The Business System Spectator

Vinnie Mirchandani brings up an interesting point: beyond the production industry, the major ERP vendors have a more hard time breaking into core operational functions. Jim recognized that legacy, typically custom-developed vertical applications, have been challenging to replace in america especially. You could develop that features again for cheaper custom. Just maintaining the legacy apps is even cheaper. Vinnie hints at a spot that’s not widely recognized.

In big companies, ERP–real ERP that forms the core transactional processing system for cross-functional business procedures of the organization–is still mainly a manufacturing industry phenomena. Outside of the production sector what you have is custom-developed systems, or commercial software for specific business functions, interfaced (at best) with the “horizontal” (cross-industry) modules (e.g. accounting, HR) of the major suppliers.

  • Mobile payment capacity for added convenience
  • Self-Employment Expenses
  • Worldwide Learn. 2011. Resources: Online Degree Completion Programs
  • Knit a scarf

So, whenever a major merchant speaks of experiencing a strong existence in healthcare, bank, or insurance, what they suggest is that they sell a lot of their accounting, HR, business cleverness, or CRM modules into that industry. What they aren’t doing is replacing all the industry-specific systems for those customers. Now, to be fair, Oracle can be an exception using sectors. In 2005, Oracle obtained I-flex, a supplier of core bank systems. That year Earlier, Oracle acquired Retek, a respected supplier of retail systems.

But still, it would be really, really interesting to discover how many of Oracle’s customers are operating all Oracle software, now three years later. I’m sure there are some, but I doubt there are many. The reason is that the manufacturing industry has already established over 30 years to figure out how cross-functional business functions should look within an included system.

Today it is uncommon to find a manufacturing company writing its materials planning or shop floor control systems. In a few very specialized niches Perhaps, but it’s rare. Not in bank, or insurance, or retail. Those sectors contain types of companies that continue steadily to run the core of their businesses with custom-developed software.

The business case for changing those systems–especially with those of a merchant that desires to charge 22% of the net license fee, each year, for maintenance (i.e. Oracle and now SAP). For HR Maybe, or financials, where I could justify the price in conditions of not being accountable for regulatory changes. But also for my primary systems? Again, for smaller companies, I believe packaged software makes a better business case for non-manufacturing industries.

Many have much less investment in legacy systems and have far fewer resources to develop or maintain custom systems. But also for large multi-national organizations in, say, bank, insurance, energy, transport, or resources, it’s hard for me to imagine them standardizing all their core operational systems on a single seller such as SAP or Oracle.