Second-tier ERP vendors are capitalizing on market uncertainty created by Oracle's hostile takeover bid for PeopleSoft with mid-sized players such as Technology One and Cincom enjoying a renaissance of sorts in the Australian market.
Both companies claim customers are now far more astute and not as enamoured with the multinationals as they were a few years ago. In the past 18months Technology One has picked up customers returning to the market a second time after failed implementations with the likes of SAP and Oracle.
The company's executive chairman Adrian Di Marco said this is particularly true in local government where Technology One initially lost to the multinationals because customers believed they were a safe bet, but soon realized they were reapplying customization with each new release and faced spiralling maintenance costs.
"We have a former SAP customer that spent $3 million without going live and they have since spent $1 million with us on a successful implementation," he said.
"These big-name companies have a business model that is basically flawed, because they use a third-party to implement product; the horror stories are not the result of bad products but bad implementations and then customization is necessary to fix it.
"We do our own product implementations and own the product; resellers don't have a deep understanding of your product."
In a mature market like Australia, Di Marco said, it has essentially come down to who is able to keep customers and who loses them.
While Technology One continues to lock horns with the likes of SAP and Oracle, Di Marco said PeopleSoft - distracted by acquisition activity - has virtually disappeared from competition corridors.
Cincom manufacturing business solutions senior director, Dave Schwarber, said market confusion has allowed the company to increase market share and recruit staff from the former JD Edwards.
Similarly, Cincom doesn't use third parties and capitalizes on its domain expertise in Defence and the areospace industries.
Although the company has 300 customers globally, Schwarber said Cincom has pegged the Asian region for huge growth over the next five years.
"Often the board-level executives will select [multinationals], but then they return to us a few years later after they have thrown good money after bad at a problem," he said.
Cincom's chief operating officer Greg Mills admits the market is saturated and there isn't a lot of organic growth available, but market consolidation in the first tier has allowed the company to position itself for growth.
The company is currently in negotiations with the Australian Department of Defence and already has defence contracts in the UK, France and US.
Cincom manufacturing business solutions managing director, Jerry Miller, said there used to be a saying that nobody got fired buying from big brand vendors but that no longer applies.
"Never pick a vendor that throws a job over the wall to a third-party provider." he said.
Categorically denying that SAP is losing customers, marketing director Len Augustine admits there are a few visible customers with implementation problems but says the company has a proud history of success with a long list of large organizations.
"We track about 20 vendors in this space with IDC and locally we have 37 percent market share; there is a big "others" category of smaller players that have core, horizontal offerings that are able to find some success locally in either HR or finance," he said.
"Our revenue grew 30 percent last year and licensing 44 percent. Uncertainty does drive different decisions compared to say five years ago, but our research shows they are actually flocking to the top end.
"ERP is expanding into different processes. Ten years ago we didn't have a warehouse management solution, we do today so we are finding opportunities within our existing customer base from organizations wanting to extract more value from the IT."