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The story continiues - ERP systems - 2015

How to read the Boston Matrix. Download the Boston Matrix in PowerPoint (2,7MB) or PDF (534kb) format.

 The Boston Matrix-

 The Boston Matrix-

 The Boston Matrix-

 The Boston Matrix-

 The Boston Matrix-

 The Boston Matrix-

How to read the Boston Matrix. Download the latest Boston Matrix in PowerPoint (2,7MB) or PDF (536kb) format.

Comments are given in meetings and INHOUSE presentation by Sren Janstl.

Life cycles for Business Applications and ERP systems

A well performed business application or ERP package can be sold and maintained at most in 15-20 years. In late stage the package have old architecture and contains of "spaghetti code". It is hard (sometimes impossibly) to make changed in the program code without hazardous damage the systems stability. For instance it was easier to make new systems year 2000 and EMU proof than in older packages.There is a possibility to "face lift" older systems with modern tools e.g. with Microsoft Windows interface. Those "face-lifts" can extend the life cycle for the package some years. But they will certainly speed up the appearance of "spaghetti code" and force the package into the Doggie stage. In attachment we have mapped many of the common packages in the Boston matrix.

Ideal is to find mature "STARS" in selection of packages. STARS are often subject to development, the vendor makes lots of profit, the remaining life time for the package is satisfactory long and most of the bugs are gone. But very few systems are for the moment found in this section of the Boston matrix.

The appearance of new systems design and technology means often that new things becomes possible to do and gives the users many advantages. There is no easy way to include new technology in older systems. Compromises and "spaghetti code" is often the result in those cases.No vendor have made two continuous rounds in the Boston matrix ..........

Characteristics for technology, vendor, support, functionality, liability, costs and installation base can be classified in following way:

Comments are given in meetings and INHOUSE presentation by Sren Janstl.

Yearlier comments

June 2003 update

In January 2002 I forecasted dramatic changes among ERP vendors. Some vendors have merged with competitors. PeopleSoft will acquire JD Edwards. Last week Oracle made a bid on PeopleSoft/JD Edwards. Their three products are all in the borderland between Star and Cash Cow in the Boston Matrix. There is a parallel with Baan and BPCS. The reasons for the merges have been to strengthen their market shares and market positions. That has happened and will be happening next two years. Instead the vendors should think of replacement products. To feed a new Baby product can do that. That is hard. It is lot easier and cheaper to buy a Baby.

Another phenomena are that large ERP vendors have turn their interest to target small and mid sized customers. A good example is SAP, which have launched SAP Businenss One. The product originates from Israel. Another example is Oracle, which has launched Oracle Small Business in United States, UK and Australia. The vendors have found their normal customer segment is replete and are looking for new customers in new segments. The market for ERP systems for Small and Middle Business, SMB, is expected to grow very fast the next coming years. It will be interesting to watch, if they can or are able to understand SMB requirements. Normally, new competitors will appear from underneath. Right now new competition will appear from the big dinosaurs like IBM, Microsoft, Oracle and SAP.

It is remarkable that few Baby products have entered the market lately. Many ERP systems in the Cash Cows phase are on the way to enter the Doggie phase. Many Baby products should show up right now to replace the Doggies. There is an enormous demand to integrate ERP systems with products like e-Commerce and Customer Relations Management systems. Those systems are often located on different technical platforms. Firewalls and other technical obstructions have made integration hard. Most leading ERP systems are not originally designed for collaborative systems environment. SAP has done an extensive and costly redesign. Another way is to start all over again to make a complete new system. Intentia has chosen that approach, which is even more costly.

New entrepreneurs are normally more cost effective compared to large well-established vendors, when to develop new ERP systems with new technology. I assume that Larry Ellison knew that, when he 1998 invested 40 million dollars into a new company called NetLedger. Year 2000 was NetLedger launching their new ERP system. It is completely web based and is targeting small businesses. More than 6,000 licenses are sold. 40 million US dollars will do for development and extensive market activities. The system is also marketed as Oracle Small Business Solutions. Large companies are more costly when developing new ERP systems. Intentia did spend more than 150 million US dollars just for development of Movex Collaborative. Marketing was not included. If Oracle had developed NetLedger, the bill had been even higher than Intentia’s development of their new system. Larry Ellison is a wise man.

