Cards on the table, I have never had a particularly in-depth interest in the whole ‘ERP’ thing. For starters, the acronym sounds funny when you say it as a word and the name of one of the largest players in the space is an American colloquialism for a fool. Take that, couple it with the fact that sales cycles in that domain are measured in human lifetimes (“I haven’t got long to live son, can you please pick up the XYZ Corporation ERP deal I’ve been working on for the past 20 years?”) and mix in my relatively short attention span and I guess it’s not surprising that I have avoided, deliberately or otherwise, anything too ERP-related for much of my IT career.

Having said all that, it should not be assumed that the above means I don’t have an opinion or two on the topic. Perish the thought. And the opinion that is top of mind is that if ever there was a single IT sector that’s ripe for some seriously disruptive competition, it has to be that one.

However, paradoxically, it seems to me that ERP is one area where there is a relative lack of innovative and hungry start-up companies and the reasons for that are worth digging into.

For starters, the aforementioned long sales cycles are a problem. Start-ups need customers and cashflow fast (unless they have very patient investors with very deep pockets) and there are many other areas which would provide a much better ‘return on effort’ to earlystage entrepreneurs.

Secondly, there probably aren’t a lot of new, ‘green field’ opportunities around these days, which means that the opportunity to tap into and ‘own’ a particular industry or sector isn’t there. That means that the majority of business opportunities will involve displacing an incumbent and, as we all know, replacing an existing ERP solution is only slightly less complex than performing a human spine transplant.

Lastly, I’m not sure that the start-up ecosystem contains a lot of people with in-depth ERP expertise or experience. Only a small percentage of the tech entrepreneurs I have met have worked for large companies, let alone have deep expertise in leading or managing them. That story is slightly different in a place like the USA, but the bottom line is still pretty much the same: one of the quickest paths to failure for a start-up is a lack of domain expertise so ERP is one of those areas that the vast majority of start-up founders tend to avoid in favour of far easier pickings (not to mention a lot more fun and ‘coolness factor’).

One of the wonderful things about change and competition though, is that they are inevitable. So how will they arrive in the ERP domain? In bite-sized chunks I suspect. Acquisition aside, the chances of another, large ERP vendor emerging are pretty slim, but what will happen (and is happening) is the emergence of small, niche players targeting specific shortfall areas of existing ERP systems or doing something in a new, innovative or better way and I can’t see any reason that won’t happen the same way it did with CRM i.e. managers bypassing the IT department and signing up for a cloud-based service that solves a specific problem quickly, effectively and cheaply. The dominance of cloud-based CRM and the emergence of HR and staff performance tools is a good example of this, and I am sure there are others.

The ‘loosely-coupled, tightly-aligned’ promise of cloud-based services is an ideal tool to chip away at the old-school, monolithic ERP systems model. And that, when combined with the huge opportunity cloud-based vendors have to reset price expectations (big, monolithic vendors really hate that) convinces me that the ERP vendor landscape isn’t going to change in a big way anytime soon but it will suffer a classic and accelerating ‘pecking to death by ducks’ over the next few years, at which stage I may possibly find whole thing a lot more interesting. Or possibly not.

ABOUT BRETT ROBERTS//

Brett Roberts is currently director of new technologies at Pitney Bowes New Zealand.

He is also the co-founder of business strategy consultancy Business IQ. He says he has been in the tech world for a million years so he’s got plenty of opinions to share.