Midtier ERP Vendors Can Capitalize On Oracle Antitrust Verdict

The ruling in the Oracle antitrust trial last week indicates a couple of things--one, that consolidation in the software market is alive and well, and two, that the door is open for midmarket enterprise-resource-planning vendors to increase their business.

Should Oracle ultimately be successful, the J.D. Edwards & Co. midmarket applications PeopleSoft Inc. acquired with the purchase of that company won't be as actively marketed as they are now, says Paul Hamerman, Forrester Research's VP of enterprise applications. Consequently, this will create more opportunities for other ERP vendors in the midmarket space.

The most successful ERP companies serving the midmarket are the ones with a very extensive indirect sales channel, such as Microsoft Business Solutions, Hamerman says. And the market has plenty of room to grow, says Satya Nadella, corporate VP of Microsoft Business Solutions Group, who says the global market opportunity for business applications in the small and midsize segments is expected to grow to $62.1 billion by 2008. Microsoft would like to have close to half that business, Nadella says. Microsoft is looking to move into a broader range of global markets and industries within the small- and midsize-business environment and within divisions of large organizations, she says.

"Right now there is no dominant player in the midmarket ERP, but we'll begin to see some healthy competition there," Hamerman points out. "We'll also see some consolidation as vendors try to acquire critical mass and as they try to acquire a more global presence."

Ross Systems Inc., a midtier ERP vendor that specializes in the food and beverage, life sciences, chemicals, metals, and natural-products industries, is focusing on growing its business outside the United States. "If you look at our No. 1 competitor, it's probably J.D. Edwards, and I think it's not only the PeopleSoft applications that are in question, but also J.D. Edwards' applications," says Rick Marquardt, President, North American operations and chief marketing officer of Ross Systems. "This creates opportunities for other vendors in the marketplace because a buyer will look to a much more-stable, less-confusing supplier."

In August, Ross Systems was acquired by Chinadotcom Corp., an integrated enterprise software and mobile applications company. With 25 distributors around the world, Ross Systems already has an international customer base in Latin America and Eastern Europe. "Our challenge is continuing to build our customer base in Eastern Europe, Asia Pacific, and China--that's something we can control," Marquardt says.

While established midmarket vendors have an advantage in their current distribution channels, Hamerman says some of the bigger names in ERP will develop or are developing channel capabilities to move down market.