Industry Outlook -- High Technology: SOFTWARE
YOUR DATA SHOULD MEET MY DATA
Hark back to the old days in the computer industry--about two years ago. A salesperson at Digital Equipment Corp. could drill down in a company database to fish out technical specs for a customer. But the data produced might not match what a Digital inventory manager kept separately on her desktop computer, resulting in annoying delays while users cross-checked their information.
That's why Digital and dozens of other companies are hot on so-called "integrated enterprise software." The idea is to junk all the old "legacy" systems that separately handle a large company's customer orders, inventory, shipping, and logistical information, and replace them with a single set of programs to run the company. That way, all the data look the same, regardless of who's tapping in or where they work.
Large multinationals already have installed billions of dollars' worth of these systems. This has flooded the coffers of industry leaders SAP in Germany and Baan in Holland. Americans missed the first wave, but now Oracle Corp., Microsoft Corp., and others are plunging in. The sector is poised to grow 14% worldwide, to $11.1 billion in 1996, according to International Data Corp.
The market for related services is a gold mine, too. Deloitte & Touche's consulting arm rakes in $200 million a year advising SAP customers. It's "a phenomenal success," says Darvis Cormier, a D&T international director.
Such services don't come cheap: A switchover can cost a large manufacturer $100 million, making it "the most expensive systems decision a company has ever made," says Dick J. Fishburn, chief information officer of Digital, which is installing SAP software.
And if your company buys such a system, your integration problems aren't instantly solved, warns Vinnie Mirchandani, an analyst with Gartner Group, based in Stamford, Conn. He calls enterprise systems "a 40% solution masquerading as a 100% solution." Still, a 40% solution is better than none. And that should put plenty of wind underneath the wings of software and services companies in this hot niche.By Neil Gross in New York, with Gail Edmondson in Paris