I'm sure it still happens, but I can't imagine a greenfield situation where a company would turn to Oracle or SAP for a full-blown, on-premises ERP system. Who would want to suffer the disruption, lock-in, and expense?
Yet the big money still seems to wind up in those two companies' pockets, much of it traceable to longtime customers neck deep in legacy software licensing and maintenance fees. According to the IDC number for 2012, Oracle took in $28 billion last year and SAP netted $17 billion. The No. 3 player in enterprise application software, Infor, took in less than $3 billion.
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As CEO of Infor, Charles Phillips is attempting to break the Oracle-SAP duopoly. For the past two and a half years, Philips, after leaving his post as co-president of Oracle, has performed what he calls a "a complete reboot" of Infor. "We changed the strategy, we changed the management team ... we changed the focus from building scale to innovation and products ... and then changed all the key assumptions on what architecture we would use." In the process, Infor has hired 800 new developers and launched 300 new products.
But what makes Phillips believe his much larger rivals are vulnerable? For one thing, says Phillips, Oracle and SAP have made many acquisitions of products, but "they don't have an integration strategy because they don't view their job as integrating those products in a cohesive way." By contrast, Infor has come up with its own method of "loosely coupled" integration that works among Infor's products as well as with third-party applications.
Another edge, says Phillips, is in vertical expertise. "For most of our competitors, the model was build a product once and sell it to all industries -- write it once and sell many. We don't do that. We really write it once for an industry. We're willing to have focused, last-mile features for a particular industry that may not make sense for other people. We can implement more quickly and we understand your industry." He cites health care as one of Infor's hottest vertical areas.
Finally, Phillips points to poor usability as a vulnerability. "I don't think they quite recognize that the next generation of users of these applications won't accept user experience and interfaces that came from the '80s and '90s -- these kinds of form-based, almost client-server looking applications that haven't changed materially in a long, long time. They're still horrible-looking." By contrast, Infor has made a major investment in improving the look and feel of its applications.
Couple that with the fact that most Infor applications are available as SaaS applications, so users can readily get demos and see the difference for themselves: "For the bulk of the portfolio, the 80 percent that we focus on, you can deploy multitenant applications [in the cloud]. But that same multitenant app you can run on premise single-tenant."
Infor's flexible deployment model, enhanced integration, vertical expertise, and UI improvements may well add up to a compelling alternative. Of course, Infor is not the only alternative in town -- Workday comes to mind as an up-and-coming cloud ERP play, while the Salesforce ecosystem is growing in interesting ways, offering core financials from third parties such as FinancialForce. And of course NetSuite has firmly established itself as a cloud ERP solution for small businesses. The problem for all these contenders is combatting the lock-in that incumbent enterprise software vendors have established over many years.
For some customers, those legacy ERP systems are as difficult to dislodge as mainframes -- the switching costs are simply too high, not simply in ripping and replacing software, but in the Herculean task of moving business logic built up over many, many years to a new platform. Nimbler customers will adopt more agile solutions such as those offered by Infor, but as with most aspects of enterprise technology, change is always slower than you think it will be.
This article, "Can Infor upset the Oracle-SAP duopoly?," originally appeared at InfoWorld.com. Read more of Eric Knorr's Modernizing IT blog. And for the latest business technology news, follow InfoWorld on Twitter.