Against dull sales of the database and module licences that underpin ERP systems, a US Department of Justice (DOJ) decision to block Oracle's purchase of PeopleSoft only adds to the multi-legged zoo of woes confronting the mighty database company.
But the ERP industry's woes stretch well beyond Oracle. Symptoms of ERP disease have been breaking out everywhere. "SAP is such a big part of the ERP market that you can get a reasonable idea of the trend by observing what it is selling," says Dan Roberts, a consultant with Cambridge-based industrial IT consultant Cambashi.
In terms of traditional ERP products, SAP - Europe's only software giant - is selling 14 percent less ERP and seven percent less CRM compared to 2002. SAP tried to expand the faltering market by selling BusinessOne, a simple accounting, reporting and sales force automation system for SMEs, which SAP acquired from TopManage. SAP also remodelled mySAP to produce All-in-One.
SSA GT's $82m acquisition of Baan's declining revenue stream last June is another high profile example of the high-end ERP industry's problems. Much of the revenue decline is due to the business cycle - there's a limited pool of enterprises big enough to bear the customisation costs of traditional ERP. Once those enterprises have been sold ERP to the max and invoiced, vendors were faced with smaller customers who present a higher cost of sale for lower revenue per project.
ERP vendors have found themselves descending a ladder of rising costs and lower revenues. Look down that ladder and the only thing ERP vendors see is that, at some point, the costs of selling ERP become higher than revenue and profit margin permit. Meanwhile, the downturn has turned CRM's cost-cutting abilities into a key sales benefit.
Cambashi's research shows spending on CRM brings the easiest return on investment in enterprises that are rich in digital data or where records are already computerised. Best positioned to take advantage of this have been the consumer-facing financial and service industries and those industries that rely on call centres.
You can learn a lot about the economics of CRM by examining the key factor in creating return on CRM investment in call centres - namely, that call centres have staff available to service the next customer call that comes in. CRM's job in this scenario is simply to match the calling customer's data to the call-taker. The scenario works well because most call centre calls are limited in scope - the product/service offer is known, the customer need is likely to be known and, as a result, the conversation may be pre-scripted.
This scenario makes a stark contrast to the traditional ERP scenario, where the customisation costs have ensured that the bulk of the return on investment promised never went to the customer. Instead, it went to one of the big five - now big four - IT consultancies.
Where the return on CRM investment is harder to see is in the business-to-business scenario. Here, contact between customer and vendor is much more complex. It often involves many relationships between several people in the customer's organisation and several people in the vendor organisation. In this environment, the relationship that requires managing is really many relationships. The "sale" itself is also likely to be more complex, involving many sales, customisation, complex support needs and integration with constantly-changing marketing efforts.
No wonder that this kind of CRM has been dominated by complex applications like Siebel, with all the attendant complaints about deployment, training and ongoing customisation costs.
So CRM vendors trying to develop CRM sales into business-to-business customers have been competing on the same high-customisation, high-cost terms as the established ERP vendors. That's not an attractive proposition - least of all to vendors like SAP, who have seen all this before.
Although SAP has not suffered in the way that Baan or Oracle have, SAP's remodeling of launches of BusinessOne and All-in-One are evidence that ERP vendors see potential for tightly focused CRM-based packages that sidestep "ERP disease" - the high cost of customisation.
According to Cambashi there is a gaping hole in industry sales management tools that presents a great sales opportunity to CRM vendors that understand this. That hole is the deficiencies in sales contact management software such as ACT!, which is cheap and widely deployed but unsophisticated.
So one path for ERP and CRM vendors is to create a package that 95 percent of businesses can use - in one form or another - by coupling CRM with accounting, reporting and perhaps inventory management. Get help selling it by supporting a VAR channel that already has the customer touch with which to sell it.
Will it sell? That's a hard question to answer. Cambashi's point is that CRM outside of the huge enterprises has to fill a very diverse set of needs without the attendant customisation costs. That is why so much CRM software focuses on the sales "pipeline" - that path from prospect, through opportunity, to sale, that defines the sales person's daily job. It's the one piece of the CRM picture that is common to most businesses, large or small. Roberts says that many corporate finance officers are not yet optimistic enough to see CRM as a sales tool.
"It's easier to get a metric on cost of sales than on new business generated," he says, "and that makes CRM easier to justify." That's a shame, says Roberts, because CFOs who think CRM is there to cut sales costs miss out on CRM's ability to help you shift your processes to become more customer-focused.
But the power of CRM's reduced sales cost argument explains why sales prospect management is so clearly the focus of the CRM Microsoft launched last year. "It's a huge improvement on the Excel spreadsheets that people use to track the sales pipeline," says Adrian Bromley - technical director of Dorchester-based VAR, Anetwork. "Just having the customer data centralised in MSDE or SQL Server makes the potential to integrate it into marketing, accounting, and what have you, very persuasive."
Besides side-stepping customisation costs, there's another reason why CRM may have a very different future to ERP: open source. It's not so evident in the English-speaking world, but get off the English-language web sites and you will discover that developers are working hard to build CRM on the platforms provided by open source databases, open source languages and the client-simplifying advantages offered by web browsers. As this goes to press, French ERP+CRM suite Compiere is the fourth most active project on Sourceforge.
Like Microsoft and SAP, open source developers have realised that by owning access to the underlying components of accounting, reporting and management systems, you can create huge integration possibilities that are within the technical expertise of many VARs, not just the big four. It's those VARs who can go out and sell your system, turning to vendors for support contracts and back-end expertise.
With that background, even as ERP struggles, CRM's future may be very different.