The evaluation emphasizes the importance of flexibility in both simple and complex licensing models as business needs change.
Posted Nov 14, 2005
Forrester has released its latest evaluation of the top ERP vendors, examining how they address customers' desires for them to provide licenses that incorporate more flexibility and better software life cycle support. "The Forrester Wave: Enterprise Applications Software Licensing, Q4 2005" shows Oracle leads the pack in accommodating business complexity, while SAP takes the top spot when it comes to delivering simplified license metrics and flexible licensing policies. "Vendors are trying to get a better hold on actual usage to become more transparent with users. They want to show the value of their software, and this changing license environment allows them to do so," says Ray Wang, a senior analyst with Forrester Research and author of the report.
The wave evaluates nine vendors, all of which have core ERP suites and significant market presence, and have revenues above $200 million. In its evaluation of complex offerings, Forrester assessed the maximum number of options each vendor provided in license metrics and upfront life cycle policies. Those with the most options fared best. Oracle is the winner in this other category. Epicor Software, IFS, Microsoft Business Solutions (MBS), QAD, SAP, and SSA Global are the other leaders, while Intentia and Lawson are named strong performers.
Upfront licensing policies and a wide choice of licensing metrics for the E-Business Suite factor into Oracle's strong showing, according to Wang. But this top spot might not last.
"Despite the apparent lead Oracle's integration of the licensing strategies of Siebel Systems, PeopleSoft, and other acquisitions, as well as the way in which it models business processes, will remain its greatest challenge," Wang says. "If they don't reconcile this in a way that's consistent, it creates confusion in the client base."
Epicor Software and QAD were the smallest vendors evaluated, but they provided competitive midmarket options. "Both have succeeded in accommodating business complexity while providing upfront, generous licensing policies," Wang says. Intentia and Lawson performed well in license metrics, but lagged in software life cycle ownership.
When evaluating vendors that deliver simplicity with flexibility, preference was given those who had two or fewer user-based metrics, but the ones with a maximum number of upfront software life cycle policies performed best. SAP has a slight lead in this market. "Customers want to prepay, they want fixed costs," Wang says. "SAP has been focused on creating equity and consistency in its licensing models across the globe. They've got simple and eloquent models."
SAP and Epicor are tied when it comes to current offering and strategy, but Epicor, MBS, and Oracle all received competitive placement in the offerings category, with MBS and Oracle with the top strategy scores. Epicor and MBS tied for second place, but Oracle came in a close third. "Companies stand to benefit from this level of competition in the market," Wang says, "especially when MBS begins to introduce role-based pricing in the Dynamics product line." QAD scored the lowest in terms of its current offering, because of its wide range of user-based models, which hampered it from leveraging its strengths in other areas. Intentia lagged on delivering and financing options, usage tiering, and overall strategy, according to the report.
"Vendors need to understand companies are looking for all-you-ca-eat models and they aren't getting it. People don't want to deal with the complexity of compliance," Wang says. "Many ERP systems were initially installed pre-Y2K and are now coming up on replacement. Enterprises have learned harsh lessons, as they have paid for maintenance of unused licenses, suffered undefined maintenance fee increases, and lost functionality credit for future releases. As companies begin their vendor selection processes, they do not want to repeat the same mistakes."
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