ERP skills shortage pushes customers to SaaS

Bangalore: An acute skills shortage in enterprise software circles that is hitting SMBs especially is forcing clients to insist upon not only the merit of the software provided by a vendor but also the availability of resources to help implement such softwares, according to recent research from AMR Research analyst Dana Stiffler.

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Though the big enterprise software vendors like SAP and Oracle are successfully promoting software products to manage business processes of small and medium sized businesses, the supply of skilled people to manage these products has not kept up with demand so far, reports Computerworld.

"SAP and Oracle application skills, in particular, are in huge demand, with service providers reporting their ERP practices continue to experience double-digit growth and strong pricing premiums relative to other IT skills," Stiffler writes in the recent report titled 'U.S. ERP Skills Gap Leaves Titans Vulnerable.' "They tell us the packaged applications business is limited only by their ability to find, train and place appropriate resources."

The net effect of the skills shortage is pushing existing and potential customers to consider alternative software delivery models, Stiffler contends.

"I think what it really means long term is that people are really crying out for a different delivery model for enterprise software and business functionality," she says. "And it is my belief that combinations of SaaS and business process outsourcing (BPO) will eventually begin to emerge and make that gap be slightly less noticeable."

AMR survey data as well as that of other high-tech market researchers illustrate just that. When CIOs were asked by AMR how they would like to ideally purchase software and have it delivered in the coming three to five years, "it is striking that many chose SaaS or BPO as the preferred way for them to be able to support these different business processes," Stiffler says. "It is not a majority, but it is edging toward half [of survey respondents]," adding that that is especially true for small and mid-market customers.

SAP and Oracle have made no secret of their desire to infiltrate the SMB market with a business-model-defying combination of on-premise and on-demand offerings. SAP's rollout problems with Business ByDesign, its on-demand ERP product, have been well documented in the report. Stiffler wonders if the ramp-up issues SAP has experienced might be due to internal SAP ideological discussions as much as technical snafus.

In addition, SAP's and Oracle's missteps and their ecosystems' inability to serve new customers opens the door for Microsoft's Dynamics ERP product set. "I think SAP and Oracle are really vulnerable in attacking the mid-market," Stiffler says, "and it makes Microsoft look much more attractive relative to Oracle and SAP, if there's this big skills gap."