP for Product-Centric Companies, resellers for Microsoft Dynamics AX (Axapta) were touting its position in the so-called "leaders quadrant." In fact, according to Gartner, MS Dynamics AX is the only product worthy to occupy a place in the leaders quadrant, a fact that Microsoft itself was quick to proclaim in a press release today.
A quick look at the MQ itself, however, shows some problems. In fact, it is difficult for anyone familiar with these vendors to understand how Gartner could come up with this evaluation. For example:
Perhaps the answer is in how these criteria are defined. Gartner does list the factors it considers.
- QAD and Syspro show a better "ability to execute" than any SAP or Oracle product
- Epicor Vantage shows a better "completeness of vision" than any SAP or Oracle product
This is not meant as a slam on either QAD, Syspro, or Epicor, but how is it possible that QAD or Syspro in the current economy can have the "overall viability" to allow them to execute better than SAP or Oracle, with their fat maintenance revenue streams? And how is it possible for Epicor to have a better geographic strategy than SAP or Oracle? Gartner does not release individual scoring for each vendor for each factor, so perhaps it scored these vendors better on other criteria.
- Ability to execute: product/service, overall viability, sales execution/pricing, market responsiveness and track record, marketing execution, customer experience, and operations.
- Completeness of Vision: market understanding, marketing strategy, sales strategy, offering (product) strategy, business model, vertical/industry strategy, innovation, geographic strategy.
Nevertheless, my issues with Gartner's Magic Quadrant for Midmarket and Tier 2-Oriented ERP for Product-Centric Companies are several fold:
Furthermore, the MQ does damage in the sales cycle as vendors are quick use the MQ in their sales presentations, if their position is favorable, with the implication that prospects ought to choose them because of it. First-time buyers, especially in small or midsize companies, may not understand the misuse of the MQ in this way.
- As indicated above, the positionings make no sense to anyone familiar with these vendors.
- Gartner's criteria for evaluation are almost certainly going to be different from the criteria of a specific buyer. For example, if I run a manufacturing company with operations solely in the U.S, why do I care about worldwide geographic presence?
- As a buyer, is "completeness of vision" really one of the two primary criteria in evaluation? How about fit to my functional requirements and industry? On this note alone, IFS and Lawson, with their industry-specific focus are being shortchanged in this version of the MQ.
- The MQ is incomplete in terms of vendors. Specifically, as Vinnie Mirchandani pointed out in a private Tweet to me, Gartner has conveniently left out the pure SaaS vendors, such as NetSuite and Intaact, from this MQ.
To be fair to Gartner, the fine print at the bottom of its study says:Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action.Nevertheless, I think this MQ does more harm than good. In my opinion, Gartner should have left it in peace to enjoy its retirement.
Update: Quick on the trigger, Vinnie weighs in.
Update, Jun. 11: Dennis Howlett finds plenty of other shortcomings in this MQ
Update, Jun. 12: Thomas Wailgum, blogging for CIO Magazine, is dripping with sarcasm concerning both Gartner and Microsoft.
Update, Jun 19: Gartner's Jim Holincheck responds.
Gartner retires mid-market ERP magic quadrantby Frank Scavo, 6/11/2009 10:03:00 AM | permalink | e-mail this!
Reader Comments:I agree with your comment about "Completeness of Vision". For a mid-market customer, they're not looking for a solution that can meet any need, for any firm. They're more specifically focused on their industry and customer base.
In terms of Garnter's evaluation criteria, you'd think they'd have the "Vertical/Industry Strategy" aspect as a High priority for this group, rather than merely Standard.
Forechecker, good catch. I didn't notice that Gartner ranked "vertical/industry strategy" as just "standard."
Which begs the question: which vertical industry? If a vendor scores high because they have vertical strength in retail, does that mean they're a good fit for me as a pharma manufacturer?
