The past year has been a rough one for enterprise resource planning (ERP) vendors. On top of unfavorable perceptions of ERP and falling stock valuations in NASDAQ, ERP vendors have struggled to convince potential customers that they can deliver e-business functionality.

But despite all the negativity surrounding ERP, organizations are still looking for enterprise-wide, back-office solutions to be the foundation for their e-commerce initiatives. “The general trend is for vendors to continue spending a lot of energy selling e-business functionality into their install base,” said Joshua Greenbaum, principal at Enterprise Applications Consulting.

One of the vendors fighting to change its image as a “traditional ERP” player is SAP, according to Greenbaum. “The agreement with Commerce One was a major watershed for SAP in terms of getting into the e-business game in a very big way,” he said. “They have put a great deal of time, money, and personnel into SAPMarkets. SAP is definitely in the game.” (SAPMarkets is a U.S.-based subsidiary of SAP that manages the e-procurement and e-marketplace activities with Commerce One.)

Making strides in the midmarket
In addition to the e-business push, larger vendors are going to make strong overtures to midmarket customers that need to strengthen their infrastructure.

“What we are going to start to see is a larger penetration of ERP and e-business software into the midmarket. This is has been a major focus of ERP vendors for a number of years, but I think that 2001 is going to be a fluctuation point in the demand cycle,” said Greenbaum.

“Small to midsize companies, especially in manufacturing, are going to be forced by the demands of e-business to modernize the back office. This push is going to drive a great deal of demand in the vendor community.”

The future of ERP
If you are interested in additional speculation on how the ERP market will evolve in both the short and long term, check out the following article:

  • “What is the future of ERP?”
  • Analysts and industry observers sound off on the growth rate of the ERP market and how vendors are approaching the midmarket.

  • ”Are you ready for ERP II?”
  • Gartner research group director Bruce Bond outlines the next phase of ERP—ERP II—and what the leading vendors are doing to meet the demands of collaborative commerce. (TechRepublic is an independent subsidiary of Gartner, an IT consultancy based Stamford, CT.)

  • ”Discussion: If ERP is dead, is ERP II its successor?”
  • Find out how fellow TechRepublic readers responded to the idea of ERP II and the future of the ERP market.

  • ”ERP mission is critical, but not center stage”
  • ERP been a tour de force for many organizations, but as other segments of the enterprise application market fight for the spotlight, the role of ERP in a company’s application strategy is changing.

    ERP midmarket penetration

    Do you think that ERP vendors are providing applications that meet the needs of the midmarket? Drop us a note or post a comment in the discussion below.