Suddenly, SAP AG and other top enterprise resource planning (ERP) vendors are deciding that they might not be able to develop complete integrated suites of business applications on their own after all.
Faced with stiff competition in a variety of new application areas, such as customer relationship management (CRM) and e-commerce, SAP and most of its ERP rivals are now looking for a little help from other software vendors.
For example, industry sources said last week that SAP is close to finalising a deal to resell call center management software developed by Nortel Networks' San Jose-based Clarify division. That would be a major change from SAP's usual insistence on writing its own applications.
But it would only be the latest in a flurry of similar announcements made by other ERP vendors such as Peoplesoft, J.D. Edwards & Co.and Lawson Software.
Meanwhile, Netherlands-based Baan said last week that it's creating a separate CRM subsidiary. Company officials said the move sets the stage for a possible spin-off of that operation - just three years after Baan bought its way into the CRM business by acquiring Aurum Software.
For some ERP users, the promise of a seamlessly integrated set of applications developed by a single vendor is a powerful magnet because it would free them from the need to integrate different products.
But Keith Bearden, CIO at dental equipment maker A-dec, said the company has already given up on the idea of getting everything it needs from Baan.
More Than One Option
Baan's CRM software is too expensive for A-dec, Bearden said. And a product-data management application developed by the vendor was deemed too limited in functionality for a project that is currently on hold, he added.
Lockheed Martin Corp. in Bethesda, Maryland, uses SAP R/3 at several of its 17 business units and expects to eventually install the ERP system almost everywhere. The aerospace and defense manufacturer has also bought SAP's new data warehousing and supply-chain planning applications.
But Dick Beckman, an ERP program manager at Lockheed Martin, said there's no corporate edict to use SAP's applications. The business units make their own decisions, which results in a mix of applications at the company.
"From an implementation point of view, in an ideal world, everyone always thinks a one-vendor approach is the best way to go," Beckman said. "But of course, reality turns out to be something else."
And with more specialised software vendors enjoying big head starts in CRM and other areas, ERP vendors are starting to realize that they don't have time to build everything themselves, said Bruce Richardson, an analyst at AMR Research Inc. in Boston.
"By the time they try to get something developed, the market for it comes and goes," Richardson said. "There are too many other legitimate choices [for users]."