ERP or Suite?
9 Feb 21
The 10th edition of HerbertNathan & Co’s market analysis ERP systems was finalized and published during 2020. The analysis was performed during 6 months and summarized into a report including a total of 27 ERP systems available in Sweden, Norway and Denmark.
What distinguishes this latest edition from previous years is the influence from external development and trends regarding AI, Machine Learning and over intelligent cloud-based services. Until recently, the market for ERP systems has stood firm on its own two feet and driven its own development. What we see is that it is no longer the ERP system industry that drives the development of itself. Instead, we see that the industry for ERP systems has ended up in the backwaters and taken on a reactive role and where it is the outside world that forces the industry for ERP systems to increase its pace. It’s now about following instead of leading.
As we have concluded in previous analyzes, it is more or less a law that all ERP systems during a life cycle of 30 years are forced to perform at least 1-2 extensive generational shifts in order for the software to remain competitive when technology shifts occur. And what is happening right now cannot be considered in any other way than a huge shift – not only technically but also in terms of the approach to what is an ERP system and how customers can and should secure their future platform for process and information support.
The future will not be about large and comprehensive ERP systems that cover everything and at the same time are sluggish and complex. Instead, the future will be about offering a wide range of digital services that, based on modern architecture, can be connected and/or replaced with more and other specialized services when new needs arise.
20 years ago, we would have called this a fragmented landscape with applications. But with new conditions and a more mature and modern approach, we now call this a flexible process and information platform. And tomorrow can in no way be compared to the situation 20 years ago.
For the older and established vendors of ERP systems, this is a huge challenge and risk. Starting to break up a +25 year old supertanker into a landscape of flexible speedboats is simply not possible. At the same time, the vendor must in some way maintain its existing customers who expect the product to follow into the future.
We now see that more and more vendors have started to re-brand their software and where in several cases this leads to a paradigm shift in how the vendor presents and sells its software. This paradigm shift usually results in a new product name containing the phrase “Suite”. With this, the vendor intends to mark that it is no longer a single product but that it is instead a framework within which the vendor offers a wide range of functions follow the architectural framework. The consequence is also that several very well-known ERP systems are about to disappear according to the names we have known them for many years. And the vendor instead includes several of its applications within the “Suite”.
Tactically, this is a wise strategy for those vendors who lack the muscles or competence to develop their own modern platform and product family based on new principles. The first step will be to move all applications under a common concept and then gradually start renovating the engine. For the customer, this can mean that the product over time can be transformed into something modern. At the same time, the customer must be aware that what lies within the Suite still consists of several separate applications with different databases and completely different information structures, which creates a great deal of complexity when it comes to maintenance and upgrades.
No vendor wants to get the stamp “Outdated” and not least at a time when everyone realizes that technology is now taking giant leaps every year. The technical changes that used to take place in 10-15 years now happen in only 2-3 years. And these changes will not escape any supplier. Both large and small vendors are affected, and everyone must maintain a very high investment rate to be able to offer a modern ERP system even in 5-10 years, or more correctly, a modern ERP system platform.
The fact that a vendor renames and starts offering its software under the term Suite does not necessarily mean that the included applications are lost technically, but the customer should be vigilant when the phenomenon occurs. Not even the largest vendors with resources in the billion-dollar range can manage to repackage their products into a new framework in just a few years, it is simply too complex.
