Maintaining Your ERP Platform: Page 2

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Cutting costs – And Looking Ahead

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Apart from the upgrade decision, firms are always looking for ways to cut the costs of their ERP packages – certainly these complex software packages don’t come cheap.

“One of the biggest pain points right now, is the ongoing costs,” Hamerman says. Reducing costs is difficult, he concedes, yet “You do it through renegotiating your contracts.”

In particular, look at your ‘shelfware,’ that is, the applications that have been bought but never fully used. Unfortunately, “A lot of software got sold that never got implemented,” he says. “Customers are paying maintenance on it, so they need to try to get those applications off of maintenance [fees].”

One trend that might offer lower costs in the future – and is already affecting the ERP market – is the software as service (SaaS) model. These purely Web-based applications are deployed on a subscription basis.

The SaaS model is relatively minor in ERP, Hamerman says. However, “It’s definitely here and there are a number of good examples. Like Salesforce.com, NetSuite, and a new player that has just emerged, Workday – [PeopleSoft founder] Dave Duffield’s new company.”

“I think the challenge, though, is to build in enough flexibility for those products to move up into large organizations.”

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