Good post. This kind of reminds me of the Fortune 500 "Best Companies To Work For" survey. To be considered, all companies had to pony up the fees. Those that didn't weren't considered. Thus, a company could absolute bliss but never would have made the list. Excluding pure SaaS plays seems a bit odd. I fail to see how architecture matters when the apps have the same fundamental purpose.
I have worked with QAD for several years for an aerospace company, and before that with Syteline for 15 years for an electronics company, which is similar progress based system..
There is no doubt that they out perform Oracle and SAP for mid market companies.
I was involved with this MQ submission process for one of the vendors. It was obvious from the outset of this process with Gartner that they had politically motivated preconceived opinions about where companies and products would be placed. The other disconcerting issue with the process is that the Gartner analysts on this project collectively had less ERP experience than any one of us.
All good comments. The only point I would make is in response to Phil. Accusations of "pay-to-play" have been made against Gartner for years, concerning MQs.
Gartner vehemently denies this, and I was very careful not to make this accusation. I think there are enough problems with the MQ without having to accuse Gartner of practicing "pay-to-play."
Thanks for posting the link to my post. I think you make some fair points related to any MQ. It is specific to the market evaluated. So, trying to use a global MQ as a guide to a US-only selection is not a good idea. That is why analyst inquiry is so important. You are also right the criteria (and weightings) a specific buyer might use is likely different from what use in a MQ. We all use the same criteria so there is consistency in the methodology, but the weights differ based on what the analyst thinks is important for that market. Reasonable minds can differ on that too. Again, that is why analyst inquiry is so critical so that a client can advice tailored to their specific situation.
Jim, I appreciate the dialog and also your post explaining the MQ from Gartner's perspective. I think there is enough information out there now for buyers to evaluate the use or potential misuse of the MQ. Thanks again.
Gartner’s methodology ensures the status quo is maintained and no new players are compared with established ERP brands. Any company relying on Gartner’s Magic Quadrant for researching ERP options would be poorly served and miss a number of viable, innovative and effective ERP options that, in many cases, outperform Microsoft Dynamics AX and the other familiar ERP solutions.
Sorry to rain on the parade, but:
1. Gartner was clear in the report that the SaaS offerings failed to make the cut because of market share. Who care's what the VC's are pumping in, I think its install base that counts.
2. The ERP old guard will never admit that Oracle and SAP are still a pain in the tail to implement. Despite what SHOULD amount to 20 years of best practices and highly competitive fees from partners, the real world is still choking on their SAP and Oracle project costs and overruns. A Microsoft implementation with abundant SOA returns, low license fees and lots of SQL Server and developer help can't help but be easier.
My feeling is resistance to pro-Microsoft anecdotes and surveys is nothing new, and can always be expected. In fact, I think it's a primary reason for Microsoft slowly progressing to dominance in every product market they choose. Time will tell if Dynamics AX is one of those products.
Kevin, at the risk of taking my own comment thread off topic....
I'm always amused by folks who talk about Microsoft purported ability to enter markets and dominate them at will.
Apart from Windows and Office, which other market categories has Microsoft dominated? Search? Online advertising? MSN? Games? Zune? Microsoft Money?
I happen to think Dynamics AX is a good product, for several reasons, but Microsoft's purported ability to dominate markets is not one of them.
The glass is half full for Microsoft, not half empty. Maybe it would be easier to rememeber those who have passed on...
1. Lotus Notes
2. Novell Netware
3. xBase databases and others
And I don't think xBox is a bust either. I'll bank on Dynamics to dominate small and medium businesses before Oracle any day of the week.
Kevin, I notice you conveniently did not respond regarding my list of Microsoft products in the preceding posts.
As I said, I think Dynamics AX is a good product, but if it succeeds it will not be because MS has some vaunted ability to dominate markets at will. The list I provided shows that is not the case. Listing products of other vendors that have lost doesn't change that.
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I wonder whether SAP's decision to dramatically reduce its expenditure on Gartner's research had any impact on the findings. It has certianly impacted on other interactions.
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