Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies

Transcription

1 G Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies Published: 27 June 2012 Analyst(s): Christian Hestermann, Chris Pang, Nigel Montgomery The focus of this Magic Quadrant is on ERP systems that support a singleinstance strategy for multientity midmarket and upper midmarket companies. User-centric improvements focused on usability and deeper integration of analytical capabilities is at the core of leading systems. Market Definition/Description ERP Systems in Product-Centric Midmarket Companies ERP systems are one of the core business applications of almost all companies above a minimum complexity. The basic concepts and functionalities have been developed and sold for more than 20 years, but the term ERP was coined by Gartner in the 1990s. In the original definition, ERP systems' functionality normally covers finance and accounting (general ledger, accounts payable and accounts receivable), purchasing, HR management, sales or customer order management, and operations management. Gartner now defines ERP in a broader sense as "a technology strategy in which operational business transactions are linked to financial transactions, specifically general ledger transactions" (see "Q&A: What ERP Is and What the Associated Terms Really Mean" and "Agenda for ERP and Enterprise Suites: Strategies and Value Realization, 2012"). The more-mature ERP systems were developed for product-centric companies, and these companies typically use most of the functional areas of ERP. Product-centric companies traditionally are: Manufacturing companies They focus their business activities on the development, manufacturing, assembling and selling of products, and the delivery of their related services. This includes all kinds of discrete products, from small and simple consumer products to complex products (such as airplanes or power plants). It also includes products that are generated in process manufacturing, such as most products in food and beverage, chemical industries or pharmaceuticals. Other companies are active in markets such as utilities, rental and services, aerospace and defense. Distribution companies They focus on buying, storing, moving, repackaging, selling and delivering products and their related services, discrete or process. Depending on the structure

2 of their sales channel and customers, companies in wholesale and distribution, and those in retail, fall into this category. The boundaries between these types of enterprises have been slowly disappearing, with more manufacturing companies distributing and servicing their products, which has led to tighter integration of ERP, CRM and supply chain management (SCM) solutions. The combined manufacturing and distribution functionality is used by enterprises in industries as different as thirdparty logistics, utilities and the energy sector. Although this list is not exhaustive, it indicates that product-centric ERP is used successfully in a variety of industries. Almost all organizations use administrative ERP strategies that are focused solely on the traditional back-office functions in financial administration, indirect procurement and human capital management (HCM). Product-centric companies typically use an operational ERP strategy that covers administrative functionality plus areas such as customer and order management, inventory management, product life cycle management (PLM), direct procurement, and the management of their manufacturing and/or distribution facilities, often including asset management. The systems in this Magic Quadrant are analyzed and rated on their ability to support the operational ERP strategy of product-centric companies. Consequently, it's not applicable for organizations looking only for administrative ERP, or ERP for non-product-centric companies. This is because several vendors that provide administrative ERP for organizations in public sector, healthcare, professional services, financial services, etc. are not included in this Magic Quadrant. For a detailed ERP vendor evaluation model, see "Use a Vendor Evaluation Model to Select ERP Vendors and Software." Many might mistakenly think that "midmarket" means "ERP-lite," or that midmarket companies are "simpler" than their larger counterparts. Gartner has produced research that analyzes this market with a unique process framework (see "Midmarket Companies: Clarify Requirements for Process and Information Support to Enable User-Centric ERP" and "Midmarket Companies: Use These Criteria to Select an ERP System With Low Total Cost of Ownership"). Most midmarket enterprises have a core set of business processes as complex or more complex than those of large enterprises, and that forms the base on which these companies differentiate themselves. However, outside of these core processes, the majority of the business processes in most enterprises in this segment do not have the scale to require a highly sophisticated or automated solution to support them. Instead of being simpler, these enterprises apply a more information-centric approach to executing many of their processes, seeking solutions that offer "good enough" support for their nondifferentiating business areas. A key part of our analysis is a vendor's ability to support a core set of global-class strategic processes, combined with offering good-enough capabilities for the less-strategic, but still important, information-based processes, thereby limiting the overall complexity of the solution. Product-centric companies vary significantly in size and complexity, ranging from less than 10 employees up to the Global 2000 companies, which have hundreds of thousands of employees. The latter are often subdivided into smaller divisions. Therefore, ERP systems also are composed of varying functional depth and breadth to meet the needs of these different-size companies. In this Magic Quadrant, we concentrate on ERP systems that are used primarily by independent, multientity companies seeking a single-instance ERP system. Page 2 of 50 Gartner, Inc. G

3 Additionally, the user organizations in this market: Are independent, product-centric companies with revenue between $50 million to $1 billion, and up to 10,000 or more employees. Typically, companies of this size have limited IT resources and seek ERP systems with low total cost of ownership (TCO). Nevertheless, they look for solutions that offer broad and deep functionality. Seek systems that can support their differentiating, specific requirements, but do not require a huge overhead in the nondifferentiating business areas. The systems must be adaptable to changing business needs. Because of their smaller size, midmarket companies are able to react more flexibly to changing market conditions and to react more quickly to new opportunities than most large enterprises. Therefore, they need ERP systems that support flexibility, rather than inhibit it. Support for industry-specific requirements and business processes is key to these user organizations. In some cases, they need combinations of these attributes for example, process manufacturing versus discrete manufacturing, or when they're the manufacturers and distributors of their products, as well as offering after-sales services. Have an international presence, either by doing business through a channel, or by having or building a direct presence in multiple countries or geographies. Therefore, they seek ERP systems that are available and supported in more than one geography. Focus on product-centric business, falling into manufacturing, distribution or a combination of both. They also offer some product-related services. This definition has been refined in this iteration of the Magic Quadrant to include only singleinstance ERP systems. There is a higher focus on multientity organizations, which are described below. We have only reviewed systems that offer strong support for single-instance ERP deployment strategies, where multiple entities can be operated using one central instance of the ERP system. This is due to the continuing interest of companies to move to a single instance or a reduced single-instance strategy. The single instance could be one global single instance (GSI), or there could be multiple regional instances, each of which supports multiple business entities in the respective region. It is important to notice that the ability to support single-instance deployment has always been an evaluation criterion in previous iterations of this Magic Quadrant. To further improve the relevance of this Magic Quadrant for CIOs, IT leaders, IT managers, application managers and others in multientity, midmarket companies, we have excluded systems that cannot support multiple organizational entities out of one single-instance system. A multientity company is characterized by one or more of the following criteria: The company consists of multiple organizational units, such as multiple business units with different offerings (e.g., one manufacturing and one servicing the company's products). These units often work with the same customers and on the same products, but their pricing and delivery mechanisms differ. The company is present in multiple countries with differing legal, tax and statutory requirements per country. In many cases, each country organization operates in the local language. Even Gartner, Inc. G Page 3 of 50

4 smaller organizations covering parts or all of Europe thus experience a wealth of different languages. The entities can encompass multiple manufacturing, sales or delivery locations that can have a high level of interaction, regardless of the geographic location. Many European midmarket companies have, for instance, opened manufacturing locations in lower-cost regions of Eastern Europe. To coordinate the various units and entities, these companies have cross-entity functions and structures e.g., for areas such as basic financial planning and consolidation, cross-entity manufacturing resource planning (MRP), including capacity and fulfillment planning, centralized and decentralized purchasing, inter- and intra-entity transactions, and flexible assignment of human and technical resources to entities. Pushed by globalization, many midmarket companies have a more direct presence in multiple countries. To cope with this situation under the limitations of the resources available to them, their desire is growing to support multiple organizational entities (like country units) out of one single instance of their ERP system (see "When to Consider a Single-Instance ERP Strategy" and "ERP Consolidation: Standardizing Processes and Evaluating Your Options"). To increase the relevance of this research to these multientity midmarket companies, we do not include vendors' ERP systems that cannot support multiple entities in one single instance. Multientity is not a characteristic that is only present in large companies. Among Gartner clients, a variety of smaller organizations with revenue below $100 million have built an international presence or divided their businesses into multiple organizational units. However, they still want to run these entities with a high level of commonality in processes and information at the lowest possible costs, by using a single-instance deployment of their ERP system. Alternative Scenarios to Single-Instance ERP Some multientity companies have chosen a federated approach, by supporting each entity with its own ERP instance, and by building data synchronization mechanisms among these instances. Especially in cases where there is a high level of autonomy and independence between entities, this approach can offer benefits. When these companies want to consolidate their instances to lower support costs and to increase business process standardization by using one common instance, they tend to migrate to ERP systems that allow single-instance deployments. Systems that can only support one entity per instance are not in any way inferior to multientity, single-instance systems. Systems such as Infor10 ERP Business (formerly Infor SyteLine) or Microsoft Dynamics NAV can be easier to handle in a site-by-site mode and allow local organizations to be run more flexibly than when using some of the bigger and more complex ERP suites. For more details on different instance strategies (e.g., loosely coupled ERP), see "Determining the ERP Suite Strategy for a Newly Merged Enterprise." Totvs A "Local Matador" in Brazil This Magic Quadrant focuses on ERP products that are presently global. However, in some local markets, such as Brazil, the global ERP systems have to compete against strong regional players. Page 4 of 50 Gartner, Inc. G

5 Totvs, for example, is the largest ERP vendor in its home country Brazil. Its total revenue was approximately $600 million in 2010, and it has a market share of almost 50% (almost 70% in small or midsize businesses [SMBs]) and year-over-year growth of over 35%. Its strong presence in Brazil, the fact that its solutions fulfill the highly specialized legal and statutory requirements of the Brazilian market, and its starting expansion into other South American countries justify that Totvs is often automatically included in selection processes for its regions. Totvs offers a variety of solutions, each for a subset of industries, many of which were acquired during the past years. The solutions are layered in so-called "Series" products, with Series 1 serving SMBs, Series 3 serving the lower midmarket, and Series T for core and upper midmarket. It is not immediately obvious which product is offered in a sales cycle. Totvs' primary solution for bigger multiorganizational companies is the Protheus product (also called Series T), which has its origins in Microsiga Software, started in The first release was offered in 1991 and successively built out. Today, Protheus serves companies in industries such as agribusiness, construction and projects, distribution and logistics, manufacturing, and retail. Totvs uses a system of six branches in the main cities and approximately 50 franchises in the regions for their go-to-market, which offer additional services for Totvs. However, the main contract is directly between Totvs and the client. Similarly strong local vendors exist in other countries (e.g., Ufida in China). As the research progresses, we will analyze those products as we see these regional players having an impact in their local markets. Gartner, Inc. G Page 5 of 50

6 Magic Quadrant Figure 1. Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies Source: Gartner (June 2012) Vendor Strengths and Cautions Epicor ERP Epicor ERP (formerly Epicor 9) was introduced in 2008 as a result of a multiyear product consolidation that included the creation of a new service-oriented architecture (SOA) based on.net and a functional foundation based on the former Vantage product and others in Epicor's portfolio. The target audiences for Epicor ERP are midsize to large-scale make-to-order and mixed-mode manufacturing companies, as well as distributors and services companies. The core functionality is complemented with additional modules for business intelligence (BI), CRM, SCM and distribution capabilities. It offers extensive analytical capabilities and full mobile access. It is the most visionary among the systems in this Magic Quadrant, with the closest resemblance to Gartner's vision of a model-driven packaged application (see "Model-Driven Packaged Applications: Using SOA and BPM to Modernize Packaged Applications"). In April 2011, Apax Partners (a private equity firm) acquired Epicor Software and Activant. Apax merged both companies, retaining the Epicor brand as the name of the new entity. While the acquisition and merger are still relatively young, Epicor stated in conversations with Gartner that it will continue to deliver on its published road maps. We expect Epicor ERP to play a leading role for new customer acquisitions in its traditional customer segments, as well as inherit some of the retail and wholesale attributes from the Activant product family in the future. Further extensibility for Page 6 of 50 Gartner, Inc. G

7 Epicor ERP is offered for HCM via Epicor's Spectrum acquisition (which was mainly in the U.S. and Canada) at the end of Over 600 customers were live on Epicor ERP by the end of 2011, with two-thirds being new accounts; Epicor's professional services team delivered the majority of implementations. This allows for closer control by the vendor and unfiltered direct feedback from customer to vendor. Epicor is increasing resources on the indirect side; but, for the majority of implementations, we expect most customers will engage directly with Epicor. Progress in selling to new accounts, as well as migrating existing accounts, has been successful, but a significant installed base is still to be converted. The success in the market has negatively affected Epicor's implementation and support delivery capabilities by stretching out some implementation timelines. Product code quality is getting better, but there is room for improvement. For these reasons we have positioned Epicor again in the Visionaries quadrant, which shows the promising nature of the product, but the product needs further attention and improvement in terms of execution and delivery. Strengths Epicor ERP has an innovative, complete SOA. Its process models and business logic engines make it highly flexible and offer stability through upgrades. The architecture supports a multitenant software as a service (SaaS) deployment of Epicor ERP with two versions (one for small manufacturing organizations, and one for small-scale distributors). Epicor is one of the few vendors to have architected a full multitenant SaaS and on-premises version out of a single product, and the only vendor having delivered it to actual customer deployments. Epicor is a Microsoft-centric solution in terms of technology components used, and is fully built using.net. For companies with a Microsoft-centric technology strategy, this makes it easier and faster to train end users and internal IT support staff alike. All base forms, as well as customized and personalized screens and reports, are modeled in a fully metadatabase format. The Epicor Everywhere Framework can be deployed on various devices, such as connected handhelds, special devices for data capturing and Web-based devices with the same functionality and high usability. Epicor ERP supports Web 2.0-style collaboration, RSS feeds, presence and in-context and enterprise search. Data tagging allows users to associate public or private unstructured "sticky notes" to any data objects, which can be searched for and interpreted in process models. Epicor plans further enhancements in future releases under the "Enterprise 2.0" label. Epicor ERP offers more than 100 predefined, role-specific dashboards and key performance indicators (KPIs) that are displayed and updated in the context of the current transaction. Customers continue to speak highly of the Service Connect module, which offers powerful integration and orchestration features to other applications. Instead of offering a stand-alone CRM solution, Epicor's CRM functionality (originally based on its Clientele product) is embedded throughout the product, with concepts such as a universal Gartner, Inc. G Page 7 of 50

