ERP shake-out cuts options

SAP and Oracle are planning to extend their lead in enterprise applications with additions to suites this month. Following a frenzied period of merger and acquisition activity, the releases may offer yet more reasons for IT buyers to err on the side of caution by choosing the big brands.

SAP, the leader in enterprise resource planning (ERP), will this week detail a major upgrade to its customer relationship management (CRM) system that focuses on over a dozen industries. The plan is to offer a better fit between ERP and CRM systems.

Oracle is expected to announce a range of enhancements for its Applications suite at its AppsWorld conference in London next week, including ways to automate support for corporate governance regulations.

The announcements come at a time when acquisition bids are giving enterprise applications a radical new look.

This month, Baan has effectively been merged with SSA; PeopleSoft has agreed to buy JD Edwards; and Oracle has launched a hostile bid for PeopleSoft.

Although PeopleSoft and JD Edwards are fighting Oracle's bid, low stock prices, and an almost non-existent market for IT flotations will inevitably lead to purchases by market leaders. Some observers fear an effective duopoly with SAP and Oracle carving up enterprise applications between them, leading to less innovation, more disruption and punitive maintenance charges.

"It really does take a lot of choice away from companies," said Sanjay Mittal, chief executive of Selectica, a developer of enterprise sales software. "PeopleSoft was a weak third and trying to become a strong competitor to Oracle but there's basically going to be two vendors left. And when large companies have a stranglehold they tend not to bring out new things."

However, Mittal said there will still be a place for specialist point-solution providers such as CRM leader Siebel and smaller firms. "Even though Oracle and SAP are clearly trying to grow to virtually everywhere, there are certain areas of strengths and others where they offer only journeyman capabilities."

In a note issued by Forrester Research, analyst Laurie Orlov described the Oracle bid as "a sabre-rattling move that hurts customers" and predicted that the customers of PeopleSoft would be obliged to migrate or face high maintenance fees.

Many customers are likely to fall in line with industry leader SAP to protect long-term investments. The company has begun advertising to attract wavering PeopleSoft and JD Edwards users.

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