Why not try the system on the web:
and notice the smell of future ERP systems

Ataio have similar technology as NetLedger, but are targeting middle-sized companies. They can become a competitor to Axapta, Dynamics, IBS, IFS, Intentia or Jeeves. Two entrepreneurs have started Ataio. They are behind NetLedger in the Boston matrix. When will the Ataio Company be for sale? XOR Connect is a child of the same age. There are probably more entrepreneurs around. They are working in the dark. The time is right. New demands with corresponding technology are available.

Scala have been through an admirable reconstruction of the company. They have cut all financial interests in resellers and have included a very attractive face-lift on the system. This has repositioned Scala backwards from Doggie to Cash Cow with iScala. They have strengthened their economy. The owners can choose if they will buy a competitor or sell to a competitor. Within 5 year Scala must replace their ERP products with a more modern platform.<---- End June 2003 comment. ------>

Comments from the January 2002 update

SAP AG is still the market leader for ERP systems. The company is the largest vendor of ERP systems. Their global market share is 12%. SAP have done a powerful redesign in order to integrate SAP R/3 with CRM, e-Business, SCM, APS and other new extended ERP applications. They are a leading actor of corporate portals by acquisition and usage of TopTier (See http://www.sapportals.com/ eller http://www.gartner.com/reprints/sap/99677.html)

Intentia have poorly sold their new Movex Collaboration so far. The official launch came at the end of 2001. Beta versions have however been around since 1999. Hopefully they have cured most of the teething troubles. Intentia have successfully established new channels for marketing in order to reach non IBM AS/400 clients. Perhaps Intentia will have their thaw soon ……

Most interesting is perhaps Axapta from Navision. Their ERP system is originally designed for an extended ERP environment with CRM and e-Business functionality. Other vendors than Intentia and Navision have accomplished that with extensive redesign and many compromises as result. The users seem to be satisfied, which is unusual for new ERP systems

Most of the actors are Cash Cows entering the Doggie stage. Some of them are already there. What is going to happen with them? And how can Intentia and Navision use these circumstances? No one has made two complete rounds in the matrix before.

Next update can mean dramatic changes.
Sren Janstl

Comments from the February 2000 update


JD Edwards is well suited to take over the leading position from SAP. OneWorld, from JD Edwards, is a reliable object oriented ERP system.

Intentias OO MOVEX can be a runner up. OO MOVEX has a better concepts than OneWorld has, but will the users accept it? They have to relieve all the child hood diseases. OO MOVEX has finally left the beta phase and is extensively widening its target market. They will not only support IBM OS/400 users.

Since last update GEAC/Smartstream and SAA/BPCS have not progressed in the Boston circle at all. They have hard to get into "Cash Cow" stage with their new products.

The pure Client server ERP systems have now entered a stable phase. They have finally become mature Stars. The vendors are not too many. Few have managed to develop C/S systems with true distributed processing,

Most of the actors are Cash Cows entering the Doggie stage. What is going to happen with them? And what is going to happen with SAP? No one has made two complete rounds in the matrix before.....

Next update can be a nightmare.

First act started in January 2002, when we realized the calm before the storm.

The ERP systems got closer to the “Doggie” phase as we described in the Boston matrix. In that article I described the high possibilities of important merges and acquisitions among the ERP vendors. That also did happen. 

The second act started in June 2003.ERP vendors looked for new target groups.

At that time their target group was not enough for their businesses. Everything seemed to be sold out. The customers demand was meet. There was no need for replacements. SAP did configure SAP R/3 to fit also middle sized companies. Different branches got pre set parameter configurations. SAP could suddenly reach smaller companies with reasonable efforts and lot cheaper costs for implementations, which was extremely important for middle sized companies.

SAP got a new market. 