8 person. This sometimes requires users to think differently when switching from a more traditional CRM solution. The implementation is based on prepackaged best-practice process templates. A shared benefits program allows users to share the risks of cost overrun and the rewards of a successful implementation. Since we last evaluated the product in 2010, 10 country packs have been added, with a further six languages planned for year-end With a presence in over 50 countries, Epicor ERP is one of the most international solutions in this Magic Quadrant. Cautions Customers have commented that the system can suffer from performance issues (due to the model-driven architecture of the product). Purchasing the best hardware you can afford, as well as paying special attention to set up, is highly recommended. As evidenced by customer reference checks, code and release quality is improving, but are still not perfect. We recommend that customers plan for sufficient testing in their projects and give some period of time to allow a new release to settle before upgrading to avoid unexpected errors. Some errors found in the earlier 9.04 iteration need an upgrade to 9.05 to resolve them. Epicor has improved the distribution and scale of implementation resources for the new product, but customers still need to factor potential resource shortages into their project planning. Customers outside the U.S. have occasionally commented that Epicor's product design and functionality can sometimes be overly influenced by the needs of Epicor's North American customers. Customers interested in using the product in Brazil and India should be aware that the full localization of the Epicor ERP for these emerging regions is a work in progress, with an expected release by year-end 2012 or in A higher focus on Epicor's industry strategy is done through Epicor for Your Industry solutions. Until these solutions are released for all industries, customers need to check whether their industry-specific requirements are sufficiently supported. The full ramifications and plans for the Epicor ERP product following the merger with Activant have yet to occur. This may impact the road map and resources dedicated to the Epicor ERP product. IFS Applications IFS Applications is a proven and scalable solution that serves companies at the intersection of manufacturing, project management and SCM, mainly in asset-intensive industries like defense, energy, communications, construction and process manufacturing. The solution is available and used in multiple geographies, with approximately 60% of customers in EMEA and the rest evenly distributed between North America and Asia/Pacific. Page 8 of 50 Gartner, Inc. G

9 The latest major release, v.8, of IFS Applications was released in May It includes further improvements to the Enterprise Explorer user interface (UI) and enables the integration of the acquired 360 Schedule solution for field service management. The already strong project management receives further enhancements. "BI by Choice" offers built-in capabilities (mostly based on Microsoft BI infrastructure) and linkages to third-party BI tools for existing BI infrastructures (e.g., built on ClickBase, Cognos or Oracle). New functionality is sometimes released as product extensions. Approximately 15 of these can be used based on v.7.5 (certain minimum service packs required) before they became available in v.8. One of IFS's future investments will concentrate on mobile support for different scenarios, including support of the individual by task-specific mobile apps, with an uplink through an IFS-hosted cloud infrastructure to avoid direct linkage to corporate systems. This support allows companies to execute a user-centric ERP strategy. IFS has a functionally rich and scalable product that can support global, single-instance installations well. The UI is built in.net. It is built on Oracle on the server side, but other middleware like JBoss also can be used to run IFS at lower costs. The product's modularity allows users to roll it out in phases. Despite the revamped marketing efforts and new branding, IFS is not visible enough in the market, thus creating issues in building internal trust and confidence to select IFS over betterknown solutions. IFS's focus on its core industries and its customers is rated high. However, the gaps in global availability of professional services and of presence by larger system integrators, and some issues with localized versions place IFS in the Challengers quadrant. Strengths Gartner has spoken to customers running IFS Applications with more than 1,500 users on one global single instance, which shows the scalability of IFS Applications. IFS's development organization has been successfully transformed to agile development methods, which are now also used in the support organization. A tight collaboration with the development center in Sri Lanka (which houses approximately two-thirds of all R&D resources) helps companies leverage the R&D investments. IFS offers to build customizations with its own resources, which typically comes at a premium but increases the likelihood that these customizations are designed so that they might be included in future versions of the core product. The quality of IFS's professional services and consultants is typically rated very high. Some larger Indian-based system integrators started to build practices around IFS, which customers should consider, if needed. Cautions When working with external consultants, their quality needs to be thoroughly checked, as some customers had negative experiences. To support more global projects, IFS needs (and plans) to win some of the larger system integrators to build out their IFS practice and make sure that their quality matches that of IFS's own resources. Gartner, Inc. G Page 9 of 50

10 Companies in high-volume industries, such as automotive suppliers, need to check the relevant functionality, as IFS is still building out its capabilities (e.g., for electronic data interchange [EDI] integration to the various car manufacturers). Gartner has heard of users having issues getting patches for bugs that were not considered as high severity. Customers should carefully check IFS's support policies and adapt them to their needs, including using the "business importance" flag available to them. The localizations for some countries are built by local IFS's partners. In some cases, these partners were slow in moving their country pack to the latest service pack, which has created issues with keeping all country units in one single instance. Customers need to plan their international rollouts accordingly. IFS has reacted to these issues e.g., with the recent acquisition of a Sao Paolo-based distributor and implementation partner for IFS Applications. Customers that have well-established conventional development methodologies struggled with the agile development methods used by IFS, especially for collaborating with remote development resources in Sri Lanka, where more detailed specifications were needed. Infor10 ERP Enterprise Infor10 ERP Enterprise (formerly known as Infor ERP LN, and originally Baan ERP) is Infor's flagship ERP product for large midmarket customers in project-based and complex discrete manufacturing, as well as distribution industries. EMEA remains the main region, with two-thirds of all customers and an even distribution of the remainder between North America and Asia/Pacific. Infor10 ERP Enterprise is a broad and mature solution for larger customers in industries such as industrial equipment and machinery, high tech and electronics, automotive and specialty vehicles, as well as aerospace and defense. This reinforced focus on targeted industries is part of the new management's strategy for developing the Infor product portfolio. Customers have shown a positive reaction to the new management team and the planned investments in Infor products. The road map for Infor10 ERP Enterprise includes various improvements across the system e.g., for additional in-context BI, industry solution suites for the above-mentioned target industries, with Infor10 Automotive generally available as of January 2012, and additional integrations to existing Infor products. Infor's middleware product, ION, is positioned as providing productized integrations, business process management (BPM)/workflow and Twitter-like real-time alerts and notifications across Infor10 products, such as Corporate Performance Management (CPM), PLM, Enterprise Asset Management (EAM) and warehouse management. Its intent is to provide out-of-the-box prebuilt monitors and workflows, as well as a framework for building additional integrations with third-party products. Moreover, it forms the foundation for Infor's enterprise mobility, BI, compliance and search capabilities. The ION Business Vault receives business object documents (BODs), which are defined using Open Applications Group Integration Specification (OAGIS) standards, and which are pushed-out (published) by the Infor applications that are connected to the ION message bus. These BODs are shredded by the Business Vault into a reporting schema and data cubes aimed at simplifying reporting and business analytics. Page 10 of 50 Gartner, Inc. G

11 Infor10 Workspace is built on Microsoft SharePoint as an overarching user experience across Infor10 applications, offering access to the core transactional parts of Infor10 ERP Enterprise. WorkBenches enable users to combine transactional data, data visualizations and in-context dashboards into their views (leveraging work that had been done for Infor MyDay and Decisions, and replacing Infor Companion). This alone does not change the UI of the underlying core application. Within the application, conditional formatting and some streamlining of typical tasks have been achieved, but personalization capabilities are currently not comprehensive. More enhancements are to be expected in a newly developed UI based on HTML5. To enhance cross-selling of the various products in Infor's portfolio, an Infor10 Suite was defined, which includes additional best-of-breed components such as Infor10 CPM (formerly known as Infor PM10), Infor10 EAM Enterprise (formerly known as DataStream), Infor10 PLM and Infor10 Advanced Planning and Scheduling. Infor has announced an enterprise user licensing model, a common look and feel at least at the Workspace level, and productized integrations to make this attractive. After various cross-selling initiatives during the past few years, it has yet to be seen how much adoption this new initiative will find among Infor customers. Infor10 ERP Enterprise is a complex solution requiring significant implementation effort. For this reason, it is not a good fit for the middle and lower midmarket. Customers claim to have experienced difficulties in obtaining timely professional services resources. The road map for Infor10 ERP Enterprise shows functional enhancements, but no fundamental modernization at this time. Interoperability with other solutions is provided by Infor's ION product. The focus of Infor10 ERP Enterprise on targeted industries, combined with the overlap in the portfolio with Lawson M3 ERP Enterprise, and the issues in delivering services and support for Infor10 ERP Enterprise place this product in the Niche Players quadrant. Strengths Infor10 ERP Enterprise is a robust and mature solution for companies in upper midmarket complex manufacturing industries, such as industrial engineering and manufacturing, aerospace and defense, high tech, electronics and automotive. The majority of its presence reflects its EMEA roots. The product supports global single-instance deployments well. Infor has reached a level of market visibility that helps it internally position its products against other well-recognized vendors. As it scales in terms of customer deployments, Infor ION should offer more out-of-the-box capabilities to integrate various Infor products, and will be the base for workflow and event management, reporting and BI. Customers have experienced improvements with Infor's 365 support model. Infor10 ERP Enterprise is Infor's flagship ERP product for the upper midmarket. We anticipate that Infor will invest more resources in this ERP product and use it to spearhead its enterpriselevel sales. Gartner, Inc. G Page 11 of 50

12 Infor's focus on 12 vertical industries will influence the product development planning for Infor10 ERP Enterprise. Cautions Customers with global deployments have experienced issues with the availability of localizations for some non-tier 1 countries, which has held it back from upgrading. Infor took over localizations from partners and moved them into the core, but IT managers planning their upgrade road maps must take into account that the last available of their pertinent localizations will determine their overall deployment timing. Comprehensive ION implementations are still rare, and experienced field-level consulting resources have yet to be developed. Gartner was not offered reference customers leveraging more than the integration capabilities of ION. The acquisition of Lawson has created further overlap in Infor's portfolio, which prompts uncertainty about future investments, especially in the general manufacturing space, where Lawson M3 ERP Enterprise and Infor10 ERP Enterprise are direct competitors. Despite efforts taken by Infor, issues with the availability and qualifications of professional services resources have not been fully removed. Some customers described negative impacts on their implementation projects. Customers planning initiatives like upgrades or further deployments need to take this into account when building their schedules. Infor10 Workspace does not fundamentally change the user experience of the core of Infor10 ERP Enterprise, but is more of a wrapper around the transactional system. Lawson M3 ERP Enterprise Since its acquisition of Intentia, Lawson has refined the new business focus of Lawson M3 ERP Enterprise, adding to generic manufacturing and distribution the vertically targeted fashion and textile manufacturing, food and beverage, equipment service and rental industries. These industry groupings have provided stronger focus throughout the company and a distinctive change in its new business dealings, with approximately one-third of the M3 part of the company reorganized by industry to increase the vertical focus. It allowed Lawson's operational management team to focus on delivering a competitive suite and organization structure for its aligned industries, rather than trying to be everything for everybody. Lawson's strategy was to penetrate these markets with complete solutions, predefined analytics and pretailored QuickStep solutions. The M3 business units focused on profitability to meet some stringent internal goals, which meant shifting some of its services revenue to its partner channel and running its consulting team at high utilization. It also pushed to extend and grow its target markets and to upgrade its customers to M3 10.1, a version for which customers have expressed satisfaction to Gartner. When upgrading, customers were able to reduce their dependence on custom modifications. Gartner believes that Infor's acquisition of Lawson in 2011 will likely change the strategic projects started by Lawson. Due to the overlap with similar projects under the ION brand, initiatives like Page 12 of 50 Gartner, Inc. G

