If you would have bought stock in the word "leverage" at the beginning of 2002, then you'd be sitting pretty right now. Based on what I've heard in the last 12 months, it's got to be one of the most popular words among both end users and vendors. Economic constraints are forcing end users to only spend money that will allow them to better leverage the IT investments they already have in place. And vendors are offering solutions that, of course, allow this leveraging to take place. Yes, 2002 was a good year for leverage. And if SAP and Oracle have anything to do with it, leverage will continue to pay dividends well into 2003.
SAP, Oracle Extend Their Reach
After speaking with both companies a few months back at the 2002 APICS exposition, leverage continued to be the buzzword du jour. This time, however, it has a slight twist. Both SAP and Oracle plan to leverage their companies' current footprints within their install bases to gain ground in markets that were previously ceded to other vendors. The CRM (customer relationship management) space, for instance, is a great example of this. Greg Mekjian, VP of global supply chain management at SAP America, sounded like a general as he outlined for me his company's strategy for knocking Siebel Systems from its perch as the top CRM solutions provider. "We have them in our sights, and we are gunning for them in 2003. It's our top mission," added Mekjian. Additionally, the company is also pressing its way into the supply chain management space held by companies like i2 Technologies and Manugistics. Once partners of SAP, these vendors may now see their software replaced by newly developed SAP capabilities as the vendor further leverages its mantra of "tighter integration is better."
Similarly, Oracle believes it can leverage the newest release of its Oracle E-Business Suite to expand its presence within an enterprise. Currently integrated to the company's core ERP (enterprise resource planning) application may be as many as a dozen vendor packages that handle tasks from field service to data collection. Well, Oracle's footprint in the supply chain just got much bigger. In addition to beefing up its applications, the company is wrapping its entire offering in customized portals powered by business intelligence tools. Of course, the watchword is leverage as Oracle's Frank Prestipino, VP of supply chain management and worldwide marketing, explained how Oracle allows manufacturers to collaborate with suppliers and customers. "Right now, total visibility into your partners' supply chains is a huge competitive advantage. In the future, it will be a requirement for successful businesses."
Will You Become A One-Vendor Shop?
What does all this mean to you? For starters, if you run SAP or Oracle, expect a full-court press from these vendors when it comes to extending their reach within your enterprise. If it's not a CRM pitch, then expect a sales call about running an SAP or Oracle WMS (warehouse management system) within your distribution centers or replacing your current supply chain planning system.
At one point, SAP and Oracle were happy to make the core ERP sale and let other vendors provide niche functionality. Those niches have since developed into actual markets. Now, SAP and Oracle want them back. And you will be persuaded to leverage your company's ERP investment by extending it to other areas of the business.
For SAP and Oracle, the watchword continues to be leverage. If you're focusing on the new markets that those companies are targeting, then you might want to invest in the word consolidation.