Consolidation of vendors makes high risk for middle and small enterprises
1. Consolidated products many times get lost in the mix with the larger vendors multi-product menu of product offerings.
2. Focus diminishes as the Consolidator spreads its resources across many products creating uncertain support and product direction.
3. End of life cycle accelerates for many of the consolidated software products leaving the business consumer in an unclear and potentially costly position.
4. Support of an acquired product can become less effective, as consolidation generally includes staff reductions in product support and related help desk areas.
The Niche Vendors
Companies requiring specific industry functional capabilities and/or who desire a closer vendor relationship including influence on product direction may be candidates for what a Niche vendor delivers best. These vendors although generally smaller in staffing, focus 360° of their efforts on providing strong market and product expertise. The results produce a high level of customer interaction, industry specific functionality, responsiveness, product influence and access to senior management.
In a consolidating ERP market, Niche vendors can end up winners because of the following reasons:
1. Consolidation means fewer competitors – An example of reduced competitive ERP solutions due to consolidation is MAPICS. Five years ago they offered three ERP solutions; XA, Point.Man and Frontstep. Today, they are no longer around, having been acquired by INFOR in 2005. Today, two of the three former MAPICS ERP products have virtually
disappeared from the ERP software market. This is common when consolidation takes place, many products get retired.
2. Walk the Talk – Because Niche ERP software companies focus on a single market they are specialists. All staff members are immersed in a single business type and understand in detail business issues and solutions associated with that specific market.
3. Business health specialist – Similar to personal healthcare, when looking to correct health issue you go to a specialist. They understand your specific area of need and offer the expertise. Why would you not do the same with your business? That’s where Niche vendors offer great advantage.
4. Less software overhead means optimized methods – ERP products are very complicated business solutions which integrate all aspects of a business. ERP software that is focused does not require features intended for another type of business. It is therefore optimized by design for its target market and is developed
efficiently with deeper yet specific market functions. Software set-up during
implementation is already streamlined due to
its inherent clean market specific business
logic.
5. Market specific focus – As an ERP business consumer, companies want to see the product remain in tune with their direction and trends in their industry. Customers of a Niche vendor are generally part of a smaller user community and one that collectively has common interests. Those common interests provide much of the R&D input insuring appropriate
product direction. For some customers it is also important to have access to the vendor’s senior management which in a Niche market organization is usually very accessible at the most senior levels
Consolidation of vendors makes high risk for middle and small enterprises