13 SmartOffice, Lawson Business Intelligence (LBI), Lawson Enterprise Search, the recently introduced Mashup designer and others will likely be consolidated with similar ION technologies. It is too early to know the exact impact, and, to date, Infor failed to provide more details. Nevertheless, customers we have spoken with are buoyed by the reaffirmation by the new management that Lawson will continue to focus on its intended key markets and will front Infor's go-to-market for ERP in selected industries. Strong functionality for some selected industries, combined with poor delivery capability in terms of availability, quality and reliability of services, position Lawson M3 as a Niche Player. Strengths Lawson's focus on certain industries enables customers to benefit from specific functionality, decreasing the need to adopt and integrate best-of-breed modules from other vendors. For example, a number of customers spoke highly of Lawson's traceability features, particularly those in the food sector. The Lawson for Equipment Services, Maintenance and Repair (ESM&R) solution, launched in November 2008, is considered functionally rich. It was produced as the result of functional enhancements undertaken in co-development with a large caterpillar (CAT) equipment dealer. Lawson has focused its efforts on ESM&R at CAT dealers, although the solution also offers functionality for other ESM&R niches. Infor's middleware product ION is positioned as a framework to build integrations between Lawson M3 and other Infor products, including capabilities such as workflow and event management, search and analytics. This will give Lawson M3 customers easier access to some offerings from the wide Infor product portfolio. Lawson's strategy of selling into niches (e.g., sportswear within apparel and textile) lets customers benefit from expertise and experience. The addition of Lawson's QuickStep approach, which offers predefined, documented business processes and preconfigured industry solutions, can help customers reduce implementation time and effort. QuickStep has become a common approach for new customer implementations according to Lawson, although few references had used the approach. Feedback from customers indicates that upfront evaluation of QuickStep is worthwhile, but, as with other template-based approaches, deviation from the standard configuration can lead to a variable ROI. Some customers praised LBI and the M3 analytics solution for reducing the need for many custom reports. Lawson M3 scored well in comparison with many other vendors for quality and reliability of the software. Its functionality was considered comprehensive, and provides strong business value. Cautions Gartner considers the future investment in Lawson's new technologies, such as Smart Office and LBI, to be under some threat. Smart Office is still included as part of Infor's released Gartner, Inc. G Page 13 of 50

14 product strategy road map, yet heavy investment in Infor's Workspace product suggests that long-term competitive investment in Smart Office, LBI and similar areas by Infor seem incongruous. Customers need to consider detailed road maps, once published. Although Infor notified customers that new development head count would be assigned to M3, and Lawson had put case management tools and processes in place to better respond to services needs, feedback from customers for this year's Magic Quadrant mirrored that of previous years, suggesting challenges with the quality and availability of professional services. As the new Infor management implements its product strategies, customers should investigate the Infor10 M3 specific road maps and investment. Responses from customers suggest that helpline support is consistently improving, clearly bolstered by the addition of internal systems and processes to raise quality and responsiveness. Yet, unsolicited comments were received from a number of clients that support for how-to-style questions is becoming less evident. The strength and depth of Lawson's professional services team scored poorly. Lawson's partners also came in for criticism in terms of the time it takes to gain availability, plus the quality of staff. The consistency with which these issues continue to occur has a negative impact on Lawson M3's Ability to Execute rating. Customers are advised to ensure they build penalties into agreements, especially those with partners, to secure adequate and consistent personnel availability. M3's broad and deep functionality can serve complex requirements in Lawson's core industries; however, several reference customers highlighted the high cost of implementation as a challenge. Comprehensive ION implementations are still rare. Gartner has yet to gain access to references that leverage more than the integration capabilities of ION. Experience of ION in Lawson consulting resources has yet to be built. Despite attempting to build its partner ecosystem, Lawson's limited partner certification program sets it behind other leading vendors and potentially exposes customers to inconsistencies. As a result, customers need to check on the level of industry and product expertise of any partner they wish to engage. Microsoft Dynamics AX Microsoft Dynamics AX is the most scalable of the four Microsoft Dynamics ERP systems; the others are Microsoft Dynamics NAV, Microsoft Dynamics GP and Microsoft Dynamics SL. It also has the clearest strategy for industry verticalization, with specific functionality for discrete and process manufacturing, retail, wholesale/distribution and services, as well as the public sector in selected countries. In addition to targeting the midmarket, Microsoft intends to provide Microsoft Dynamics AX as a solution for subsidiaries of large enterprises. To do this, the partner channel of approximately 450 qualified Microsoft Partner Network (MPN) Silver and Gold partners for Microsoft Dynamics AX is being complemented by Microsoft centers of excellence (COEs) within its Microsoft Consulting Services team, which has focused primarily on Microsoft CRM until now. The latest release of Microsoft Dynamics AX 2012 became generally available in August 2011, with new seat-based licensing replacing the previous concurrent user model, but with additional features Page 14 of 50 Gartner, Inc. G

15 that should enable the product to compete in the lower enterprise market, albeit engaging a drastically modified partner channel for this market. Microsoft says that Microsoft Dynamics AX 2012 close to doubles the functionality found in Microsoft Dynamics AX 4.0, and that together with the changes to the technical architecture and greatly enhanced features of its business model organizational structures, indicates the progress that the solution has made. It also indicates the significant change that customers will experience when upgrading from previous versions (see "Microsoft Convergence 2011 Previews Dynamics AX 2012 and Next Steps Into the Cloud"). We've included sample testimony from Microsoft Dynamics AX 2012 early deployment customers; but because of the short time between general availability and the research for this Magic Quadrant, it is too early to judge fully live deployments from a statistical sample perspective. Gartner believes that nearly all customers upgrading from version 4.0 or older will reimplement, rather than upgrade, since the functional footprint of Microsoft Dynamics AX 2012 will allow them to retire many of their customizations and extensions, and provides the opportunity to re-examine aging business processes. Microsoft has announced the RapidStart services for Microsoft Dynamics ERP, a tool and services that promise to reduce the time to deploy, configure and customize Microsoft Dynamics ERP systems. At this time, the Azure-based solution covers only the core Microsoft Dynamics AX 2012 solution, but partners are being encouraged to create configuration scenarios for specific industries, process models and additional functions. The announcement of a strategy to deliver Microsoft Dynamics AX as a cloud-deployed solution at its next major release and to enable the Microsoft Dynamics partner ecosystem to complement Microsoft Dynamics AX with partner-built cloud extensions to deliver a complete cloud solution maintains the strong vision of Microsoft Dynamics AX. Among Microsoft Dynamics' strongest differentiators is using its partner community as a primary route to market and as a source for innovative industry-centric functional additions. This strategy helps preserve this strength in the cloud. The company is nearing the final stage of a five-year project to re-energize and re-equip its MPN partners for its next stage of growth. The main impetus began in January 2012, as new partner remuneration rules commenced. Gartner believes that this program will result in better delivery capabilities by a streamlined partner channel. Companies looking to implement Microsoft Dynamics AX 2012 must ensure that they use qualified partners (see "Microsoft Dynamics AX 2012 Moves to General Release With Revised Pricing and Promising Configuration Accelerator" and "Top Takeaways From Early Adopters of Microsoft Dynamics AX 2012"). Strengths The flexibility and extensibility of Microsoft Dynamics AX makes it a strong solution for midsize customers and should be of particular interest to large companies trying to satisfy divergent business unit needs, such as multimode manufacturing. Discrete, process and lean manufacturing principles have been integrated into one solution and can be used in parallel. The system also enables users to combine solutions from various industries. However, this flexibility means that consistent, centralized change management is key. Gartner, Inc. G Page 15 of 50

16 One of Microsoft Dynamics' strengths is the way it leverages the Microsoft application platform and productivity suite, with enhanced integrations to Microsoft's Visual Studio, SQL Server and BI, and SharePoint. Throughout the system, analytical capabilities have been more deeply integrated. Early adopters whom Gartner interviewed highlighted the ease of adding data visualizations and drill-down capabilities. The new architecture of Microsoft Dynamics AX 2012 supports the parallel deployment of extensions built by different partners into one solution. The partner layer can host multiple extensions, which are well separated from each other but can interact through clearly defined interfaces. Role-based UI personalization is seen by customers as being very flexible. However, Gartner estimates that only 20% to 25% of the user base personalizes the UI. Customers praise Microsoft's Premier support. Many customers value a strong relationship with Microsoft's development team. However, to scale, Microsoft needs to find a way to disseminate the same level of knowledge to partners, or embrace this direct contact as a differentiator and resource it. The new modeling capabilities of Microsoft Dynamics AX 2012 allow customers to graphically model various aspects of an enterprise, like the organizational setup and relationships between various business units, the allocation of people to organization units and the respective setup of user rights and access options. This model, while not yet making Microsoft Dynamics AX a fully model-driven packaged application, positions it better for upper midmarket companies, which tend to have dynamic and complex hierarchies. Cautions Microsoft Dynamics AX resources are sometimes difficult to source, according to customers, particularly at critical periods, despite Microsoft's MPN program. Microsoft is trying to supplement partners with Microsoft Consulting Services and other field resources, but industry expertise and experience at the partner level are often lacking. Clients are advised to ensure resources are aligned to required projects and protected as part of their service contracts. A small number of customers commented that Microsoft's incident support requires improvement, which is possibly one of the reasons why many customers value a direct relationship with the central development teams. Outside of the 36 countries for which Microsoft directly provides the product, the localization of Microsoft Dynamics AX is built by partners, which highlights the importance of careful evaluation of localizations. Customers suggest that Microsoft should be responsible for these localizations, even if it means reinstating a partner's intellectual property into the product. Localization of Microsoft Dynamics AX 2012 for Brazil, Russia, India and China (BRIC) will not be available until the end of The change from Business Ready Licensing to the new seat-based licensing in Microsoft Dynamics AX 2012 creates challenges for some customers that are upgrading. They should negotiate to ensure commensurate named seats are provided over the old concurrent model Page 16 of 50 Gartner, Inc. G

17 (see "Microsoft Dynamics AX 2012 Moves to General Release With Revised Pricing and Promising Configuration Accelerator"). Documentation for the final solution beyond what is delivered directly by Microsoft sometimes lacks details. Even though Microsoft's implementation methodology, SureStep, assists in documentation production, partners are often too stretched to finish the job effectively. Customers need to make sure that the complete solution is thoroughly documented, to avoid issues in later life cycle phases of the system. Oracle E-Business Suite Oracle E-Business Suite is a global, multiorganization, integrated, scalable solution with strong functionality for various industries, including high tech, industrial manufacturing, automotive, life sciences, consumer packaged goods (CPG), chemical, communications, utilities, engineering and construction, aerospace and defense. To shorten deployments in midmarket companies, Oracle to date delivers more than 470 Oracle Business Accelerators as rapid implementation tools incorporating industry best-practice business flows to provide a base solution. Oracle Business Accelerators allow customers to generate system configuration instructions based on a series of questions that pertain to their industry. The configuration instructions can be loaded onto an Oracle instance to create the setup required. Customers can then add, modify and expand the footprint as their businesses scale, and achieve faster deployments by selecting the industry-specific business transactions and business flows they need. This approach aims to reduce the initial efforts of an implementation; if further refinements are required, the overall effort is likely to increase. Despite the desire from users and partners to cut the implementation times short, customer experiences have shown that the design and blueprint phases, as with any rapid implementation offering, should be done with sufficient diligence, to determine the exact fit between Oracle Business Accelerators and requirements (see "Rapid Implementation Packages for ERP Deliver Results, but Handle Them With Care"). This will help users avoid later changes that prove to be more complicated and expensive than defining a solution with a better fit to the specific requirements before deploying it. Oracle E-Business Suite is an international product: The core product offers 35 standard languages, and Oracle Business Accelerators are available in 47 countries. New industry Oracle Business Accelerators for Engineering & Construction and three industrial manufacturing segments are available in 28 countries. Approximately 120 Oracle Accelerate solutions for Oracle E-Business Suite targeted to midsize customers and leveraging Oracle Business Accelerators are available from Oracle and its partners. However, most of these Oracle Business Accelerators are specific to some countries, and not uniformly available on a global level. Configuration features for multiorganization, multicountry projects have been improved, and Oracle E-Business Suite (available since August 2010) has seen improvements in areas such as SCM (e.g., electronic Kanban), contract management, procurement and service management. Prebuilt end-user documentation leverages business flow simulations built with Oracle User Productivity Kit (UPK) that allow users to build business process documentation, instructor manuals and business process-based presentations. Gartner expects the next version of Oracle E-Business Suite 12.2 to be released in late 2012, containing various functionality and usability enhancements and tools to reduce system downtime. Oracle and some partners offer hosting options and outsourced service offerings, which can allow Gartner, Inc. G Page 17 of 50

18 midsize companies to leverage Oracle E-Business Suite's capabilities without requiring internal resources to run the application. Oracle has declared global availability for Oracle Fusion Applications, positioning it as another source for an augmentation strategy, where distinct modules out of more than 100 modules can be deployed to extend existing ERP deployments (see "Weighing the Decision to Become an Early Adopter of Oracle Fusion Applications"). Some of these modules can offer attractive capabilities for some midmarket companies in a best-of-breed manner, and some Oracle midsize customers have successfully implemented this approach, but Gartner did not yet speak to any. The initial release is not targeted to the midmarket and does not include deep industry-specific functionality. Gartner therefore believes that it will not offer a viable option to replace full-suite deployments of current Applications Unlimited solutions like Oracle E-Business Suite before Oracle continues to support existing products. Oracle E-Business Suite has gained an unquestioned position as one of SAP's strongest competitors to deliver ERP solutions for large enterprises and for upper midmarket companies. However, its functional breadth and depth leading to an intrinsic complexity, lack of a modern, easy-to-use interface and the occasional need for more skilled IT resources, all of which can sometimes cause higher operating costs, can restrict its usability in some core midmarket companies. Several midmarket companies continued to report that the implementation of Oracle E- Business Suite has exceeded their resources and capabilities, and that significant assistance from Oracle consulting partners was needed, which was not always easy to get, and sometimes proved to be costly. Oracle E-Business Suite, together with Oracle's complementary applications, such as Oracle Hyperion, Oracle Agile Product Lifecycle Manager, and Oracle CRM On Demand, delivers a branded suite, where some deeper integrations have to be built and maintained individually, with Oracle's Application Integration Architecture (offering a potential foundation). These factors, together with the lack of a clearly visible, visionary next-generation offering for midmarket organizations, are the primary reasons why Oracle E-Business Suite is positioned in the Challengers quadrant with respect to midmarket companies. Strengths Oracle E-Business Suite is a scalable global integrated application suite with comprehensive functionality for many industries and is well integrated with the Oracle technology stack. It offers a multitude of complementary applications, some of which deliver prebuilt integration to Oracle E-Business Suite. The support for global single-instance deployments and for international companies is rated high by customers. Companies that experienced fast growth highlighted the scalability of Oracle E-Business Suite. Oracle Business Accelerators were found helpful to build a first conference room pilot system and to support the initial process design, delivering an industry best-practice base product with sometimes reduced deployment time. Oracle has over 120 Oracle Accelerate solutions for Oracle E-Business Suite available from Oracle Accelerate partners worldwide. Page 18 of 50 Gartner, Inc. G

