Off-Brand ERP Vendors Seek VARsBy John Moore | Posted 2005-06-01 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
Software companies emerging from non-U.S. markets are targeting small and midsized customers with ERP software, and they're recruiting VARs to help them.Emerging software players seeking to penetrate the midmarket enterprise resource planning space are inking deals with resellers to make an initial dent.
3i Infotech Ltd., a maker of ERP software, last week announced a VAR deal with Infonetics Corp., a move that marks the software company's channel push in the North American market. 3i Infotech is based in India and has U.S. offices in New Jersey. 3i Infotech's Orion Enterprise ERP software targets process industries from food and beverage to pharmaceutical.
In May, Compiere, which markets an open-source ERP solution, unveiled plans to recruit 20 to 30 U.S. integrators and VARs this year. Like 3i Infotech, the company pursues midsized customers. Compiere found initial interest for its product in Europe and Latin America, but believes its reseller strategy will broaden its customer base in North America.
The company plans to pursue niche ERP consulting players, Vajpayee added. That strategy is in keeping with 3i Infotech's ERP approach, which targets individual segments within process manufacturing. The company offers a bakery business suite, for example. Accordingly, 3i Infotech will seek resellers within the various sub-industries within the process manufacturing.
Infonetics, a consulting and IT services firm in Shrewsbury, Mass., serves midmarket companies with a focus on process manufacturing sectors such as food and beverage and life sciences.
A Market Opening?
Some industry watchers believe that ERP vendor consolidation in the midmarket may wreak enough fear, uncertainty and doubt among customers to spur software defections. PeopleSoft's acquisition of J.D. Edwards (subsequently absorbed into Oracle Corp.) and Microsoft Corp.'s purchase of Great Plains and Solomon provide key examples of the trend.
The situation also befuddles service providers, according to Vajpayee. He said resellers "don't know who they belong to" in terms of software vendor allies. "This itself has created a significant opportunity for us," he said, adding that market conditions will help him recruit partners.
But will consolidation yield customer sales? David Saad, Infonetics' president, cautions against getting too caught up in the hype surrounding consolidation and a potential buying spree.
"You are always going to find when consolidation takes place a few companies that quickly get scared by what's going on and go align with a new vendor," Saad said. "In my experience, the majority of customers make a significant investment in whatever they have for a solution."
Accordingly, few are willing to quickly change ERP vendors. And those customers determined to move in a new direction "take their time to go through the evaluation process," Saad noted.
That said, Saad said he believes vendor turnover will take place and resellers have an opportunity to do business.
"I think that long term there is going to be switching going on in the market," he said. "I think many [companies] are going to go back in the marketplace and do a re-evaluation of options. We have an opportunity to pursue those opportunities."
ERP's TCO equation.
Saad said Infonetics' short-term focus is pursuing prospects that are "trying to get into a solution that affords them a better TCO [total cost of ownership] story." And while 3i Infotech's Orion is largely unknown in the United States, he believes the product's TCO will help open customer doors.
Orion consists of the core ERP capability and modules for supply chain management, customer relationship management and warehouse management. Rapid implementation time ranks among the main factors shrinking TCO, according to the executives.
Vajpayee said the product generally takes two to six months to install, compared with 18 months or longer for traditional ERP products. The company's process niche approach accounts for some of the schedule compression. A company seeking the bakery solution receives only the software functionality relevant to the subindustry.
In addition, 3i Infotech provides tools intended to speed the implementation process. The migration of legacy data into a new ERP system often impedes progress in ERP projects, Vajpayee said. The company's Integrator tool migrates legacy or external data into Orion's repository, eliminating "the burden of writing customized conversion routines," he added.
Other tools handle administration, customization and configuration chores.
The tool set, Saad said, "makes these implementations much more timely and thus less costly."
Outsourcing May Spark Strike in U.K.
A number of United Kingdom IT Web sites report that IT staffers working for the Bradford Council may strike in light of a pending outsourcing deal.
Calls for a strike followed the revelation that several positions would be cut following an outsourcing project. Workers represented by the Unison public service workers union began voting Tuesday on whether to strike, according to the Web sites.
Bradford is a city in north-central England.
Customers Selective in HR Outsourcing
The majority of companies are extremely reluctant to outsource human resources functions, according to the analysis of Watson Wyatt. Wyatt is a human-capital consulting firm that released results of a 135-company survey on May 31. A number of vendors and industry analysts consider human resources among the most active areas for business process outsourcing.
Nearly two-thirds of the respondents to Watson Wyatt's survey described their HR function as mostly or completely insourced. Twenty-nine percent said they have a hybrid approach of insourced and outsourced functions, while 7 percent reported being mostly outsourced.
The survey reveals reluctance to outsource certain HR functions with a single vendor. Of companies outsourcing multiple HR tasks, 8 percent said they have consolidated the administration of retirement plans, health and welfare benefits, and other HR activities with a single vendor.
However, most companies reported outsourcing transaction HR activities such as 401(k) administration (84 percent) and some aspects of pension administration (71 percent), according to Watson Wyatt.