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  • Cloud and SaaS ERP Surges, Along with Tier II Providers, Panorama Says

    February 5, 2013 Alex Woodie

    We are constantly bombarded with hype about the cloud and software as a service (SaaS) business model, but all too often, the data backing up the tall claims is slim. But according to a recent study by Panorama Consulting Solutions, the market share of cloud- and SaaS-based ERP systems grew from 6 percent in 2011 to 18 percent in 2012, which spells trouble for traditional, tier-one ERP providers.

    Panorama is an ERP consulting company that does market research, training, and conferences as well. The Denver, Colorado-based company was founded in 2005, and has been putting out its annual ERP report since 2008. The 2012 ERP Report, released in October, is based on surveys of 246 participants representing organizations that implemented ERP solutions within the last year.

    The three-fold increase in cloud and SaaS is one of a number of observations on the ERP market that Panorama made in its report. In addition to moving away from on-premise ERP implementations, more organizations are adopting solutions from tier II and tier III ERP providers.

    This move away from single, integrated tier-one solutions to best-of-breed solutions is part of a ERP cycle that has its roots in the Y2K IT spending splurge, Panorama president and co-founder Eric Kimberling writes in his blog. “… [F]or many companies that invested heavily in single ERP systems to address Y2K cycles 12 and 13 years ago, the pendulum is swinging back toward best of breed and niche solutions,” he writes in his latest piece, “Anarchy in Enterprise Software: The Revolution of Tier III ERP Vendors.”

    Panorama categorizes a handful of IBM i software vendors as tier II and tier III vendors. (Only three vendors are tier I: Microsoft Dynamics, Oracle, and SAP). IBM i ERP software vendors on Panorama’s tier II list include Infor, IBS, and HarrisData; those on its tier III list include VAI, Friedman, JDA Software Group, and Solarsoft (now part of Epicor).

    Kimberling sees tier-two and tier-three vendors chipping away at the tier-one vendors, and using the cloud- and SaaS-based delivery methods to do it. (Tier-one ERP vendors are defending this assault by investing in cloud and SaaS models themselves, he says.)

    Customers will adopt the best-of-breed approach for a variety of reasons, but the most common are the lower costs and lower risks associated with best of breed. “More companies are looking for ways to spoon-feed their ERP software purchases and implementations to their organizations,” he writes. “This incremental approach can be conducive to best of breed solutions rather than full-blown and tightly integrated ERP systems that don’t work as well in bits and pieces.”

    It is a creed of Panorama’s that ERP software should be adapted to fit the customer’s specific business needs, and not the other way around. To that end, Panorama reports that 70 percent of its survey participants reported making minor to moderate modifications. This may explain some of time and cost overruns that ERP projects typically entail. With a cost of $10.4 million, the average ERP implementation is $2 million over budget, and more than 50 percent of ERP projects are late (anywhere from a couple of days to taking 50 percent longer than anticipated).

    “CFOs, CIOs and COOs seem to be particularly risk-averse at this moment in time, so the relatively low-risk appeal of Tier II and Tier III ERP systems can appeal to this mindset,” Kimberling says. Tier II and Tier III are not without risk, but Kimberling notes that “these smaller, niche solutions provide a viable alternative for many educated organizations that have the insight to consider their full portfolio of options.”

    For more information or to access the 2012 ERP Report, see Panorama’s website at www.panorama-consulting.com.



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    Do the Math When Looking at IBM i Hosting for Cost Savings

    COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

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    However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

    When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

    CONTINUE READING ARTICLE

    Please visit ucgtechnologies.com/IBM-POWER9-systems for more information.

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Volume 13, Number 4 -- February 5, 2013
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