There are some market share estimations by analysts (Pang 2007) that give us a very raw figure on the developments of the ERP or Enterprise Systems market either globally or in certain countries. The assumptions and fundamental calculations of the market share investigations are seldom visible for the public. For countries with a broad range of enterprise system vendors like Germany where more than 600 enterprise system vendors are registered insufficient there is to do data research in that area although text-based case studies are broadly available like the honorable project "Experience base" (Woelfle 2009). However, a detailed and industry-specific analysis of reasons for new enterprise systems answering the following questions is missing:
- Movements of market shares from systems with an old technological base to newer ones?
- Trends in scrapping of old systems?
- Movements to a new system from the same vendor and so on.
The main goal of the ongoing project "Enterprise Systems Knowledge" is to attack these questions in a new manner.
Enterprise system, market share, selection reasons.
Description of the project
The above mentioned reasons were enough to start an ongoing project called Enterprise Systems Knowledge. The scope of the project is to cover all ERP projects in Germany, Austria and Switzerland in every industry and every year in a systematic manner. Figure 1 shows what information is stored for every project.
To ensure a high quality in relationhsip to the goals of the project a process of entering and validating data about ERP projects was established (Fig. 2).
Information about enterprise systems project come from very different sources. The project leaders get a lot of press releases from media offices or software vendors where new contracts are mentioned. A web search shows other information about new ERP projects, e. g. on project web sites or in newsletters from independent sources.
On the web sites of some vendors all new projects and all successfully completed projects are available in different degrees of detail. The project has cooperations with some of the vendors that send all information about new projects to the project organization. Other information are available from selection platforms that are often used in Germany, Austria and Switzerland to decide basing on functionality which enterprise system should be used.
It may be stated that is not a very useful way to select the new enterprise system because other important factors like the use-cost-ratio or the experience of the vendor in a certain industry are not covered. On the other hand the reference lists on these selection platforms are an important source of project information. Another big source of information about new projects are trade journals which cover short messages about new projects in every issue. All information is stored first-hand in a raw manner and then thoroughly validated depending from the initial quality of the information.
So in most of the cases either the vendor, the implementation partner, or the project leader of the user's company is called and interviewed about the terms of his project. After finishing and completing the validation the data can be used for analysis in the area of reasons for system selection, market shares, market volumes and observations of the behavior of certain vendors.
First results from actual work
Although a complete coverage of the central European Enterprise systems market has not been reached today, some insights can be drawn from the projects already collected and mostly validated until now. The data base covers 116 enterprise system vendors and 384 projects in different industries mainly in manufacturing (see Fig. 3).
A big number of ERP projects in manufacturing can be explained with the very big number of different vendors in that area and with the strength of that branch in the German, Austrian and Swiss economy. The project leaders expect that with more projects in the data base the other important industries like retail and services will gain in numbers and importance.
It is estimated that there are more than 500 projects selecting new enterprise systems in the investigated European region every year.
Very interesting for the research, for consulting and for the enterprise system vendors themselves are the reasons why a company needs a new system and decides to establish a certain system (Fig. 5, basing on 212 projects). The functionality of the system is the main reason to choose a certain system. This can be seen together with the favorite use of web-based selection platforms which have a market share of 30 - 40 % of all selection decisions made in Central Europe.
The above mentioned critics on selection platforms are enhanced looking at the 2nd most important reason for choosing a new system. Flexibility is a quality of a system that can not be proven by functionality .
Also the number 3 reason for selecting a new system "transparency" is not easily to be proven by a computerized selection platform but depends strongly from the degree of covering the industry-specific business as processes and not as an independent set of functionalities.
Beside the twelve mentioned reasons are a lot of other reasons to choose a certain system that occur only in less than 10 % of the selection processes. Therefore they are not shown in the figure.
Solutions to be replaced
Enterprise systems have a long history starting in the 1950's with the first wage management programs continuing in the 1980's with MRP and coming to full bloom in the 1990's with the rise of the SAP/R3 enterprise system. Therefore it is very interesting which solutions the companies that decide to invest in a new enterprise system have before the new system takes places. From the investigated 100 projects nearly one quarter has an individual solution before.
11 of the 104 projects are using Excel as a spread sheet calculation and very unstructured delivery of information through the company before implementing a new enterprise system. A surprise is that nearly 10 % of the investigated projects have taken the decision to scrap down SAP and to go to another enterprise system. This can be brought into context with the high complexity of SAP as an enterprise system that is only useful in bigger companies.
Sometimes special branches of a company are sold and are then able to look for a new system without having to be urged to use the former trust's system.
Outlook and further research
The article described the initial setup and first insights into the new project Enterprise Systems Knowledge. The next tasks are to fill the system with at least 650 more projects for the next couple of years and to be able to answer questions like the following:
· Are there different reasons to choose a new enterprise system in certain industries?
· Are there significant information that small companies choose small vendors?
And in the year 2009, the project leaders of the ESK project want to able to calculate for the first time reliable market shares for the ERP market in Germany, Austria and Switzerland.
1. Mohamed, S. (2009) Probing the Gaps between ERP Education and ERP Implementation Success Factors, AIS Transactions on Enterprise Systems, 1, 1, 8-14
2. Pang, C. (2007) Dataquest Insight: ERP Software Market Share Analysis, Worldwide. http://www.gartner.com/DisplayDocument?id=735723 (last accessed: Feb 20. 2009)
3. Sumner, M. (2005). Enterprise Resource Planning. Pearson Education, Upper Saddle River, NJ
4. Woelfle. R. (2009) Expertise relating to implemented e-business projects. http://en.experience-online.ch/cases/experience.nsf/en/index (last accessed: Feb 20. 2009)