19 Oracle's global presence, its viability and its financial stability are undoubted. Some of the largest global system integrators offer services around Oracle solutions (see "Magic Quadrant for Oracle ERP Implementation Services, North America"). Oracle Fusion Applications are generally available and offer not only best-of-breed style add-on modules to coexist with an existing ERP solution, but also a clearer vision for a next-generation ERP offering than in the past. Cautions Oracle E-Business Suite is a challenge for some smaller, as well as larger, customers, as it requires considerable resources to implement and to operate. Midmarket customers need to check if they require a product that can serve the largest enterprises and if they have the means to deploy and support it successfully. Oracle E-Business Suite can support very large global deployments, but customers should carefully design global charts of accounts, calendars and currencies as users found it difficult to change these after go-live when later changes became necessary. Oracle Business Accelerators allowed companies to reduce the time and scope needed for an implementation, but they did not offer support for later changes and optimizations. Some customers found it difficult to make changes to a system after go-live, so a detailed process design and a thorough check against the best practices delivered by the Oracle Business Accelerators were considered to be important, to avoid time-consuming and disrupting changes at a later stage. This is especially important when an Accelerate solution that was primarily built for one country is to be used on an international scale. Customers sometimes found it difficult to recruit the necessary resources and found consulting services to be high-priced, especially the ones offered by Oracle Consulting Services. Some Oracle partners offer pricing alternatives. The enterprise license model offered by Oracle is tied to the overall revenue of a company and was considered not to be commensurate in cases where the company growth did not result in a similar growth in numbers of users. Companies that plan to enter into an enterprise license contract need to carefully plan their projected growth for the life time of the contract to protect themselves against undue increases in costs. Midsize companies can use a component pricing model to purchase Oracle solutions. Oracle publishes price lists on its website, and customers should carefully choose the pricing that makes sense for them. Customers upgrading from an earlier version of Oracle E-Business Suite (11 or smaller) need to be prepared for the fundamental changes in some modules, especially financials, which have made upgrades more difficult for some customers with whom Gartner spoke (see "Oracle EBS Release 12 Upgrades: 12.1 Is Ready for Wider Adoption, but Is Still a Major Upgrade"). Oracle JD Edwards EnterpriseOne Oracle JD Edwards EnterpriseOne has been in the Oracle family for almost eight years. After an uneasy beginning, it has firmly established itself in the Oracle portfolio with an active and Gartner, Inc. G Page 19 of 50

20 enthusiastic customer base. JD Edwards continues to be relatively agnostic of infrastructure providers (customers are able to use Microsoft, IBM and Oracle). One change made in August 2010 is that new Oracle JD Edwards customers can no longer purchase IBM infrastructure products from Oracle, but will need to go directly to IBM. Customers that purchased IBM infrastructure products from Oracle are still supported through In the future, Oracle will continue to certify the product on IBM and Microsoft's stacks, but customers must seek support directly from their respective vendor. Gartner occasionally sees Oracle promoting Oracle E-Business Suite to prospects when Oracle JD Edwards EnterpriseOne appears to be a better fit. We therefore advise customers to seek additional outside guidance to ensure they are evaluating the appropriate product for their business requirements, if it appears that they are being directed to a product incorrectly or overly early in Oracle's sales process. The solution serves four broad industries projects and services, consumer goods, manufacturing and distribution as well as asset-intensive industries via a sizable partner base globally. As with any vendor's channel community, there is a variance in terms of breadth of offerings and capabilities. In terms of the distribution of partner base, Oracle JD Edwards EnterpriseOne has a mixed spread worldwide, without a concentration in one area, which shows the maturity of the ecosystem. To increase the speed of deployment and set up, Oracle has created a number of Oracle Business Accelerators, used by qualified partners across Oracle's applications portfolio. These are tools used in conjunction with Oracle solutions, such as Oracle JD Edwards EnterpriseOne, which provide predefined business flow-based templates. There are approximately 150 Oracle Accelerate solutions for Oracle JD Edwards EnterpriseOne available from partners that provide a packaged, rapid deployment solution using Oracle Business Accelerators. In April 2012, Oracle released version 9.1 of the software, which included enhanced UI, reporting and mobile capabilities, which are all user-desired features. For this research, we focused on version 9.0, as it was current at the time we conducted our research and afforded Gartner meaningful reference customers to speak to. Features as of 9.0 include a reworked UI with modern concepts, such as in-context reporting and dashboarding, enhanced personalization capabilities (which have been further refined in version 9.1), and browser-based access to the full solution through tablet computers. A framework allows end users to define and publish embedded views of related information that may stem from external Web applications. Functional enhancements in 9.0 include an apparel management solution adopted from a partner, environmental accounting and reporting, enhancements in financial management of global organizations, and revenue and cost forecasting for projects. While the product road map is subject to change, we expect Oracle to continue enhancing elements such as usability, analytics (native, as well as via integration with other Oracle BI products) and mobile access to the application. Given the progress of Oracle Fusion Applications, we don't expect Oracle JD Edwards EnterpriseOne to experience a complete overhaul of its architecture to make it a completely model-driven packaged application, beyond the strong configuration features that it currently offers. Due to the product's continued evolution, positive customer feedback and product Page 20 of 50 Gartner, Inc. G

21 positioning/strategy, we have again placed Oracle JD Edwards EnterpriseOne as a strong contender in the Challengers quadrant. Strengths Oracle JD Edwards EnterpriseOne offers deep, native industry functionality for its four industry focus areas. Oracle is beginning to make selective intellectual property acquisitions from its partner community to further deepen the product in areas where it feels there is significant customer opportunity. The recent Tools release 9.1 offers optimized access to the application from mobile devices such as Apple's ipad. From a product extension perspective, Oracle JD Edwards EnterpriseOne customers have an increasing number of potential add-ons from Oracle's portfolio. These optional products range from horizontal functionality (e.g., CRM and BI capabilities) to highly product-centric areas, such as demand planning, transportation management and PLM. Customers we have spoken to speak highly of the code quality in recent releases, as well as the relative ease in maintaining the application. Customers tend to use the multiple technology stack options (Oracle, IBM or Microsoft) that Oracle JD Edwards EnterpriseOne offers for vendor negotiation and in-house skill reasons. The quality and consistency of Oracle's technical support for Oracle JD Edwards EnterpriseOne remains high, with many customers we spoke to considering Oracle's support superior to the original support offered by JD Edwards prior to the acquisition. During 2010, Oracle unveiled an enhancement to its partner certification program with the introduction of specializations. In the case of Oracle JD Edwards EnterpriseOne (and also for Oracle E-Business Suite), these exist for areas of manufacturing, financials, distribution, Configurable Network Computing (CNC) and projects. As of December 2011, over 50% of partners within the JD Edwards ecosystem have achieved some level of this enhanced certification criteria, and the number of integrations validated by Oracle is growing continuously. Cautions Customers continue to comment that, in some fundamental areas (such as production planning, purchasing and printing), additional custom reports/interfaces/workarounds are needed with 9.0 to make it more suitable to end users. While a common issue with other vendors in this research, we noticed more of a trend among Oracle JD Edwards EnterpriseOne customers to comment on this. Customers should monitor the progress made in newer releases (e.g., the JD Edwards One View Reporting in 9.1). Customers have commented that the annual maintenance cost for Oracle JD Edwards EnterpriseOne can sometimes be higher than the perceived value they are receiving under their support agreement. Overall, the quality and response of customer support is positive. Gartner, Inc. G Page 21 of 50

22 Customers interested in extending Oracle JD Edwards EnterpriseOne with other Oracle Edge products should be aware that the license and implementation of these Edge solutions is sometimes much higher than expected for the typical Oracle JD Edwards EnterpriseOne customer base. Oracle JD Edwards EnterpriseOne customers with a need or interest in some of Oracle Fusion Applications modules are now able to purchase selected modules, but customers need to be fully aware of the potential risk when using this very new technology. QAD Enterprise Applications QAD has a long heritage for serving midsize and large organizations in the manufacturing sector. Originating with a focus on automotive and industrial manufacturing, QAD now also serves CPG, life sciences, and food and beverages organizations. QAD has a balanced presence of installed base and new customers worldwide, and it maintains a healthy direct presence in 21 global locations with a staff of 200 or more support engineers and 400 or more professional services staff. QAD is predominantly a direct sales, implementation and support organization, with partners only used in a small number of select geographies. QAD has rewritten its financial management module and its UI, and has created an Enterprise Edition targeted to its large customers. This provides it with a much improved foundation to compete with many of its peers in the marketplace. QAD also offers a hosted option with shared codebase and separate databases per tenant for customers wishing to maintain full control and ownership of the product without the need for a dedicated data center internally. Mobile access from ios and Android devices is supported. The product strategy overall lacks vision in terms of technology; but for the target audience, the pace of innovation is acceptable. When delivered, the product and code quality is generally held in high regard by the customers we have spoken to. From a core technology component's perspective, QAD continues to follow the Progress technology stack combined with some QAD proprietary components, such as BI. Customers looking to move from QAD Standard Edition to Enterprise Edition and that have made many customizations over the years are advised to consider a reimplementation plan, rather than an upgrade, as QAD has made many improvements that negate the need for a number of customizations. Due to QAD's continued focus on specific industries, the impact of the recession on QAD's results, and the lack of a broader partner ecosystem, we have placed QAD in the Niche Players quadrant, although one with a strong Ability to Execute. Strengths Reference customers speak highly of QAD's focus and investments in their respective industries. Most admit that QAD is not the fastest vendor to adopt, rewrite and incorporate new technology into the product. When it does these things, QAD produces a solid outcome. QAD has solid references for global upper midmarket deployments using the Domain Architecture for single-instance deployments. Page 22 of 50 Gartner, Inc. G

23 QAD has shown itself to be highly customer-centric, with a strong focus on its industries. Key executives regularly meet with customers on-site to discuss progress and answer product/ company strategy questions. Normally, this is a trait reserved for special/top customers by many vendors; but for QAD, this appears to be a regular occurrence for large and small customers alike. QAD predominantly utilizes a direct sales and implementation force for most geographies, which enables it to retain and maintain consistency in terms of delivery to end customers. In addition, according to QAD, its global partners include over 1,000 implementation professionals. QAD has been providing dedicated hosting for QAD instances for many years. This offer has been complemented by a SaaS version (shared code, separate databases) that customers can use with limited IT resources for application management. This model together with QAD's Domain Architecture allows for a hybrid deployment, where parts of the application of one customer can be run on-premises and other parts accessed as SaaS. Cautions QAD offers a natively built BI solution that should be good enough for some situations as the underlying BI platform. Customers seeking richer data visualization and analysis capabilities should also consider using a third-party product. Despite having global coverage for professional services, QAD suffers some availability issues (especially when it comes to certain domains, such as financials and accounting). Customers we spoke to commented that flexibility is needed to accommodate the schedules of certain professional services resources. While the quality of QAD's professional services teams' technical knowledge and implementation perspective has been rated very highly by customers that Gartner spoke to, comments regarding the quality and availability of QAD's business consulting expertise was less consistent. QAD's license revenue was hit particularly hard during the recession. While the situation consistently improved during 2011, it has taken longer for QAD to recover and increase revenue compared with its peers. This makes QAD slightly weaker financially versus some of its peers. Almost 60% of QAD is still owned by the founders, who act as chairman and CEO, respectively. This has proven to be a strength for the past 32 years, but questions regarding the transition to a new management in the longer term are current themes among many customers we spoke to. While the eventual successors cannot be compared with the founders, the latter are unlikely to relinquish control until they are happy with the new management's capabilities and intentions. Sage ERP X3 Sage ERP X3 is Sage's global ERP solution, which was officially launched in early 2010 with the aim of capturing mind share and market share in the global midmarket customer segment. (This runs counter to most of Sage's other ERP products, which tend to be more small-business-orientated Gartner, Inc. G Page 23 of 50

