Upward Expansion

 
 
By Renee Boucher Ferguson  |  Posted 2003-08-04 Print this article Print
 
 
 
 
 
 
 

Vendors turn to development, partnerships, acquisitions.

ERP Software providers have figured out that many potential customers want their software to be customized for their vertical industry right out of the box.

As a result, enterprise resource planning software vendors are trying to broaden their vertical-industry portfolios through development, partnerships and acquisitions.

"When technology is a commodity, you need to go into vertical [markets] to get more customer shares," said Mike Greenough, president, chairman and CEO of SSA Global Technologies Inc., which last month acquired Baan Co. for its discrete manufacturing capabilities.

Chicago-based SSA, which already had software expertise in the process- manufacturing vertical, is not alone in taking the acquisition route to expanding its vertical reach. PeopleSoft Inc. took a big step in expanding its vertical coverage late last month by acquiring J.D. Edwards & Co. The acquisition brought PeopleSoft, of Pleasanton, Calif., a suite of software tuned for about 20 vertical markets and a large installed base among manufacturers.

At the same time, Lawson Software Inc. acquired consultancy and software developer Numbercraft Ltd. to bolster its appeal among companies in the retail and consumer packaged goods industries.

Taking the development route, Oracle Corp. and SAP AG have rolled out new and enhanced applications for a variety of verticals. Oracle, of Redwood Shores, Calif., late last month began shipping Version 11i.9 of its E-Business Suite, with enhancements geared for 20 industries, including the automotive, aerospace and financial services sectors.

For health care companies, for example, Oracle 11i.9 features a Healthcare Transaction Base that provides a single repository for health care data and operating room scheduling integration capabilities. The upgrade provides advanced support for electronic signatures and electronics records designed to help life sciences companies comply with the Food and Drug Adminstrations 21 CFR Part 11 regulation.

For its part, SAP has partnered with companies including IBM, American Express Corp. and BearingPoint Inc. to bring out packages for specific vertical industries. In June, the Walldorf, Germany, company made available, as part of its SAP Business One and MySAP All-in-One product lines, IT bundles for electronic device makers and wholesale distributors. Both product lines are targeted for small and midsize businesses.

ERP software traditionally has automated business processes that are broadly applicable to a wide variety of businesses, such as human resources functions or financials. The key to making vertical software offerings appealing to companies is to understand their business needs.

"Ultimately, I would want the vendor of the software to resolve [business issues] for me, so I dont have to do that," said Steve Hight, vice president of IT at National Mentor Inc., in Boston. Hight, an Oracle E-Business Suite user, would like to see more focus on his industry.

Vail Resorts Inc. three years ago chose to invest $10 million in PeopleSofts software for its vertical expertise, said CIO and Chief Financial Officer Jim Donohue.

"The whole reason we chose PeopleSoft for our ERP platform is [Vail Resorts] knew it was going to grow in the hospitality and resort segment, and we wanted a reliable, robust and growing ERP platform—and confidence that PeopleSoft would make investments [in their products] necessary to adopt and change," said Donohue, in Avon, Colo.

SSA plans to bolster its offering for manufacturers with a host of technologies—from supply chain to business intelligence—that enable companies to conduct end-to-end business.

"Within two or three years ... what youre going to see is stacks [of technology that represent] seamless integration of a whole vertical," said Greenough. "It might happen that Manugistics [Inc.], Cognos [Inc.] and SSA are one company—or it could be i2 [Technologies Inc.] instead of Manugistics—but clearly we look at the whiteboard and look at where we were, where we are today and where that journey will ultimately take us.

"The grocery store 15 years ago did not have a separate deli, a separate confectionist. Everything is there now, from a haircut to a bank," Greenough said. "Thats how everything will evolve for SSA. No question Oracle, PeopleSoft and JDE combined will do that. SAP will do that."

 
 
 
 
 
 
 
 
 
 
 

Submit a Comment

Loading Comments...
 
Manage your Newsletters: Login   Register My Newsletters























 
 
 
 
 
 
 
 
 
 
 
Rocket Fuel