NAV-igating ERP's rocks and shoals 12 March, 2008 By Steve Wexler

Participating in a panel session were: Nancy Teixeira, Group Manager, Business Solutions Group, and Joel Martin, ERP Product Manager, both with Microsoft Canada; Tracey Santos, Client Experience Manager, Dynamics, Habañero Consulting Group, and their customer Kristin MacMillan, Director of Operations, Imprint Plus; Marc Di Giorgio, TBC, Industry Built, and their customer Kirk Southcott, IT Manager, CanGro Foods; and analyst Tim Hickernell, Info-Tech Research Group.

In the classic good news/bad news scenario, the opportunity for selling ERP (and other sophisticated business solutions) is huge and growing, worth more than $70 billion. The bad news is that prospects need to be convinced of the need; they would rather buy a forklift or other tangible asset than an ERP solution.

With 300,000 customers and 9,900 partners worldwide, the Microsoft Dynamics market is growing, said Teixeira, and most of that growth is taking place in North America. Microsoft has recorded six consecutive quarters of 20%-plus growth, with 26% in the latest quarter, and finally surpassing the $1 billion mark in revenues.

However, if the market is exploding, it's also evolving, said Di Giorgio, whose company has been selling ERP for 10 years. "ERP customers are much more sophisticated today, placing much greater demands on us than 10 years ago."

The way Industry Built decided to deal with that was to focus on a couple of industry verticals, including food services. Di Giorgio said Dynamics NAV can handle about 60% of a business' need, and his company increases the functionality to around 90%. By narrowing their focus, the company has been growing at more than double the rate of Microsoft, a noteworthy accomplishment when IT budgets are only growing in single digits, at best.

This is Southcott's fourth NAV implementation, and it keeps getting easier with each new product iteration, he said. More importantly, by consolidating CanGo's 14 previous application environments, the company took its $5 million ERP budget down to $2.5 million and speed up access to information.

Info-Tech just completed an ERP study that focused primarily on North America and Northern Europe and found that 20% of respondents were either implementing or planning to implement an ERP system this year. The number one reason is replacing outdated technology (47%), followed by a desire to reduce complexity (19%), said Hickernell. Most customers and prospects are looking for the basics, like financials, procurement, analytics and reporting. According to the data, the U.S. market showed the smallest preference for NAV at 7%, while the total study came in at 14% and Canada at 15%.

"If reducing complexity was the number one goal in the study, Canada scored even higher," he said. The study, which involved approximately 1,000 respondents, indicated that while software as a service was front and center in the CRM market, 85% said they weren't interested for ERP, which meant 90% in the U.S. and 91% in Canada. Both Habañero and Industry Built agreed SaaS wasn't getting much interest.

Industry Built's Di Giorgio added that getting customers to consider ERP is also an uphill battle. "In the food services industry they don't want to buy ERP, they have to experience what we call a 'trigger event'. He referred to product recalls where companies have had to bring back more product than they needed to because they weren't able to track down and right products. Commodity pricing is another factor driving customers towards ERP, with big companies like Wal-Mart "nickel and diming" smaller suppliers. "Everybody eats food and nobody wants to eat food form China." It's a recipe for ERP success in the food industry, he said.

Habañero's Santos said companies are looking for a holistic solution, where everybody can have visibility with the relevant information. ERP is just one part of the solution set they supply, which includes business intelligence. Their challenge, she said, was conveying that they are "much more than just ERP."