24 and available in a limited number of countries.) Sage ERP X3 is available in 55 countries and is built on the former Adonix product. Sage ERP X3 currently has over 3,300 customers, including former Adonix customers, with an increasing number of new Sage ERP X3 customers. Over 80% of the original user base is in Europe, with a good presence in various African countries. Of the new customers, two-thirds are in EMEA, approximately 20% are in the Americas and approximately 10% are in Asia/Pacific. The solution has been successfully deployed to smaller customers with, on average, approximately 50 users to some larger customers with over 500 users, although some of the largest have over 1,000 users. The current version of Sage ERP X3 is version 6.4 (released in 1Q12), which has been built with usercentricity as a core topic and supports search, as well as integration to Microsoft's Office 2010 product. Through the Netvibes publishing platform, it allows users to connect to Sage ERP X3 from mobile devices. The next release is expected in Gartner has seen notable progress regarding internal sales and product enablement since we last evaluated Sage. The product has been elevated as a core strategic offering within Sage. Further investment and effort are still needed to bring it into the same league as others in this Magic Quadrant, especially for product depth and support for product-centric industries. The product today is more advanced in terms of industry readiness for service-centric industries. These factors lead to us positioning Sage ERP X3 in the Niche Players quadrant. Strengths Sage has incorporated some of what Gartner considers the basic foundation of a modern packaged ERP application into Sage ERP X3 e.g., first steps toward embedded analytics, aspects of user centricity, SOA design principles, etc. (see "Modernizing ERP: How to Make Users Fall in Love With ERP All Over Again"). Sage ERP X3 supports the Microsoft SQL Server and the Oracle Database, which offers more options for its customers than many other vendors in this Magic Quadrant. Sage ERP X3 offers prebuilt integration to a selected range of Sage's CRM (e.g., SalesLogix) and BI products that are available and supported globally. Sage leverages an extensive partner community to deliver and support the solution to customers, and also provides the use of Sage professional services for large and/or complex deployments. Due to Sage's geographical coverage, the company encourages a program whereby local Sage units can create localizations and customizations for their local market. These localizations are then selectively brought back into core code for the benefit of the customer base. Sage ERP X3 is one of the few solutions rated in this Magic Quadrant that has good coverage in various African countries, as well as a large installed base of small customers, which could be migrated to the solution as they outgrow their existing solutions. Page 24 of 50 Gartner, Inc. G

25 Cautions Customer perceptions generally characterize Sage as a software provider for small companies without the need for complex multicountry and multisite needs. This sometimes makes Sage ERP X3 a harder sell for advocates when asking for sign-off from senior management. Sage sells Sage ERP X3 alongside other solutions, such as Accpac and MAS 500, in certain markets. This sometimes leads to confusion for end customers, and possible showdowns and competitive messaging among the various Sage products, especially when reseller partners are involved. Sage has improved its industry strategy for Sage ERP X3, by offering industry solutions for verticals such as automotive, aerospace and defense, industrial engineering and machinery. However, the product lacks the same level of deep functionality for these verticals as some other products in this Magic Quadrant offer. License costs are considered on par with more-established products. Sage ERP X3 offers two license models, with concurrent licenses in the Standard Edition and named users in the Premium Edition. Customers found this to be an issue when moving from Standard to Premium. While Sage has provided Gartner with a list of reference customers, we have experienced more difficulties in speaking with these customers, compared to the prior year. This suggests that prospects for the solution may also experience some difficulties in contacting reference customers and that Sage needs to improve its reference selling capabilities, which are critical in the midmarket. Sage possesses a significant portfolio in local solutions (notably in finance and HR). Packaged and standard integrations with Sage's local HR solution still require a custom professional services engagement, although Sage is working on a tighter integration framework between Sage ERP X3 and its local HR and payroll solutions. SAP Business All-in-One SAP Business All-in-One applications are prepackaged, industry-specific solutions fashioned from SAP Business Suite functionality to support midmarket businesses. With preconfigured CRM, supplier relationship management (SRM) and ERP functionality, SAP Business All-in-One is the SAP Business Suite product with a templated deployment methodology, sold and implemented exclusively by SAP partners. Each partner remarkets and implements an industry-specific offering that uses a combination of SAP industry templates, as well as partner-specific templates, to configure a turnkey solution. Each solution provides business process documentation that includes feature set descriptions, process flow diagrams and step-by-step user guides. This approach delivers the full scope of the underlying solution while helping to reduce the effort needed in the early phases of an implementation. Additional changes, enhancements and customizations, beyond simple configuration and turning on additional functions, are possible, but users doing so have to cope with the full complexity of the SAP Business Suite. Gartner, Inc. G Page 25 of 50

26 In addition to the underpinning SAP NetWeaver technology platform, SAP Business All-in One comprises the ERP core ECC 6.0, selected functionality from CRM (mainly for sales and services with some marketing) and SRM (mainly procurement and sourcing), and some BI capabilities for operational reporting and analysis. The functional richness of SAP Business All-in-One, with or without the addition of Rapid Deployment Solutions for additional functional areas, can help reduce customizations, but also makes customizations where needed difficult to build and to maintain, especially through upgrades. This leads to the fact that users adapt even their company-specific processes to what the system offers, rather than adapting the solution to best fit their differentiating business requirements. From the perspective of global penetration, ability to scale, market share and SAP's commitment to the solution, SAP Business All-in-One is one of the strongest solutions in the market. SAP's Solution Configurator enables partners to include their individual offerings, scope and prices, which is the most developed and transparent approach in the industry. Yet, for the user companies considered in this Magic Quadrant and based on data across all the reference customers with whom we spoke as part of the study process, SAP Business All-in-One proves to consistently result in a higher TCO for the same number of users against other considered solutions. End-user complexity and reduced flexibility to adapt the solution to changing business requirements are also evident in responses from customers using the product. Despite these factors, the combination of SAP's undisputed leadership in the large enterprise market, coupled with the ongoing efforts to make it easier for midsize to large organizations to adopt the preconfigured packages, makes SAP Business All-in- One one of only two products in the Leaders quadrant with a specific fit for companies at the upper end of the midmarket and for companies with aggressive growth ambitions that need the scalability and functional strength of a Tier 1 solution. Strengths SAP Business All-in-One offers rich functionality and many well-documented industry-specific best practices, which together address a wide range of requirements out of the box. More than 700 solutions are available globally and supported by over 1,000 partners worldwide. Each partner delivers its own extensions for specific industries or regions. SAP's fast-start program continued to help midsize businesses make their implementations easier and proved its value in the early phases of an implementation project (e.g., system configuration, personalized demo and easier installation). SAP's Rapid Deployment Solutions take the principles that originated in SAP Business All-in- One (software, preconfigured solutions with best practices, documentation and often fixed prices) and apply them to other functional areas (e.g., CRM, SCM and others). SAP Business All-in-One customers should check which Rapid Deployment Solutions published quarterly offer opportunities to expand the functional scope of their preconfigured implementations. Gartner believes that SAP Business All-in-One is best-suited for upper midmarket companies or for fast-growing companies in a variety of industries that have a demand for broad and deep specific functionality. The application is available worldwide, but the majority of the installed base and new clients is in EMEA. Page 26 of 50 Gartner, Inc. G

27 Cautions Customers need to be aware that significant additional effort might be needed after the first golive to complete and optimize the implementation. Carefully check the estimated efforts for external and internal resources. Ensure that recognized KPIs are used throughout the implementation, which you and the implementing party recognize and by which the partner is measured at each step. Where possible, insert risk and reward milestones to ensure the partner remains focused on the end success, not simply the implementation. Few partners are trained in Rapid Deployment Solutions and few have experience, so choose partners carefully. Some customers commented that SAP tended to rely on the fact that customers will license a report generator, such as Business Objects, Crystal Reports or Cognos, and, as a result, the production of some complex reports without such tools was challenging. This reflects previous customer comments. Although SAP Business All-in-One offers thousands of built-in reports, the users with whom Gartner spoke did not find all the reports they needed, and found that even simple changes required expensive programming in Advanced Business Application Programming (ABAP). Despite the large global presence of the SAP Business Suite, customers commented that legal requirements, such as invoicing and reports for some countries, are not fully supported in the SAP system. In general, over 90% of local requirements were deemed to be fully covered. Users should remain diligent to ensure support is provided in a timely manner. Customers recommended having sufficient ABAP and other technical skills before starting an implementation or deployment. SAP Business All-in-One is very capable, but this sheer amount of functionality results in a lot of complexity, requiring extensive training. Usability was mentioned as an issue, particularly related to personalizing screens. Customers commented that unwanted fields are only marked as inactive, not hidden; so users complain that the fields still clutter the screen. The NetWeaver Business Client, which SAP positions as an important infrastructure to overcome issues around lack of usability, found little adoption; customers commented that it did not fully cover all functionality areas they needed. Customers need to check if NetWeaver Business Client (which was recently enhanced with additional context-specific content support) meets their needs. Surprisingly, there was some criticism about the depth of industry knowledge and diligence of the SAP Business All-In-One partners. In a number of cases, partners were not fully aware of industry-specific and geographic requirements that had been estimated essential by the customers. Several customers commented that some of the new initiatives coming from SAP, including SAP Hana, are priced so high that they must only be applicable to very large organizations. SAP plans to address the SAP Hana topic during 2012, with offerings tailored for midmarket companies. Gartner, Inc. G Page 27 of 50

28 Vendors Added or Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor. Added No products have been added. Dropped The following products have been removed because they do not support a single-instance deployment for multientity midmarket companies (see Market Definition and Inclusion Criteria): Infor10 ERP Business (formerly known as Infor ERP SyteLine) Offers a replication module to synchronize multiple entities of the system. The replication allows users to synchronize data, thus allowing them to set up some degree of master data management (MDM) and joint processing of transactional data between entities. This replication feature was described in a lot of detail in "Magic Quadrant for ERP for Product-Centric Midmarket Companies." Being available in more than 20 languages and used in more than 30 countries, Infor10 ERP Business is a very international solution. A Web client, better support for mobile users and a portal solution built on Microsoft SharePoint enable support for more types of users across the company. Integrations into Infor10 Workspace, role-based dashboards and other interactions with Infor10 ION have been added, as well as Food and Drug Administration (FDA) compliance and other industry-specific enhancements. Microsoft Dynamics NAV Offers various solutions to synchronize multiple instances, most of which are built using Microsoft BizTalk server and supported by NAV partners. The road map on NAV focuses on making it available as a cloud ERP based on Microsoft Azure with subscriptionbased licensing, with its growth focused on companies with up to 100 employees. The next release, announced for later in 2012, will have consolidated functionality that was distributed over different country versions, will deliver a client based on SharePoint and will include functional enhancements across the product. Syspro With customers in over 60 countries sold primarily through a reseller channel, Syspro's comprehensive ERP product is one of the most international midmarket ERP systems. It offers a role-based UI with dashboards and support for mobile access. The next versions will include a module for retail, a Web-based product configurator and enhancements to warehouse management. Exact Globe This is an ERP system that is primarily used by small single-site companies, as well as subsidiaries of large enterprises, and does not support single-instance deployments. The latest version, Exact Globe Next, was released in late 2011, offering a reworked UI, including dashboards, event management and basic Synergy functionality for all users. The Page 28 of 50 Gartner, Inc. G

29 lower end of the Benelux (Belgium, the Netherlands and Luxembourg) market is served with Exact Online in two flavors: a generic SaaS financial accounting solution and specialized versions offered to trade and professional service companies. Over the last two years, Exact was run by an interim management team that executed a major internal restructuring, reducing the number of subsidiaries and employees. Inclusion and Exclusion Criteria As described in the market definition, this year's midmarket ERP Magic Quadrant focuses on singleinstance ERP solutions for product-centric multientity midmarket companies. To be included in this Magic Quadrant, an ERP suite must fulfill all of the following criteria: Geography: The vendor must serve at least two of the following three global regions: North America, EMEA and Asia/Pacific. Installed base: The vendor must have at least 500 customers in the product's installed base with the organizational structure as described in the market definition, and the installed base distribution must be at least 20% in two of the three geographies. New license sales per product submitted: Each quarter, license revenue from new customers with the organizational structure as described in the market definition must contribute at least 10% to the total revenue. Two of the three geographies must contribute at least 20% of new license sales per geography. Viability: The offering must be viable and supported at the time of publication of this Magic Quadrant. Application functionality: The functionality provided by the vendor must contain the systems of records for general ledger and product master, and at least four of the following systems of record: order data, customer master, employee master, vendor and supplier master, purchasing, contracts, assets, pricing, cost, quality and planning. The solution must support multiple organizational units, multiple country legislations, etc. in one integrated instance or a similar setup. Architecture: The majority of an application must be in one architecture and data model (application platform), or the vendor must have a credible vision for accomplishing this. An ERP suite must fulfill all of the above criteria in order to be included. We find that clients are interested in offerings from large global vendors with fragmented installed base offerings, regardless of whether or not the product is global, but because of the vendor's marketing presence. Therefore, we have defined an additional independent criterion: Offerings of large global vendors with a road map to become globally available: To be a large global vendor, a vendor must have an installed base of at least 3,000 customers in this market. For a vendor with a fragmented offering, we include the ERP system for product-centric companies that have the biggest international presence, if the vendor articulated a strategy to make its product available globally by the end of 2011 and has the ability to execute against this Gartner, Inc. G Page 29 of 50

