Large firms buy ERP software in pick-and-mix way

Despite widespread perceptions and initial stated objectives, not one of the 10 multinational companies interviewed by business software analyst, Dennis Keeling, had introduced a huge enterprise wall-to-wall ERP system provided by only one key vendor. Eight of those questioned were SAP users.

Keeling, who is also chief executive of the Business Application Software Developers' Assocation (Basda), explained: "ERP systems are fine if you're in Germany, the US or UK, but if you have sales offices in Asia, for example, the costs associated with configuring a centralised server and catering to different fiscal requirements are very high."

Tier two systems have also become popular in branch or sales offices because their needs are often less complex than those of large centralised head offices for which tier one offerings have been optimised.

The complexity required here means that implementation fees for tier one applications are much higher, with an average being between E15,000 and E30,000 compared with between E2,000 and E8,000 for tier two packages. Vendors in this space include Scala, Systems Union and Microsoft Navision and Great Plains.

"Licences are only generally about 15 per cent of the total cost, so the real problem is in the implementation. Some tier one players are aware of the issue, which is why we've seen price cuts and massive discounting already, but that's mainly the direct players because they want to be in and out of accounts as soon as possible," Keeling said.

This tends not to be the case with tier one vendors that sell their applications by means of the third party channel, however, he added.