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How midsize ERP vendors fend off newcomers

By Staff -- Manufacturing Business Technology, 9/1/2005 12:00:00 AM

Cambridge, Mass.-based analyst firm Forrester Research says the competing styles of traditional midsize ERP vendors fall into three camps:

  1. Organic: Within this group, opportunities exist for vendors to develop strong channel strategies that shift sales &marketing resources to refining and improving products. Examples include Glovia International, IFS, Intentia, and QAD, assuming these companies have the economies of scale required to compete.

  2. Aggregator: This group concentrates on acquiring competitors, a strategy that focuses on assets already in place. Examples include Geac and SSA Global, whose primary goals are financial benefits like back-office economies of scale, maintenance revenues, and install-base retention.

  3. Assimilator: This group, which includes Infor and Lawson Software, is comprised of companies with acquisition strategies aimed at reduced time-to-market, improved domain expertise, and expanded functionality. This particular growth strategy brings with it the disadvantages of disruption in the product-development cycle, and reduced economies of scale.

While Forrester says all three strategies are in play, midsize vendors that focus on acquiring and integrating other independent software vendors (ISVs) could see more long-term success because they will be able to offer their customers viable alternatives that are rich in functionality, yet match the large ISVs' claims for low total cost of solution ownership. Small and midsize businesses will benefit from expanded product footprints, vertical-focused solutions, and user-centric customer service.

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