Study: Not Much Loyalty Among ERP CustomersStudy: Not Much Loyalty Among ERP Customers

Oracle, SAP, PeopleSoft, and other makers of IT systems that drive businesses don't have a strong hold on their customers, which makes it difficult to sell them additional products, market-research firm the Yankee Group said Thursday.

In a study of executives involved in purchasing enterprise resource planning software, the research firm found an unusually low percentage of decision makers who were willing to recommend any of the market-leading brands. In studies of other markets, it's typical for leading brands to get recommendations from 50% of buyers. But in the ERP study, Yankee Group found at most, 32% of the decision-makers recommending a brand--in this case, Oracle. PeopleSoft came in second with 29%, and SAP was third 26%. Microsoft, a relative newcomer in the ERP market with its software for small and midsize businesses, was recommended by only 14% of the buyers. SSA Global Technologies Inc., which acquired ERP vendor Baan, was at the bottom with 1%.

The reason for customer dissatisfaction can be found in the disconnect between those attributes the study's subjects listed as most important for the "perfect" ERP vendor and those associated with software makers.

Many of the vendors, especially Oracle and PeopleSoft, were seen as cutting edge in technology and vision. But the study's subjects listed those attributes on the bottom; the most important were high integrity, fast return on investment, inexpensive operation, easy implementation, and excellent service.

"You have this disjoint where vendors are marketing speeds and feeds, pushing technology innovation in the marketplace; and buyers aren't interested in those attributes," Yankee Group analyst Jon Derome said. "They're interested in practicalities such as 'understanding my business' and 'delivering what you promised.'"

Another example was SAP, which had the highest level of brand awareness among those surveyed. But though the company was well known, it failed to attract recommendations from nearly three out of four buyers because it scored below average in many of the attributes most important to customers, Derome said.

IBM scored above average on the most number of attributes listed for the perfect ERP vendor--which was surprising because it doesn't sell ERP software, Derome said. That leaves IBM in a unique position to sell product by partnering with other makers of business software.

"There's some interesting things that they can do from a marketing perspective, such as taking a lead in a sale and have the ERP vendor take the back seat in certain categories," Derome said.