Update of the ERP (Enterprise Resource Planning): the leaders of the pack

As large manufacturers of enterprise resource planning (ERP) solutions continue to expand into the supply chain management (SCM) market, the number of shippers turning to these mega vendors -suites for supply chain applications is maintained. According to Gartner’s Supply Chain Technology User Wants and Needs Study this year, one in four companies remain “largely committed” to a primary megasuite (ERP) vendor and strongly favor that vendor for SCM solutions.

Examining how mega-suite (ERP) vendors consider shipper preferences when procuring new supply chain applications, Gartner found that 42% are broadly engaged with a sole or primary mega-suite platform provider. Fifty-eight percent of enterprises prefer a heterogeneous or cutting-edge (no dominant vendor) application environment.

Digging deeper into the supply chain applications that companies have already deployed or are planning to deploy, Gartner found that mega-suite ERP vendors tend to dominate in the order management/customer service areas. (where 56% of companies prefer their ERPs); basic supply chain planning (42%); supply management such as procurement and procurement (41%); and warehouse management systems (38%).

At the other end of the spectrum, a higher percentage of shippers work with either top vendors or multiple vendors for applications such as network design and simulation (25%); global trade management and compliance (26%); visibility or event management (38%); warehouse control systems (23%); and transport management systems (25%).

Dwight Klappich, research vice president at Gartner, says that in the ERP industry, SAP, Oracle and Infor are the top three vendors shippers turn to. The supply chain “mega-suite” is dominated by JDA, Manhattan and High Jump. “These six vendors, between revenue and number of customers, dominate the market,” Klappich says. “That doesn’t mean other vendors can’t encroach on their market,” he continues, “but right now these six vendors have well over 10,000 customers. The rest of the handset market probably doesn’t have as many users. »

In this article, we explore the steady progress mega-suite vendors are making in the supply chain management solutions market, show how shippers are adopting these solutions, and predict what lies ahead for the rest of the industry. year and until 2020 for this sector of the software market.

pack leaders

A sector that grows either by developing its own applications or by acquiring the best companies specializing in specific solutions, ERP has been steadily making its way into the supply chain management space for years now. With shippers paying more attention than ever to their supply chains, logistics operations, and transportation networks, the demand for the technology that supports these operations has increased exponentially.

According to Klappich, Oracle and SAP have made a name for themselves in the transportation management systems (TMS) market, where JDA and Manhattan also have a strong presence. “These are the four leaders in the Gartner TMS Magic Quadrant,” he says. Scrolling down the list and looking beyond just TMS, Klappich says vendors like E2open (which in May acquired GTM supplier Amber Road), Mercury Gate, and BluJay are carving out their own piece of the SCM pie by focusing on medium-sized shippers.

“There is still a robust leading market, and especially on the supply chain planning (SCP) side of the equation,” says Klappich. This is because there remains a contingency of users who would prefer a dedicated solution over one that has been developed as part of a larger product portfolio. “As ERP vendors continue to develop their applications, I don’t think they’ve reached the point of offering best-in-class functionality that’s 100% on par with leading vendors in the industry,” says Klappich. , “but I also don’t think they necessarily need it to be successful.

Using SAP as an example, Klappich says the vendor’s extended warehouse management (EWM) has positioned it as one of the largest vendors in the entire WMS space. “EWM is certainly on par with Manhattan, HighJump and JDA in terms of customer base.” Add SAP’s legacy ERP user base to the mix and the vendor jumps to the front of the pack pretty quickly. “EWM may not be a best-of-breed,” he explains, “but it’s a contender.”

Expand reach

As he examines the growth of the ERP industry over the past few years, Clint Reiserresearch analyst at Boston ARC Advisory Group, indicates that the term “resource” itself has grown considerably since the first ERPs began selling their wares to users in large enterprises. “It’s not just about planning anymore; it’s also about execution,” says Reiser. “As a result, ERP vendors are becoming enterprise software platform vendors.”

Outside of the SCM space, for example, Reiser points to SAP’s 2014 acquisition of behavioral marketing company SeeWhy, maker of a cloud-based platform that analyzes shopper data in real time at from consumer actions on web, mobile and social media. A few years earlier, SAP had acquired Sybase, which produced software for managing and analyzing information in relational databases. “Both of these acquisitions were outside the scope of what would traditionally be considered an ERP,” says Reiser.

These and other strategic moves have propelled ERPs into a new realm of being able to offer comprehensive product suites that don’t always fit the traditional definition of an enterprise resource planning application. Supply chain management has not been immune to this trend, says Reiser, who expects the push to continue.

“ERPs will not only be marketed as an extension of their core legacy applications, but will also appeal to new customers,” says Reiser, who cites Oracle’s SCM Cloud as an example of how a large ERP thinks beyond its core customers. “These big vendors are not just growing with SCM, but they’re also growing in the enterprise software market as a whole.”

blur the lines

Bob Hood, a Capgemini principal and head of the group’s Move Domain practice, also sees the traditional lines between ERPs and top vendors blurring in the supply chain space, where he says companies like Oracle are “aggressively bringing cloud-based supply chain functionality to the cloud.”

These changes help open the door to small and medium-sized users who may not have invested in the vendor’s legacy ERP solution, but want to take advantage of its TMS capabilities. It used a similar approach on the WMS side when it bought cloud-based WMS provider LogFire in 2016.

“The blurring of lines between ERP and best-in-class continues,” says Hood, who points out Integrated Business Planning (IBP) from SAP and Ariba (for procurement) as two more examples of ERPs wanting to compete with the best supply chain solutions.

“ERPs are getting quite aggressive with the supply chain — and the marketplace in general — in the cloud, which is very different from the traditional, monolithic ‘nut soup’ type of ERP deployment,” says Hood. “ERPs still bring a ‘sequel’ to the table in terms of various modules and features, but they are now more focused and compete more like the best than they traditionally have.”

“ERPs always bring a ‘next’ to the table in terms of
the various modules and functionalities, but they are now more
points-driven and competitive more like best-of-breed
than they traditionally have.

—Bob Hood, Capgemini

Hood expects this momentum to continue, at least in part thanks to the high number of SAP S/4HANA migrations taking place as the vendor’s ERP platform nears its end-of-life (EOL) deadline. 2025 (at which point support for this platform will end and users will need to migrate to S/4HANA). “There’s a tremendous amount of energy going into these migrations right now,” says Hood. “As customers migrate to S/4HANA, there will be [increased] interest in supply chain functionality as part of these transitions.

As Oracle continues to expand its cloud offering, Hood expects the vendor to integrate features like finance and human resources into the equation, as well as new supply chain capabilities. “We’ll probably see the continued evolution toward a cloud suite,” he says, “with supply chain as a big part.”

Klappich also expects more traction for mega-suite providers investing in their apps and delivering new options that help shippers manage their end-to-end supply chains. “I haven’t seen any indication that they’re backing down on their investments or stopping adding new features to their platforms,” ​​says Klappich, who sees partnering with best-in-class as a good option. for ERPs who may not want to grow. their own features or buy new companies.

“We’re at a point where mega-sequels can do more partnering with third-party systems,” Klappich explains, “and take steps like bolting on Optricity for slotting rather than having to buy the technology or build themselves.”

To shippers investing in new SCM solutions this year, Klappich says those already using an ERP should likely “pre-screen” this vendor and explore any new supply chain offerings it might have brought under its umbrella. “If you’re in the middle of the plate in terms of functional requirements, your megasuite vendor might be a good choice,” says Klappich, “but integration shouldn’t be the dominant evaluation criteria. There are also advantages to considering the other options that exist on the market. »