R.I.P. ERP?

With industry insiders and pundits circling like buzzards to proclaim the death of software solutions, it should come as no surprise that at least one market Nostradamus can imagine the demise of the ERP market. All over the online newswire lately is reaction to the proclamation by AMR Research’s Bruce Richardson that “rapid adoption of service-oriented architectures will lead to the end of the ERP market as we know it.” Said e-media reaction has ranged from “interesting” to “unthinkable.”

Richardson begins with recent work from Oracle and SAP in the web-service enabling sphere. SAP, he says, recently announced their 500th enterprise service solution but that they may need to provide “up to 30,000 web services in order to fully web-service the whole suite across all the verticals served,” a seemingly impossible number. Richardson’s neo-sci-fi timeline has SAP and Oracle customers giving up on those firms’ ERP applications, instead contracting “low-cost Indian or Eastern European integrators to build custom composite applications.” (This feels quite plausible, with the amount the giants are plunking into education and development on the Subcontinent and the untapped, low-cost, high-expertise potential of the former communist states.)

By 2012, the old ERP backbones that had supported all the new independent work would simply become too expensive to maintain. By this time, figures Richardson, the vendors of applications in India and the former Soviet bloc will have discovered their own way to build business process platforms. Naturally, these would be cheaper. Richardson does see some big boys making some moves to prevent his future from happening.

In July consulting, services and outsourcing firm Accenture announced their Accenture Technology Lab for SOA Innovation, representing a three-year, US $450 million investment. The lab is designed to “accelerate the development of SOA applications customized for specific industries, including healthcare and financial services.” Partners in scenario building will be BEA, IBM together with – get this – Oracle and SAP. Strange bedfellows, indeed. Accenture is also helping Oracle develop an Oracle Innovation Center specifically built around SOA technology.

One Accenture exec informed Richardson that Accenture would be taking on at least 250 SOA projects this year. If this number seems miniscule, it is (and Richardson admits it), but Richardson’s tea leaf reading calls it a sign. Plus, Accenture also purchased life insurance market software and services provider NaviSys, with which Accenture hopes to build a life insurance process platform. Richardson goes on to tout a firm or two, young Workday in particular, that are “eying the ERP replacement market.” The analyst teases readers with hints that Workday’s future plans for writing software are “based exclusively on metadata.”

Unfortunately, “legal documents prevent me from disclosing [Workday’s] product plans and strategy,” he writes. Speculation is great fun (especially if you’re not too heavily invested in, say, Oracle’s success), and though Richardson invites readers to check out his article in 2010, he’s apparently not taking any literal bets. However, the AMR mouthpiece certainly seems to be on to something when he says that “SOA will make today’s ERP systems look like yesterday’s mainframe apps.”

So don’t get too too comfortable with your present system. The article, entitled “ERP Doomsday Scenario: Death by SOA?” is available at http://www.amrresearch.com/Content/View.asp?pmillid=19699&pubid=2726&custid=381817.

Bruce Richardson is a trends analyst with almost 25 years of experience in the field, almost 20 years of it with AMR Research and has covered the SAP market since 1991. He is responsible for spearheading new market research and contributing to the AMR analysis of leading market trends in areas including ERP, supply chain management, service-oriented architectures, and software-as-a-service.

Founded in 1986, AMR Research is an advisory firm focused on supply chain, enterprise applications, and infrastructure. The AMR Research Market Analytix Report Series provides technology vendors with targeted marketing and competitive information on key application markets of ERP, SCM, CRM, procurement and sourcing, PLM, and HCM.