Top Trends in ERP 2010 – Part IV

Continuation from Top Trends in ERP for 2010 Part III 9.            SaaS is probably the most significant non-ERP trend to look forward to. There isn’t much growth for ERP in regards to cloud computing but there is anticipated growth in application hosting. In fact, application hosting for ERP growth was almost 100% last year, and I anticipate this trend to continue. In fact, application hosting has shown growth in every functional area and SaaS in particular has shown tremendous growth in HCM and CRM. What is also surprising is that on-premise deployment of software for any given functional area does not exceed 80% which means the majority of firms are using some form of SaaS or Application hosting to deploy one or more of their business functions. The chart below provides the relative percentages for each category. [1]
ERP HCM CRM Spend Mgmt/SRM PLM Order Mgmt SCM
On-Premise 76% 61% 74% 60% 65% 73% 68%
SaaS 3% 13% 13% 9% 5% 3% 4%
ApplicationHosting 11% 15% 13% 15% 13% 14% 18%
10.          Micro-Verticalization will be delivered by channel partners. In the future we will see increased specialization amongst channel partners providing specific services to a sub-set of a major vertical; this process is known as micro-verticalization. For example, there are traditionally eight major verticals: Manufacturing, Business Services, Utilities & Telecom, Transportation, Public Sector, Retail & Wholesale, Media, Entertainment & Leisure, and Finance & Insurance. Now when we look at the Transportation vertical (NAICS code 48) closer we see that it consists of 41 micro-verticals such as Scheduled passenger air transportation, Short line Railroads, Taxi service, Freight transportation, etc. Channel partners deliver micro-vertical value by addressing the needs of each of these sub-verticals. For example, if we focus on freight transportation partners, we’ll have the option of developing services and solutions for the following sub-verticals: Line-haul railroads, Deep sea freight transportation, General freight trucking – local, Scheduled freight air transportation, etc. This process will essentially allow partners to build an expertise in a vertical that exists within a larger vertical. By focusing on micro-verticals and sub-verticals many channel partners can maximize revenues by focusing on a niche portion of the market wherever market segmentation may exist. The specialization that firms offer when they focus on this micro-vertical approach has been increasing over time as the industry continues to consolidate. As software vendors become all things to everybody customers need the specialization that channel partners bring in order to implement the solutions to the necessary degree of specificity that customers require to meet their business needs. This is one trend that I definitely see continuing into the future.

Conclusion

First and foremost I want to thank Tim Harmon, Senior Analyst for Forrester Research, for putting this list together and allowing us to comment on it. When I originally heard Tim discuss these trends I felt that the subject was extremely fascinating and worthy of discussion. Consequently, I wanted to share these with you, and I hope that you enjoyed learning about the Top Trends in ERP for 2010 as much as I did. Some of these trends you may, or may not, agree with but it does give you something to think about and in the words of Arsenio Hall make you go—Hmmmph! Take care and God Speed!
Entire contents Forrester Research 2009.