30 strategy. The evaluated product has to fulfill the criteria defined above for viability, application functionality and architecture, and at least 10% of quarterly revenue of this product must come from new customers. Unlike the previous set of criteria, this criterion says that while coming from a large global vendor, the product itself does not yet meet the requirement for being an international product. Evaluation Criteria Ability to Execute The breadth and depth of functionality and the technology of midmarket ERP products are highly rated components of a vendor's Ability to Execute. The most comprehensive systems are not automatically the best choice for midmarket companies, which, in many areas of their businesses, have neither the need for specialized functionality nor the means to cope with it (see "Midmarket Companies: Clarify Requirements for Process and Information Support to Enable User-Centric ERP"). The right mix of good-enough functionality in commodity processes with strong support for fewer, but strategic, processes is more important. Because midmarket companies have only limited IT resources to assign to implementing and running an ERP system, the lowest possible TCO throughout the application life cycle (from selection through implementation, optimization, operation and management, to retirement) is a key requirement, and is one important differentiating factor (see "Midmarket Companies: Use These Criteria to Select an ERP System With Low Total Cost of Ownership"). The expectation that the TCO of a cloud ERP would be much lower than other ERP systems is the major reason for the growing interest in these offerings. However, cloud ERP can only reduce some parts of the overall costs (see "SaaS ERP Only Reduces Part of the Effort Needed to Implement and Operate Your ERP"). Product/Service: In addition to the functional fit of the solutions to a wide range of midmarket companies, we have rated the ease of adapting or modifying a solution, the UI (ease of use, personalization and collaboration, integration with analytic applications, etc.), the overall simplicity or complexity of a solution (see "What CIOs Need to Know About Application Simplicity" and "The Role of Simplification in Application Overhaul") and the level of verticalization that a solution has achieved. Because of limitations in resources, many midmarket companies look to their primary ERP vendor when seeking additional products (e.g., for PLM, SCM and warehouse management). Therefore, we also rated the availability of add-on products and the level of their integration with the core ERP system. Consequently, the product criterion has one of the highest weightings in this Magic Quadrant. An ERP system's ability to serve a multientity company in a single instance always has been an important evaluation subcriterion. The relative weight of this feature has been increased to account for the focus on this type of solution, unlike the previous Magic Quadrant versions. Overall Viability (Business Unit, Financial, Strategy, Organization): Because most ERP systems are used for 10 or more years, vendor/product viability and risk remain important criteria. Although the vendor's viability is important, it should not overshadow product fit, vendor expertise, TCO, and service and support. Several of the vendors included in this Magic Quadrant are smaller companies; and although there are some viability concerns, all other factors being equal, viability alone should Page 30 of 50 Gartner, Inc. G

31 not preclude users from considering these vendors. Many smaller vendors have been profitable and in business for many years, and most have actually suffered less from the economic climate in 2010 and 2011 than some of the large vendors. While their revenue may not be in line with large megavendors, their overall persistence in successfully serving their target markets over a number of years merits their consideration. The intensive acquisition activities of the past few years have shown that ERP systems whose architectures are not dated and that have an active user base of a certain size are not automatically taken off the market. The products are still sold, even when the vendor is taken over by a competitor with an overlapping offering, although the speed of innovation and the investments into the acquired product might be negatively impacted. (For further information on recent ERP acquisitions, see "Lawson's CUE Announcements Indicate the Value It Carries Into the Acquisition by Golden Gate-Infor," "Customers Could See Mild Gains From Apax Purchase of Activant and Epicor," "Managing Vendor Risk: It's Not the Software Vendor You Should Worry About, It's the Product" and "Where All the Midmarket ERP Vendors Have Gone.") Therefore, the overall viability criterion has a standard weighting. Sales Execution/Pricing: Pricing and sales execution are significant differentiators in the midmarket ERP segment. ERP systems whose core market is in the upper-midmarket or largeenterprise space are often significantly more expensive in terms of TCO. Although even high discounts on license fees can often be negotiated, other important cost factors (such as rates for consultants and maintenance rates) are less flexible. Several vendors have a huge portfolio of additional components, such as PLM, CRM and SCM, but the prices for these components are often much higher than the core ERP licenses. Many midmarket firms realize this after they have made a significant investment in time and resources deploying the ERP system, expecting, but not finding, similar pricing on extended components once their evolving requirements demand them. Ease of buying is important for midmarket companies that cannot afford to install complete teams for the selection and negotiation process. Most of the vendors in this research do a huge portion of their business through an indirect channel, and the development and sustainability of the channel is an equally important factor. For these reasons, the sales execution/pricing criterion has a high weighting. Finally, license models that offer options for different types of users (e.g., not requiring a full license for information-only users) help companies build a more user-centric ERP strategy. Market Responsiveness and Track Record: Midmarket ERP is a slowly evolving market. Most solutions have been around for more than 10 years, and, in some cases, the roots of the systems date back 20 or more years. Because of this level of maturity, market responsiveness is less important for the core ERP functionality, and the market responsiveness and track record criterion has a low weighting. Marketing Execution: Marketing execution, while important to market visibility, is not an important element of the overall evaluation process, and most of the vendors covered lack the means to be highly visible in multiple regions. Vendors that can afford to run global marketing campaigns suffer from the fact that the portion of their messaging that is focused on midmarket companies is often hidden under the highly visible, but generic, overall messaging targeted at the largest enterprises. Therefore, the marketing execution criterion has a low weighting. Gartner, Inc. G Page 31 of 50

32 Customer Experience: An ERP vendor's ability to use and exploit functionality to drive business value and provide a good customer experience is a critical element of a vendor's Ability to Execute. ERP systems touch almost all parts of a company, and the implementation of an ERP system is one of the most complex projects in many companies. Midmarket companies lack the workforce capacity to allow many business users to exclusively support the implementation; rather, the implementation work has to be done in addition to the daily workload (see "Midmarket Companies: Use These Criteria to Select an ERP System With Low Total Cost of Ownership"). Vendors with a long track record in the midmarket have designed and built their systems and tools to overcome their customers' resource constraints, and their consultants and professional services are wellacquainted with this. The lower level of specialization that is typically prevalent in midmarket IT organizations requires support organizations on the vendor side that can deliver technical and business support efficiently, and flexibly fill gaps in skills and resources for their customers. For international deployments, it is important that this level of quality and ability is equally present in all regions where the systems are available, either directly or through the partner channel. For these reasons, the customer experience criterion has a high weighting. Operations: Finally, the operations criterion looks at a vendor's internal ability to meet its goals and commitments on an ongoing basis. Factors include the quality of the organizational structure, including skills, experience, programs, systems and other vehicles that enable an organization to operate effectively and efficiently on an ongoing basis. Because the external factors that are important for companies that deploy any of the systems are included in the criteria described above, the operations criterion has a low weighting (see Table 1). Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Weighting high standard high low low high low Source: Gartner (June 2012) Completeness of Vision Market Understanding: We assess an ERP vendors' ability to understand buyers' wants and needs for ERP in general, but for midmarket ERP in particular, and translate them into products and services. Vendors that show the highest degree of vision listen, anticipate and understand buyers' Page 32 of 50 Gartner, Inc. G

33 wants and needs, and can augment them with their own ERP visions. Vendors that simply respond to current market requirements without anticipating future requirements will not likely be successful over the long term due to the complexity of functional and technical enhancements that will have to be made to the products, even in the comparably slow-moving ERP market. Vendors' domain expertise, their focus on product-centric companies in the midmarket, their technology vision and vision for the midmarket ERP of the future rank highly, which is why the market understanding criterion has a high weighting. Marketing Strategy: A vendor's marketing strategy has a low impact on the midmarket ERP market. Although important, marketing strategy is not highly differentiated among vendors. Most vendors in this market struggle with their visibility and market awareness, and, in the case of wellknown brands, it is not obvious from their marketing that they are relevant players in the midmarket ERP space. Therefore, the marketing strategy criterion has a standard weighting. Sales Strategy: A good vision for the sales strategy will remain an important success factor in the future. Midmarket companies have some specific buying behaviors (see "Survey Analysis: Worldwide SMB IT Spending Plans for 2011" and "Predicts 2012: Midsize Businesses Seek Technologies to Simplify Their IT Environments"), and vendors that want to be successful in this market have to build strategies and organizational structures to comply with these. A concise and transparent mix of indirect versus direct channels is important, because customers expect similar structures and consistent conditions in all regions where they need to deploy the solution. Examples for innovation in the sales process include self-service capabilities to guide prospects (e.g., Webbased solution configurators and pricing engines). Therefore, the sales strategy criterion has a high weighting. Offering (Product) Strategy: Product strategy is critical, and refers to a technology provider's approach to development and delivery that emphasizes differentiation, functionality, technology, methodology and feature set, as the provider maps to current and future midmarket ERP requirements (see "How to Evaluate Your Vendor's ERP Strategy"). It also refers to technology evolution, which includes important topics such as user-centricity (see "How to Learn to Love Your ERP (Again)" and "Using the Hype Around ipads and Tablets to Make ERP More User-Centric"), mobility (see "Predicts 2012: The Business Application and ERP Markets Are Changing Rapidly"), SOA, embedded analytics, model-driven packaged application awareness (see "Model-Driven Packaged Applications: Using SOA and BPM to Modernize Packaged Applications"), MDM, social software, and the emergence of business process platforms (BPPs) and multienterprise BPPs. For the purposes of this evaluation, Gartner measures vendor strategies for building end-to-end processes that span functional areas across the enterprise. The vendors' understanding of market changes, and their product strategies for successfully navigating these changes, significantly influences their Completeness of Vision, which is why this criterion has a high weighting. Business Model: Vendors' business models (that is, the soundness and logic of providers' underlying business propositions) are not critical, except as they apply to delivering overall midmarket customer satisfaction; therefore, the business model criterion has a low weighting. Vertical/Industry Strategy: Industry-specific functionality is an important differentiating factor among midmarket ERP systems. Some vendors have selected a number of industries on which they Gartner, Inc. G Page 33 of 50

34 focus, while others offer more horizontal functionality and rely on their partner channel to complement and complete the solution (see "How to Evaluate Your Application Vendor's Industry Strategy"). In this case, to avoid customers being overly dependent on partners, which are typically much smaller and often less viable than the vendor, it is important that the vendor and the partners show a high level of mutual engagement, and work closely together through joint development and rigid certification programs to ensure clarity and consistency in relaying timely messages and delivering product functionality of the highest quality to the customer base. Because most vendors in this Magic Quadrant have developed an approach to offer industry-specific functionality, although each for a different set of vertical markets, the vertical/industry strategy criterion has a standard weighting. Innovation: Most midmarket ERP vendors do not have the size or the financial means to drive massive innovation programs. Rather, they tend to be pragmatic, taking a just-in-time approach to delivering process and feature innovations, based on when their customers expect them and can use them, rather than an "invent and they will come" mentality. As visible in recent developments, such as role-based UIs or industry-specific orientation, major trends are often developed by some of the large vendors. As they are generally accepted and sought out, the trends become quickly adopted by the smaller vendors as well. Therefore, the innovation criterion has a low weighting. Geographic Strategy: We look at a technology provider's strategy for directing resources, skills and offerings to meet the specific needs of internationally active midmarket companies. Since more midmarket companies are participating in globalization trends and are present in multiple countries or regions, it is important that their ERP vendors can accompany and support them in all relevant territories. Most of the vendors included in this Magic Quadrant have a market presence that is restricted to some regions, so this is an important selection criterion to determine whether the vendor covers all markets that are, and will be, relevant to the selecting company. Therefore, the geographic strategy criterion has a standard weighting (see Table 2). Page 34 of 50 Gartner, Inc. G

35 Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Weighting high standard high high low standard low Standard Source: Gartner (June 2012) Quadrant Descriptions Leaders Leaders demonstrate a clear vision and the Ability to Execute against this vision. Midmarket ERP Leaders' products have deep and robust functionality that addresses a range of core user requirements. Not necessarily the largest vendors in terms of revenue, these vendors have proven products, a track record of customer success and demonstrated momentum in growing their market presence, as well as a clearly communicated strategy to develop their current product into a next-generation application without causing too much disruption when adopted by their customer base. Leading vendors have offerings that appeal to the specific process needs of midmarket customers, show good support for user-centric ERP approaches, and are designed or streamlined for low TCO, while being available and well-supported in multiple regions. Leaders are successfully transforming their products to become model-driven applications to allow for high process and information flexibility, with tools for embedded analytics and UIs that allow for easy adoption by different types of users in the context of a user-centric ERP strategy (see "How to Learn to Love Your ERP (Again)"). Leaders have compelling strategies for addressing the ongoing market changes related to emerging technologies, such as SOA, cloud, mobility and the integration of social technologies. They also have built structures to extend their systems with industry-specific solutions, often in cooperation with their partner's ecosystem, which delivers the best support for the specific processes in vertical markets, while offering good-enough support for the lessdifferentiating processes (see "Midmarket Companies: Clarify Requirements for Process and Information Support to Enable User-Centric ERP"). Leaders have built delivery channels, either Gartner, Inc. G Page 35 of 50

