Midtier ERP Customers Command Attention - InformationWeek

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4/26/2004
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Midtier ERP Customers Command Attention

Vendors big and small are vying for their share of the lucrative market.

When Michael Angelo's gourmet foods went shopping to replace its inadequate enterprise software, it turned to Ross Systems Inc., a midtier enterprise-resource-planning vendor that focuses on food manufacturers and other process-intensive operations.

The maker of specialty frozen and refrigerated products such as lasagna and calzones has had to keep a tight rein on IT spending, and the top ERP vendors--namely Oracle, PeopleSoft, and SAP--were just too expensive. "They were priced far beyond what we could spend on application software to run our business," says Michael Angelo's CIO Ron Cantrell.

Michael Angelo's CIO Ron Cantrell

The top ERP vendors' products were too costly, Cantrell says.
The decision to implement Ross Systems' iRenaissance ERP software has helped cut to 90 days or less the time it takes to bring new products to market--a process that used to take as long as six months.

Michael Angelo's previous enterprise software operated in batch communications, which wasn't conducive to the company's just-in-time production: Freshly made ingredients are received and products are cooked, packaged, and shipped to customers within 24 hours.

The iRenaissance implementation has been such a success that Michael Angelo's is planning an upgrade to the latest version of the software so it can take advantage of new modules such as warehouse-management, demand-planning, and shop-floor control systems.

Small and midsize companies, which generally include those ranging from $50 million to $500 million in annual revenue, represent the greatest growth for ERP companies. "It's the largest opportunity in the market today," says Mike Dominy, senior analyst at the Yankee Group.

The small and midsize market has caught the attention of Microsoft, Oracle, PeopleSoft, and SAP, which are all increasing their efforts to provide modular, easy-to-use, and vertically focused software. "We're having a convergence where the midmarket is getting squeezed hard," says Dwight Klappich, an analyst at Meta Group.

Midtier ERP providers are pushing back. Lawson Software Inc. will kick off a companywide strategy at its user conference this week aimed at giving customers top-quality software that's easier to install and maintain. Jay Coughlan, Lawson's president and CEO, says the customer-centric focus will enable Lawson to outperform the rest of the ERP pack. "Companies aren't getting out of their software what they expected, their implementations take more dollars than what they bargained for, they're being hammered by outdated pricing models, forced to upgrade maintenance contracts without getting value, and in some cases have functionality sitting on the shelf," Coughlan says.

Lawson will preview a new version of its ERP suite, which the company says will come with a lot of prepackaged components. Even the installation manual will be easier on customers: Instead of the current 300 pages, the manual accompanying the new software will be only 30 pages. The suite is slated to be available by year's end.

Lawson also will showcase its enterprise-performance-management suite, including new budgeting, planning, and reporting software, as well as several new apps for the health-care and retail markets.

Staying focused on specific industries is one way midtier ERP vendors can gain ground. Ross Systems' new-license revenue has grown by about 50% quarter over quarter, says Scot McLeod, VP of marketing for Ross Systems. "It's a great time to be a specialist provider," he says.

Ross Systems' process-manufacturing expertise played a big role in Michael Angelo's choice. "In our business, we have a lot of byproducts and processes," Cantrell says. "We'll make a huge pot of sauce, and we may use that sauce on 40 different products. Ross Systems' apps allow us to control that very well."

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