What's Next for ERP in 2008
As customers demand more from Web 2.0 applications and software vendors scramble to meet these demands, we should expect to see more mergers. The assembling of such technologies as “instant messaging, Web conferencing, email, desk phone, mobile phone, blogs, and RSS feeds” has proven to be an overwhelming task. A way to provide such technologies without losing some of the functionality which makes these technologies so appealing is to merge or purchase smaller niche companies that have the new emerging technologies already in hand. Larry Barrett in his article in InternetNews.com reports on the most likely scenarios to come in 2008. The companies to watch will be those with established expertise in data management, business intelligence and analytics and security. The candidates include Informatica and i2 Technologies. Regarding this anticipated consolidation, Barrett cites HP’s CEO Mark Hurd:
“I think you'll see continued industry consolidation and see more and more vertical integration. It could accelerate in the next year or two if the right alignment of players were to occur ... I think potential M&A opportunities will rise to the top.”
And what about the big players in the ERP arena? Is a purchase of SAP a possibility? SAP’s co-founder and chief of its supervisory board left the door open a bit when he responded to such an occurrence by the likes of IBM, Microsoft, or Google stating, “If shareholders think that a combination, and not independence, is better, then it will happen.” Barrett points out some of the key factors involved in any proposed merger with the world’s largest business applications vendor:
- SAP’s market cap is $63 billion. Microsoft would be an expected suitor. It has the money. The antitrust issues would require Herculean efforts and thus make such a combination unlikely.
- Google could afford it, but the corporate cultures are so divergent that this is a limiting factor.
- IBM seems to be the one.
Barrett cites Peter Goldmacher, an analyst with Cowen & Co.
“As big as SAP is, they're becoming a niche vendor and I think Oracle is hurting them and hurting IBM. Both of these guys need each other. And there's not a better fit. You'd have the No. 1 applications company and No. 2 database company competing against Oracle, which is No. 2 in applications and No. 1 in database.”
Does anyone really think that Oracle’s Larry Ellison will just sit idle and watch this all happen? To read an interesting article and get a sneak peek at what other types of companies have caught the eye of Venture Capitalists as well as the large enterprise software companies check out Larry Barrett’s article in InternetNews.com.