Encouraged by this progress SAP looked at the small business market with SAP Business one. This system was acquired from an Israeli vendor and is marketed with a completely new channel strategy. SAP can now target all branches of all sizes with three products. All of them are positioned as “cash cows”. The original R/3 product has got an extensive 7 billion dollar redesign to fit today’s requirement of integration with 3:rd party products with interfaces like SOAP, web-services and SOA service oriented architecture. SAP can for many years keep same position as they had in the summer of 2003. Very much talks for continued high profit for SAP. SAP tries hard to get rid of the reputation of complex and expensive methods. Everything is done to make this true.

The third act starts now.

As all good theater plays it will end with sudden deaths for many of the vendors. The actors among the  “babies” have earlier been started up by entrepreneurs. Now suddenly have well-established vendors like Oracle with Netsuite and Fusion the lead. The same applies to Microsoft and Intentia, which also have been dominating among the “babies”. This is a new phenomenon. We can still notice some newcomers like Ataio (http://www.ataio.com) as babies. We do not now if Visma will fulfill their new development with Visma X. There are signs that Visma instead will be an ISV partner to Microsoft Business Solutions. That applies also for Epicor-Scala.

Movex Collaboration from Intentia has not progressed at all since the summer 2003. I believed in them very much during the first act. They earn a better destiny. Already 1995 they foresaw the demand of integrations. This was required with complex collaborations with e-commerce at a variety of platforms like Apache and Linux.It seems that the well-established big vendors are behind most of the new “babies”.

What happens with vendors, which are approaching the “doggie” phase? It is to late to develop a new “baby”. They really have only one option: Acquire a company, which have system, which now is a young “cash-cow”, “star” or a “baby”. But the Big Three, Microsoft, Oracle and SAP will all the time puff them behind.

This applies also for vendors, which are targeting small companies. That has always been a marketplace for local vendors. But not now.  Last two years, the Big Three have focused small businesses worldwide. This is another new phenomena. Suddenly you can see a big battle of ERP systems in Vrnamo, a small countryside village in Sweden, far away big cities. Two months ago, I recognized a large neon sign from ORACLE …. in Vrnamo!! The battlefield is set to conquer the small and medium sized Businesses – SMB. SMB is today the only growing market for ERP vendors.

My conclusion is that the ERP market is turning to become a mature market. Who have forgotten 1980’s, when we had 60 vendors of word processors in Sweden? 56 of them were domestic. Today we have only one to choose from. MS Word does not come from Sweden. Today we have 120 ERP systems in a small country like Sweden …..I hope for a large selection of ERP system. Is that that a reasonable hope? Have the Big Three underestimated the difficulties to globalize their ERP systems for SMB? Or will SOA change the market rules for ERP? Or will SOA become to complex for ERP applications?Denouement of the drama will be summarized at next update!

The fourth act.

Sren JanstlBusiness applications and ERP Systems mentioned in the Boston matrix (keywords): Scala Polaris, Prosit for Objectives, Ergosoft WIN, OO ASW San Francisco, OO Movex, BPCS, JD Edward's One World, Navision, IFS Applications, SmartStream, XOR Control, Jeeves, VISMA Business, Maconomy, Axapta, Agresso, Baan ERP, PeopleSoft, SAP R/3, Concorde XAL, Exact, Bravad, Orion, Prosit Open, Bravo, IM*ESS, Oracle Application, CROM Pro, adeEKO, Prosit Open, JD Edward's Classic, Devis and Guda/X.Characteristics mentioned:Baby
Technology: Hot and un-mature
Vendor: New vendor or established
Support: Improvised
Functionality: Basic
Liability: Childhood sickness
Costs: Low
Installed base: None/ few

Technology: Mature modern
Vendor: Growing or established
Support: Structured
Functionality: Many add on's and new possibilities
Liability: More and more stabile
Costs: Moderate
Installed base: Rapid growing

Technology: Face-lifts
Vendor: Established
Support: Bureaucratic
Functionality: New add hoc's
Liability: Stabile
Costs: High
Installed base: Large

Technology: Old
Functionality: Declining
Support: Passive without actions
Functionality: No development
Liability: Unstable
Costs: Unacceptable
Installed base: Declining


Comments are given in meetings and INHOUSE presentation by Sren Janstl.

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