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What Will You Do After The Fire?
You're going to think we're crazy. But alas, great sucess takes the opposite point of view. Read it and heed it.  |
Is Your ERP a Mothership or Just a Satellite?
publication date: Jul 12, 2011
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author/source: Neil Gillespie & Allen Ray
ERP Software Company ConsolidationsIf
you noticed, there have been quite a few software consolidations that
have taken place over the years, and for good reason. The first few were
because the distribution industry consolidated for the most part,
yielding fewer 'check writers'. Then the industry took a swan dive with
the recession, hit bottom and didn't rise very much from there. Capital
investment wasn't the number one thing on distributor's minds, so more
consolidation among business systems could be expected. That's exactly what happened. Epicor's private equity owner APAX recently bought Activant, which had previously acquired Eclipse, Prophet 21, Array (TSS), Prelude and Speedware. Activant also has Vista Information Services (which distributors and manufacturers use) and is the platform / partner for IDEA. APAX plans to merge the companies into four units, distribution being one of these. Infor just completed purchasing Lawson. And these are just a couple of examples. So,
now what? What happens when an ERP company buys others? Well they want a
return on their investment, of course. The way to get that return is to
minimize the investment in multiple platforms necessary to keep the
profitable part of the customer base. They have issues, though.
Distributors tend to hang on to their older systems and don't migrate as
quickly as the acquirers would like. The
acquirers do like any stock portfolio manager would do. They look at
products like stock and calculate the return they can get. Then they
pick the winners and invest in those. And they look for products that
cover multiple industries, unless an industry is very large and
lucrative. The other products are slowly taken off life support.
Sometimes not so slowly, like when we're still in a very slow capital
investment environment and they can't rely on new installation income as
much to hide the poor performers. What's Number One On Your Criteria List? (and 2 and 3 and 4....)Having
kicked the tires on a few business systems, there are some favorite
criteria for choosing ERP systems in different situations. But the
probable fate of your system in the ERP maker's portfolio of platforms
has risen to number one on the list. And it should rise to number one in
your criteria as in this "new" economy. Here's a baker's dozen of other difference makers you might consider....
Of course, there are more that can be added to the list. But do you have the above considerations on your list? ERP Lifespan Most
of all...you really need to determine what the lifespan of your current
ERP system is. Will it be supported? If so, how long? How fast will you
be able to get support? ("All support technicians are busy, your
approximate holding time will be 45 minutes...give or take an hour").
Will they invest in it? What is their deal to migrate you to the
"Mothership" package? This
is business,folks. When you have branches that don't deliver or people
that don't deliver, you look to serve the customers some other way than
through the branch or person that's not making it. ERP
product lines aren't all that different. Whatever is not delivering to
the bottom line has to be consolidated or cost reduced. Plus if you
slowly draw down the resources devoted to a package (i.e. additional
programming investments and installed base support), maybe the buffalo
herd won't notice as much and will stick around so you can migrate them
over time to your Mothership. The moral of the story? Get on a Mothership. Start compiling your criteria now if you're not already on one. And
here's another tip. Find out what percentage of the parent company's
sales your package is. And if you can get it, the percentage of the
total INCOME (revenue) for the company, then you will know where you
stand. Is it the Mothership or a small satellite?
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