36 direct or through an indirect channel, which help midmarket customers with their limited resources to successfully adopt, deploy and optimize their solutions. Finally, Leaders cultivate a broad and generally overwhelming level of customer satisfaction in a number of geographies and industries, as demonstrated in continuous interactions between Gartner analysts and their customers. Challengers Challengers have broad and mature ERP systems, with a strong international presence, either directly or through indirect channels. Although their solutions can be configured to the needs of midmarket companies, they may not have a clear strategy for fundamentally modernizing their solutions (for example, a lack of financial potential for the significant investments needed, or architectures that do not allow for evolution, or the existence of other solutions in their portfolio, which, in Gartner's view, will be preferred over them, such as Fusion Applications as Oracle's nextgeneration offering). Challengers offer solid support for companies that do not expect to undergo dramatic changes and do not expect the most innovative solutions built using the latest technologies. All the products listed in the Challengers quadrant of this Magic Quadrant will presumably not disappear, even if their vendors are acquired (see "Managing Vendor Risk: It's Not the Software Vendor You Should Worry About, It's the Product" and "Where All the Midmarket ERP Vendors Have Gone"). Challengers have stable consulting and support structures in multiple geographies. Finally, despite any noted shortcomings, which vary depending on the product offering and vendor, one clear, distinguishing feature of a Challenger is a vocal and satisfied base of customers across the geographies and industries the vendor serves. Visionaries Vendors of products in this quadrant have a compelling vision for achieving a differentiated position in the market, such as a full SOA/model-driven packaged application strategy, high ease of use, implementation and operation, but they lack certain characteristics in their Ability to Execute. Visionaries might have compelling product strategies, but they lack the market momentum or have not yet reached full market presence to move higher in their Ability to Execute. Generally, customer satisfaction, as with Ability to Execute, is limited, mixed or ambiguous, due to the newness of recently introduced innovation(s), or because the vision, although noteworthy and theoretically appropriate to the midmarket, has delivered mixed results in vendor practice. Niche Players The Niche Players in this Magic Quadrant fall into two categories. The first category comprises solutions that are often functionally adequate, and, in some cases, are the best choices for the specific requirements of an individual customer. However, they lack the full depth, breadth or robustness of functionality demanded by the most complex and sophisticated users, and often do not have a vision for attaining, nor the level of persistence required to attain, the status of becoming a next-generation ERP product (see "Modernizing ERP: How to Make Users Fall in Love With ERP All Over Again"). These vendors often lack the broad experience, new client numbers, customer references or investment levels compared with the leading vendors in the Page 36 of 50 Gartner, Inc. G

37 market. This is not to say that Niche Players are not viable; in fact, they can be good ERP vendors for many buyers. In some cases, such as user companies that only deploy to a few countries, or companies with limited complexity or sophistication, or are in a few very specific target vertical markets, a Niche Player vendor could be the best choice. The second category of products in the Niche Players quadrant comprises solutions that were originally designed as solutions for large enterprises, or over time have been developed for large enterprises. Although these systems have broad and deep functionality in most areas, their scope, complexity, cost and scalability can sometimes be more than what midmarket users require. In some cases, lack of skilled consulting resources and limitations in the availability of partners have to be overcome to improve these vendors' solutions Ability to Execute. For both categories, we find the products in this quadrant do not have a clear and credible vision for how to turn the solutions into modernized offerings (see Market Overview), whether because of a lack of financial means to execute against a vision or because the company pursues other visionary plans that are not directly applicable to the products analyzed in this research. Nevertheless, for an individual enterprise, a product in the Niche Players quadrant can be a good choice, depending on the user's requirements. A more detailed analysis is needed to determine the best solution for any given company, and Niche Players solutions should not be excluded from any selection process. Context The 2012 Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies addresses the needs of product-centric companies with between 100 and 999 employees, and with annual revenue between $150 million and $1 billion. In actual cases, the number of employees will be up to 10,000 or even more, depending on industry and geography. These enterprises are not necessarily small or have only basic business requirements. They have limited IT resources and seek ERP systems that support their differentiating business processes well with deep functionality, but do not require significant overhead in the nondifferentiating business areas (meaning the systems must minimize TCO and complexity; see "Midmarket Companies: Clarify Requirements for Process and Information Support to Enable User-Centric ERP"). Compared with previous versions, the inclusion and evaluation criteria for this Magic Quadrant were changed. To cope with the ongoing globalization, many midmarket companies have built an international presence, either organically or through acquisitions. To make this research more relevant for those midmarket companies that have evolved over a single-site organization, only those ERP systems are included that primarily serve companies with multiorganizational requirements (e.g., multiple legal entities in different countries). Systems that do not offer strong support for the resulting requirements e.g., to support multiple legal entities in one single instance (global or regional) are not included. (Please note that this Magic Quadrant is different from the version published in 2009, and does not cover divisions of larger enterprises with a two-tier ERP strategy.) Gartner, Inc. G Page 37 of 50

38 The ERP market for midmarket companies is large and mature, and several applications that we analyzed have their origins in systems that have been in the market for more than 10 years. Yet, Gartner sees this market as being continuously modernized, and established systems with deep functionality on older technology are being displaced by more modern and agile systems (see "IT Market Clock for ERP Platform Technology, 2011"). These new systems enable users to be more agile in their responses to changing market conditions and to grasp new business opportunities faster. The key changes in this market since the last publication of this Magic Quadrant include: Integration of data visualization (e.g., dashboards) into transactional screens is offered by many vendors. In some cases, this is done in a context-sensitive way, where the content of the visualization elements is automatically updated to reflect the active business object (e.g., a customer) in the transactional part of the screen. This allows users to gain additional information without having to leave the transactional environment. Most vendors have started to offer some flavor of cloud ERP, and the term is often used interchangeably with SaaS-based ERP. However, in various cases, this does not mean a new product. Instead, it often names a combination of traditional hosting of a dedicated instance, some managed services and possibly a subscription-based license model. Oracle has announced that the cloud version of its Oracle Fusion Applications will be offered in a singletenant model. No new entrants of multitenant ERP systems have come up in the meantime. Not much progress has been made on the availability of skilled and experienced resources for consulting and implementation. Many customers that Gartner spoke to have had issues getting the resources they needed. The shortage is worse with some vendors than with most, but companies embarking on an ERP journey need to take that into consideration and make sure they get resources with the skills needed at the time needed. Deep industry coverage, business consulting expertise and the right level of certification or specialization is sought, but not always provided. The overall ERP market grew 12% in 2011, up from 5% in 2010, with product-centric ERP for midmarket companies more than contributing their fair share to the market. Manufacturing and operations have not been as healthy as other ERP segments in recent times, but even this area showed encouraging growth in Given the mild recovery seen in the market over the past two years and the still fragile nature of the macroeconomy, we expect the market to see growth in 2012, but it's likely to be more moderated compared with The majority of vendors featured in this Magic Quadrant performed at or above the average growth rate for the market. All vendors featured have a healthy percentage of revenue from maintenance, thus recording a positive level of vendor viability. Mergers and acquisitions (M&As) came back as a prominent feature of the overall ERP market in 2011, with indications already seen that this will again feature highly in the evolution of the market in However, the majority of the activity has centered around the HCM segment, rather than the midmarket product-centric ERP arena. The two exceptions in 2011 were Epicor's acquisition by Apax Partners and Lawson's acquisition by Infor. While there are some significant providers that are still independently owned and operated, we believe the majority of M&As in the midmarket product-centric ERP space have occurred, thus providing a level of Page 38 of 50 Gartner, Inc. G

39 predictability in the market. Even when some major vendors have been acquired, their products and brands live on. It's rare for an acquirer to discontinue an acquired product; if they do, there's normally a long timeline attached to it (see "Managing Vendor Risk: It's Not the Software Vendor You Should Worry About, It's the Product"). Similar to the last iteration of this Magic Quadrant, Gartner has identified two offerings that qualify as Leaders in the market at this time: SAP Business All-in-One and Microsoft Dynamics AX: SAP Business All-in-One is one of the broadest and deepest solutions in the market, and its Best Practices and the Fast-Start Program reduce the effort needed for the early phases of an implementation. SAP Business All-in-One is based on extensive experience from SAP's large partner channel, which has turned partners' expertise into prepackaged and precustomized versions of SAP's Business Suite, marketed under the brand name SAP Business All-in-One. SAP has responded to customer complaints regarding usability by releasing a NetWeaverbased Business Client, but its adoption is still limited, as with Sybase-based mobility solutions. Overall, challenges with this application's complexity and cost continue to be issues, which makes it a best fit for companies that are in the upper midmarket or, by rapid growth, intend to be there in a few years. Microsoft Dynamics AX is targeted at midmarket organizations. It offers broad and robust functionality, and delivers low TCO through integration with other Microsoft products and technologies. Microsoft's industry strategy for Microsoft Dynamics AX results in strong functionality built by Microsoft's internal resources or acquired from proven partners. Microsoft has continued to improve its channel of resellers, by focusing on working with partners that contribute new sales and have undergone the certification programs. The last release, Microsoft Dynamics AX 2012, offers some fundamental changes to its architecture, which makes it an even stronger solution, but will require significant change efforts for customers upgrading from an earlier version. One offering is rated as a Visionary: Epicor ERP (formerly Epicor 9), through its use of modern technology and delivering on the promise of a product based completely on an SOA, is the most visionary and complete offering in the market. Its ICE architecture and built-in BPM features offer a high level of flexibility that can be preserved through upgrades, as witnessed by a number of customers Gartner spoke to. Epicor ERP offers innovative approaches to mobility, embedded analytics and deployment as a SaaS solution (Epicor Express). Epicor is a comparatively small vendor, but the company and the product have proven to be strong in worldwide execution, although it is not yet as mature and as globally present as the Leaders' products. In 2011, Epicor was acquired by Apax Partners and then merged with Activant, a vendor offering a number of ERP solutions for smaller distribution companies. The decision was made to use Epicor ERP as the future platform to build out capabilities for distribution companies. There are seven other offerings in the Challengers and Niche Players quadrants. Some of these offerings have superior functionality in particular parts of the market, so investigate these options, as they might offer a good fit for your specific requirements. However, these offerings do not have a Gartner, Inc. G Page 39 of 50

40 compelling vision for leading the market, or have other critical challenges detailed in the individual product summaries. Gartner's methodology does not allow readers to use the Magic Quadrant for a trend analysis, to see how a solution has evolved compared with its peers by just looking at "how the dot has moved." Instead, each Magic Quadrant is a point-in-time analysis that describes and analyzes the current situation. This is especially true when the evaluation criteria have been changed: From 2009 to 2010, a product's ability to serve as a complementary solution in a two-tier ERP scenario was dropped (see "Two-Tier ERP Suite Strategy: Considering Your Options"). From 2010 to 2012, solutions that do not primarily serve multiple organizations in one single instance were removed from the Magic Quadrant, and the ability to support multiorganizational enterprises received a higher weighting, along with some other changes in the evaluation criteria. These changes make it impossible to assess a product's progress by comparing its current position in the quadrant to the position in a previous version of this Magic Quadrant. Market Overview ERP Market Overview: Almost Back to Predownturn Values Last year, 2011, was a positive year for most vendors in the ERP market, with license revenue nearing or exceeding levels seen in 2008 (before the global downturn took hold). Gartner estimates that the market grew 10% in 2011 to $23.3 billion in total software revenue. Of this, Gartner estimates that approximately $2.7 billion can be attributed to product-centric companies. Last year (2011) also marked the first year that the market's valuation increased over the total value seen in Drivers for license revenue recoveries include: Catch up modernization projects and the resumptions of deferred ERP upgrade projects. The uptake of new modules. The expansion of users accessing the ERP system. End of standard support for older versions of ERP software. The need to rethink the IT systems strategy, due to significant changes to the business over recent years. Maintenance revenue for the majority of vendors has continued to perform well (even during the downturn), with most vendors successfully retaining the majority of their customers on support contracts. In many situations over the last two years, vendors have sought to fully execute their contractual rights with their clients (e.g., audits in extreme cases) to ensure they can derive maximum revenue. Therefore, losses of maintenance contracts for the majority of vendors have been minimal and usually a result of the customer going out of businesses rather than volunteering to drop maintenance contracts. Page 40 of 50 Gartner, Inc. G

41 While the market has clearly regained some strength and momentum, the ERP market is still subject to the restrictions and confidence levels imposed by the current economic climate. Even in emerging regions where growth has been historically strong, there is some weaknesses and uncertainty. Gartner's outlook for the market overall is one of cautious optimism for moderated, but still positive, growth. The implications of the market's health means that it remains very much a buyer's marketplace, with end users being able to exert more leverage on new business deals. One detrimental effect of the poor economy has been that many large and midmarket vendors have reduced their professional service capabilities, hoping that third-party system integrators and consultants will increase their resources to supplement and increase the vendor's professional services capacity. Overall, this remains a work in progress (with associated implications for end users). Hence, we advise clients to be cognizant (and, if appropriate, set contractual expectations) about the implementation resources that a chosen vendor provides. M&A Activity After a brief hiatus during the peak of the economic downturn, M&A activity returned. Most of the activity was confined to relatively small or focused M&As for industry and functional capabilities. Many of last year's M&As were related to the HCM sector. The biggest was the announced takeover of SuccessFactors by SAP, closely followed by Oracle's announcement to acquire Taleo. In terms of significant announcements for midmarket product-centric ERP providers, two involved vendors featured in this Magic Quadrant: The acquisition of Lawson Software and the resulting merger with Infor was started in April 2011 and completed in April The transaction included new and extended debt financing with an average maturity date of (For further analysis, see "Customers and Prospects Should Monitor Potential Sale of Lawson" and "Lawson's CUE Announcements Indicate the Value It Carries Into the Acquisition by Golden Gate-Infor.") The acquisition of and subsequent merger of Epicor Software with Activant Software by Apax Partners occurred in May The go-forward name for both entities is Epicor Software, and the road maps indicate plans to integrate various functionalities contained in Activant's solutions into Epicor ERP, similar to the completed integration of iscala and Vista. (For further analysis, see "Customers Could See Mild Gains From Apax Purchase of Activant and Epicor.") M&A activity is a consistent force within the industry (especially within ERP). While there's a tendency to make pronouncements about the future status and viability of acquired products, the reality is that product road maps are subject to change for current products and customers, but the acquired systems are unlikely to be retired or unsupported anytime soon. This gives customers plenty of opportunity to assess whether the acquisition or merger of their vendor is positive or negative and, if appropriate, allows time to make alternative arrangements and plan a migration for another product and/or vendor. Gartner, Inc. G Page 41 of 50

