Enterprise Software Vendors, Integrators Brace for New Competitive Landscape

ITSMA study shows full-suite providers leading in awareness; niche vendors and integrators winning positioning wars

ITSMA study shows full-suite providers leading in awareness; niche vendors and integrators winning positioning wars

Lexington, MA  July 29, 2005  Buyers of enterprise software applications and services are more aware of, more familiar with and more likely to call a full-suite software vendor like SAP or Oracle than a smaller niche vendor or a third-party integrator such as Accenture, Deloitte or Capgemini, according to recent research from a software industry group.

However, the report, by the Information Technology Services Marketing Association (ITSMA), also indicates that third-party integrators and smaller, more specialized software vendors are making strong moves to position themselves head-to-head with software industry giants, particularly in the enterprise resource planning (ERP), supply chain management (SCM) and business intelligence/analytics (BIA) markets.

In fact, ITSMA's new study, "Enhancing Customer Value from Enterprise Software Applications and Services," shows that 40 percent of the 501 U.S.-based decision makers surveyed prefer to work with smaller, specialist vendors rather than full-suite providers. It also shows that, when implementing the software, more customers rely on a third-party consultant or integrator than a software company.

The software group attributes both findings to the strong market positions many specialist firms and integrators have carved out for themselves, along with the positive qualities customers associate with them. The data also signifies that buyers are doing their homework and not simply selecting the company with which they're most familiar, according to the ITSMA.

"Although the large software companies own more mindshare, customers look very favorably on the smaller niche vendors and third-party integrators, and many buyers prefer to work with them, too," says Lori Weiner, study author and senior director at ITSMA. "It goes to show that achieving favorability with a small but targeted market is becoming more and more essential. Today, customized marketing messages, relevant value propositions and, of course, a seamless customer experience are trumping mass advertising."

According to the study, there is a real opportunity for companies to gain a competitive edge in the enterprise software market by better addressing customer priorities such as "responding to customer needs," "enabling regulatory compliance" and "mitigating risk."

Application-Specific Findings

For each of the five enterprise solution categories cited below, ITSMA interviewed a different 100-person subset of its 501-person sample based on their decision-making involvement with the various application types. Participants in each of these "mini-studies" were asked their opinions and perceptions of nine full-suite providers and integrators along with two application-specific specialist firms.

>Enterprise Resource Planning (ERP)

In the ERP space, the data reveals that Oracle/PeopleSoft and SAP are the companies with the highest brand equity. Lesser-known niche vendor Lawson, however, emerges as the company with the strongest positioning across nine business-oriented categories, including:

  • Implements solutions that are right for the client's business;

  • Enables the development of a strong, strategically sound business case;

  • Is a trusted business partner.
Similarly, third-party consultants and ERP integrators  including IBM, Deloitte, Accenture, Capgemini and BearingPoint  score high marks from customers for performance in key categories, outpacing both SAP and Oracle/PeopleSoft.

All the mentioned companies, with the exception of Deloitte, are listed on the ITMSA Web site as members of the association.

>Supply Chain Management (SCM)

In terms of overall brand equity in the SCM market, the survey gives SAP a slight edge over IBM and Oracle. According to the report, however, Deloitte and IBM hold the strongest defined market positions across five or more of the business-oriented categories examined, though not always the same ones.

Other firms that are well positioned in multiple categories include:

  • Manugistics

  • Accenture

  • i2

  • Microsoft
Neither Manugistics nor i2 is a member of the association; the other companies are listed as members on the ITSMA Web site.

>Business Intelligence/Analytics (BIA)

The BIA market is slightly different from the ERP and SCM markets in that specialist firm Cognos emerges in the survey as the awareness leader. The company cedes the strongest market position to professional services firm Accenture, which holds sway across six of the business-oriented categories measured.

Cognos and Accenture are both listed as members on the ITSMA Web site.

>Customer Relationship Management (CRM)

As in the BIA market, a CRM specialist, Siebel (an ITSMA member), rises to the top of the brand equity meter, emerging as the firm respondents are most likely to call when they need a CRM solution. In terms of market positioning, however, IBM (which ranks second in brand equity) is the clear leader, with the strongest position in five of the nine categories tracked.

>Human Capital Management (HCM)

HCM solutions, arguably among the most mature of the areas examined in this study, is unique among the application types examined in this study because a niche vendor did not emerge as a leader in either awareness and familiarity or market positioning. Instead, Oracle/PeopleSoft, SAP, IBM, and Microsoft take the lead, although integrators including Deloitte, Accenture and Bearingpoint are hard at work staking out differentiated market positions.

About the Study

Based on interviews with 501 U.S.-based IT and business executives involved in the purchase of software applications and solutions, "Enabling Customer Value from Enterprise Software Applications and Services" explores the customer decision process and assesses the brand awareness and market positioning of the major software applications services providers.

Specifically, the study aimed to benchmark the brand equity of full-suite application providers, integrators and niche application providers, and to explore the customer decision process for buying enterprise software applications overall and in each of the following categories listed above.

Study respondents all held director, vice president or C-level positions and represented organizations with budgets ranging from $300 million to over $20 billion. The industries examined in the study include financial services, manufacturing, government, communications, retail and others.

The following 19 software and services providers were evaluated in the report: Accenture, Avaya, BearingPoint, Capgemini, Cognos, Deloitte, Hyperion, i2, IBM, Intentia, Kronos, Lawson, Manugistics, Microsoft, Oracle, PeopleSoft, SAP, Siebel, and Workscape.

Additional Articles of Interest

 To see research from the Computing Technology Industry Association, see the following articles:

 Bad packaging, poor handling and substandard shipping and receiving practices account for more than half the returns in the supermarket industry, and the use of folding cartonboard could significantly reduce unsaleables in the industry, one research project has found. Read about the GENCO study of frozen food manufacturers in the SDCExec.com article "Bad Packaging, Poor Handling Seen Driving High Unsaleables."

 To go the distance in business you need to take a disciplined approach. Supply & Demand Chain Executive offers key best practices for making your supply chain hum in the article "7 Habits of Highly Efficient Supply & Demand Chains," the cover story in the April/May 2005 issue of the magazine, featuring an interview with supply chain guru Jim Tompkins of Tompkins Associates.
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