SaaS ERP offerings still won't be for every enterprise, she says, because the level of built-in customization doesn't yet approach the deeper capabilities of on-premise ERP suites. Despite that shortcoming, though, it's an intriguing option for more enterprise customers who might want to have a hybrid ERP system with a mix of on-premises and SaaS options. "I think in general the pendulum is swinging to the customers having more choice," Martens says. "That can be used by customers at the negotiating table. Why should they pay a certain amount of money for software licensing and maintenance when they can also get it at lower price using SaaS? It seems to give customers more of a bargaining chip."
Despite the glimmer of new energy in the ERP marketplace lately, there are still questions. One ongoing key issue, according to the Forrester study, is the continuing consolidation of players in the ERP segment.
"Market consolidation is always hard for customers when it happens," Martens said. "When you see a vendor buy a company where there is some overlap in their businesses, that's certainly a cause for concern" and can affect your deployment and ERP strategy.
"Infor is still in the process of buying Lawson, and it looks like it will close," she says. Private equity firm Apax Partners recently acquired Epicor, is taking them private and is merging them with Activant in a deal announced this spring. "We're still waiting to see how these consolidations will affect customers."
Forrester is currently working on a new study with a focus on the future of ERP and reviews on seven interesting trends in the marketplace, according to Martens. "It's more optimistic about the market than it is pessimistic," she says. "There really is a sense that ERP apps are truly changing in terms of what they're going to do and what they're going to look like. The demand from customers is that the apps are going to have to be much more usable.
"I think part of that is the changing demographics of users who grew up using the Internet," compared to past ERP users who adapted to the software that was put in front of them, she says. Today's new corporate ERP users "have certain expectations of what the applications should look like and how they will work," she says. "Vendors will have to work on making them more usable and more personable. I think it's one of the messages you're hearing from vendors, as they are now including more business intelligence capabilities in with ERP so users can do querying of their ERP data and present the results in more arresting ways."
So does that mean that we'll see more gamification of ERP applications, where they could take on more playful, entertaining or intriguing characteristics of video games?
Well, let's not get too carried away, but some of those kinds of more engaging features have been finding their way into some CRM (Customer Relationship Management) applications lately, according to Martens. "We're seeing it in CRM and others. It could happen here in ERP, maybe."
ERP users are also looking for collaboration features, according to the study. "We're hearing a lot about collaboration on the CRM side, but vendors are also talking about it for ERP, too," she says. "I think there is a strong use case for it, especially in the Human Capital Management world. It could be very helpful to bring together ad hoc groups of people for discussions within ERP applications."
Todd R. Weiss covers Enterprise Applications, SaaS, CRM, and Cloud Computing for CIO.com. Follow Todd on Twitter @TechManTalking. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Todd at firstname.lastname@example.org. You can also join Todd in the "CIO Forum" group on LinkedIn.com to talk with CIOs and IT managers about the things that keep them up at night.
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