42 Major Trends and Changes Since the last publication of this Magic Quadrant, we have seen the following major trends and changes in this market: SOA and model-driven architectures prove their value in packaged applications for the midmarket. Systems with a more model-driven architecture (for instance, Epicor ERP) offer more configuration capabilities that allow users to adapt the system to their specific, differentiating needs. Instead of more intrusive customizations that can prove difficult in a system upgrade, the model-based configurations can be preserved during an upgrade (see "Manage ERP Customizations, Don't Avoid Them"). To make their solutions more user-centric, many vendors have reworked their UIs. Dashboards and other data visualizations can be added and mixed with transactional screens, navigation has been improved, search features were added, etc. However, it needs to be understood that user-centricity is about more than refreshing the UI. It is about rethinking the entire ERP strategy by taking the users' needs more into consideration than in the past, when most of the strategy was about ensuring data and process integrity. Beyond the traditional transactional power users, ERP needs to be made relevant for information users, casual users and business leaders and process owners (see "How to Learn to Love Your ERP (Again)"). Mobile access to ERP systems is gaining momentum and has garnered a lot of interest among user communities, especially the information and casual users. Beyond well-known scenarios like workers moving around a warehouse and using specialized, ruggedized mobile devices to post material movements, even more traditional ERP systems, such as Oracle JD Edwards in its latest release, offer full tablet-based access and specialized, single-purpose apps to perform certain activities. Companies need to define their mobile scenarios and the kind of access that is needed in each. Interest in SaaS-based or cloud ERP is growing, but adoption is still limited. Many vendors have defined offerings that include some form of hosting, including services to manage and operate an ERP system. Many vendors have added some subscription-based license models, and then claim their ERP system was available in the cloud. However, essential cloud features like elasticity, metered use or pay-per-use are not included in many of these enhanced hosting offerings, let alone the promise of transparent upgrades to gain easy access to the latest product enhancements that many users link to SaaS. Users need to understand that implementing a SaaS-ERP is, in many cases, as complex and costly as implementing a traditional on-premises ERP system (see "SaaS ERP Only Reduces Part of the Effort Needed to Implement and Operate Your ERP"). NetSuite (see "Observations and Analysis From NetSuite's 2011 Global Customer Conference") and Plex Online continue to be the leading vendors in this space, but despite a more aggressive attempt to grow outside the U.S., the majority of their customers are still U.S.-based. SAP Business ByDesign, which was made generally available in August 2010, is finding increased adoption, but its country presence and number of industry-specific versions are still limited. Epicor, for example, offers a SaaS version of its product (Epicor Express) primarily to small companies, while Oracle says it has designed Oracle Fusion Applications to be deployed as Page 42 of 50 Gartner, Inc. G

43 multitenant SaaS, on-premises and hosted (see "Weighing the Decision to Become an Early Adopter of Oracle Fusion Applications"). Gartner's Pace-Layered Application Strategy (see "Applying Pace Layering to ERP Strategy") triggers a lot of interest among users and vendors. ERP systems traditionally reside on the layer of the systems of record. However, industry-specific extensions or company-specific configuration possibilities let them partially overlap in the systems of differentiation layer. It is important to understand that pace layering is a model that needs to be filled with content by ERP users, not by ERP vendors. What is differentiating or innovative depends on the users and their use of business applications, not an arbitrary positioning on the vendors' side. Shortage or lack of skilled resources for implementation and consulting services remains a critical issue, even with some of the large vendors. The impact that this had on customer projects differs among vendors. Customers embarking on a major ERP initiative such as an implementation, a major upgrade, a consolidation project or an international deployment need to factor this into their planning. In some cases, sales success of an ERP system ate up the quality of service delivery. Recommended Reading Some documents may not be available as part of your current Gartner subscription. General ERP Research "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market" "How to Learn to Love Your ERP (Again)" "How to Deliver a More User-Centric ERP Solution" "Using the Hype Around ipads and Tablets to Make ERP More User-Centric" "Agenda for ERP and Enterprise Suites: Strategies and Value Realization, 2012" "Enterprise Application Suites and ERP Key Initiative Overview" "Hype Cycle for ERP, 2011" "Q&A: What ERP Is and What the Associated Terms Really Mean" "Predicts 2012: The Business Application and ERP Markets Are Changing Rapidly" "Predicts 2012: Emerging Suites and SaaS Are Driving New Capabilities in Administrative ERP" "Defining the Five Phases of the ERP Life Cycle" "Life Cycle Guide to ERP Research, Update 2011" Gartner, Inc. G Page 43 of 50

44 "Applying Pace Layering to ERP Strategy" "Application Standardization: When It Works and When It Doesn't" "Use a Pace-Layered Application Strategy to Clean Up ERP During Upgrades and Consolidation" "What Can Gartner's Pace-Layered Application Strategy Do for an Enterprise's Business?" "Accelerating Innovation by Adopting a Pace-Layered Application Strategy" "What to Do When Your ERP Vendor Is Acquired" "ERP Project Best Practice: Transitioning ERP Projects From the Architect Phase to the Select Phase" "ERP Requirements-Gathering Considerations and Guidelines" "How to Accelerate Your ERP Requirements Definition" "Manage ERP Customizations, Don't Avoid Them" "ERP Consolidation: Standardizing Processes and Evaluating Your Options" "ERP Consolidation: Convincing Others Requires 'the Art of War'" "To Upgrade or Not to Upgrade: That Is the Question" "Coordination Is Key for Managing ERP Support, Maintenance and Ongoing Projects" "Global ERP Template: Management and Maintenance" "ERP/Business Applications and the Public Cloud: A Life Cycle Assessment Methodology and Key Focus Areas" "CIO and ERP Leaders' Guide to Gartner's Cloud Computing Definitional Research" "CFO Advisory: ERP Overview" "CFO Advisory: ERP; Business Enablement" "Use a Strategic ERP System Integrator Relationship to Drive User-Centric Thinking" "Gartner Interviews Andrew McAfee on Why Investment in Enterprise Applications and ERP Matters" "Avoid Misleading Cost-Estimating Rules of Thumb" "Estimating the Costs of an ERP/Business Application Initiative" "An ERP Business Case Tutorial" Page 44 of 50 Gartner, Inc. G

45 "Ten Factors That Can Affect ERP Total Cost of Ownership" "Toolkit: Business Case Model for Total Cost of Ownership Analysis of SaaS Versus Traditional Application Software and Services" "Rapid Implementation Packages for ERP Deliver Results, but Handle Them With Care" "ERP Program Manager's Guide to Mergers, Acquisitions and Divestitures: Overview" "Toolkit: Job Description for ERP/Business Application Project Manager" "How to Deal With the ERP Customization Needs That Result From Localization in the BRIC Countries" Modernization of Business Applications "Restructuring Your Application Portfolio" "Business Managers Need to Care About SOA in ERP" "IT Market Clock for ERP Platform Technology, 2011" "IT Modernization: The Changing of the Guard" "Model-Driven Packaged Applications: Using SOA and BPM to Modernize Packaged Applications" "Applications Overhaul: How to Get Out of the Hole and Not Fall Back In" "Best Practices in ERP Innovation: Toys for the Board, Essential Tools for the Disabled" "Embedded Analytics Will Impact Business Application and BI Strategy" "MDM for ERP Requires a Different Mind-set" Market Overview "Market Snapshot: ERP Software, Worldwide, 2012" "Market Share Analysis: ERP Software, Worldwide, 2011" "Market Trends: ERP, Asia/Pacific, " "Forecast: Enterprise Software Markets, Worldwide, , 4Q10 Update" "Competitive Landscape: Software Support Services for Enterprise Applications (CRM, ERP, SCM), Worldwide" "Use a Vendor Evaluation Model to Select ERP Vendors and Software" Gartner, Inc. G Page 45 of 50

46 "How to Evaluate Your Vendor's ERP Strategy" "SaaS ERP Only Reduces Part of the Effort Needed to Implement and Operate Your ERP" "Toolkit: How to Determine the Appropriateness of SaaS" Midmarket ERP-Related Research "Midmarket Companies: Clarify Requirements for Process and Information Support to Enable User- Centric ERP" "Midmarket Companies: Use These Criteria to Select an ERP System With Low Total Cost of Ownership" "Managing Vendor Risk: It's Not the Software Vendor You Should Worry About, It's the Product" "Will SaaS-Based ERP Succeed in India When It Hasn't Globally?" "Competitive Landscape: Midmarket Manufacturing Focused ERP Software, North America, 2012" "A Two-Tier ERP Suite Strategy: Is It Right for You?" "Two-Tier ERP Suite Strategy: Considering Your Options" "Localization Is the Way to Cope With Globalization Challenges" "How Globalization Will Affect Technology Development and Use" "Understanding Users Through Activities: A Critical Path for Simplification" "What CIOs Need to Know About Application Simplicity" "The Paradigm of Resource Constraint" Vendor-Related Research "Microsoft Convergence 2011 Previews Dynamics AX 2012 and Next Steps Into the Cloud" "Microsoft Dynamics AX 2012 Moves to General Release With Revised Pricing and Promising Configuration Accelerator" "Top Takeaways From Early Adopters of Microsoft Dynamics AX 2012" "Vendor Rating: Microsoft" "Vendor Rating: Oracle" "Weighing the Decision to Become an Early Adopter of Oracle Fusion Applications" "Oracle EBS Release 12 Upgrades: 12.1 Is Ready for Wider Adoption, but Is Still a Major Upgrade" Page 46 of 50 Gartner, Inc. G

47 "Oracle Fusion Applications: A Mystery Resolved" "Oracle Fusion: Understand the Road Map and Estimate Transition Costs" "Magic Quadrant for Oracle Applications Service Providers, Europe" "Vendor Rating: SAP" "Vendor Focus for SAP" "Using Pace Layers to Boost the Business Value From Your SAP ERP Investment" "Oracle, Salesforce.com and SAP Acquisitions Will Impact Your SaaS Strategy" "Duet Enterprise by Microsoft and SAP Unlocks User-Centric ERP With SharePoint" "SAP Tackles Innovation Without Disruption at SAP Influencer Summit" "SAP Operations: Constraints for Single Global Instances" "SAP Research Roundup Through 2Q11" "Magic Quadrant for SAP Application Service Providers, Europe" "Competitive Landscape: SAP Application Outsourcing, North America" "Cool Vendors in the SAP Ecosystem, 2012" "User Survey Analysis: SAP Application Maintenance Challenges, 2011" "SAP Is Committed to the ERP Midmarket, but Customers Should Apply Due Diligence to Its Portfolio and Sales Channels" "Lawson's CUE Announcements Indicate the Value It Carries Into the Acquisition by Golden Gate- Infor" "Infor's Acquisition of Lawson Could Mean Strategy Change" "Market Insight: Lawson's Wholesale Distribution Division May Be Key to Unlocking New Market Share" "Infor ERP: How ION Impacts Consolidation Planning" "Can Infor's Ion Integration Suite Deliver Easy Integration for Its Applications?" "Infor Announces New Product Strategy and CEO" "IFS Will Increase Field Service Market Penetration Through Metrix Buy" "Customers Could See Mild Gains From Apax Purchase of Activant and Epicor" Gartner, Inc. G Page 47 of 50

48 "SWOT: NetSuite, Wholesale Distribution Industry" "Observations and Analysis From NetSuite's 2011 Global Customer Conference" Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor that compete in/ serve the defined market. This includes current product/service capabilities, quality, feature sets and skills, whether offered natively or through OEM agreements/ partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: The vendor's capabilities in all pre-sales activities and the structure that supports them. This includes deal management, pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel. Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word-of-mouth and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Page 48 of 50 Gartner, Inc. G

49 Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision. Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements. Business Model: The soundness and logic of the vendor's underlying business proposition. Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market. Gartner, Inc. G Page 49 of 50

50 Regional Headquarters Corporate Headquarters 56 Top Gallant Road Stamford, CT USA European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Japan Headquarters Gartner Japan Ltd. Atago Green Hills MORI Tower 5F Atago, Minato-ku Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on its website, ombudsman/omb_guide2.jsp. Page 50 of 50 Gartner, Inc. G