Pegasus A Report on Mid-Market ERP October 11, 2001 MBA 253 The Pegasus Group: Mario RossoMario Rosso Phil RandolphPhil Randolph

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 2 Emerging ERP Opportunity  The potential market for mid-market ERP systems has forced major vendors (JBOPS) to reevaluate and redesign their systems  A large number of new vendors have emerged to meet the growing demand.

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 3 Changing Market Trends  ERP market traditionally confined to fortune 1000 companies  1990’s Boom in ERP sales to large Companies  ERP vendors designed products for this market  1998-Present: ERP sales in decline  Factors Preventing Mid-size companies from adopting ERP –Complexity –Cost –Lengthy Implementation

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 4 Mid-Market Customer Profiles  Gartner Group: $200mill -- $1bill rev.  Marcam: $50mill -- $500mill rev.  PeopleSoft: Below $750mill  Others lower bottom range to $20mill  Association For Computing Machinery –Large: More than 1,000 employees –Mid: Between 50 and 1,000 employees

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 5 Mid-Market Vendor Profiles  Ross Systems Inc. –Provides ERP and e-business solutions to 3200 businesses world wide –  ABACUS Data Sys. –  Handout

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 6 Forces Driving Mid-Market Firms to Deploy ERP  Competition (large and small enterprises)  Need for real-time info to help speed delivery of products and services to customers  Improved decision making  ISO requirements and Y2K  Promote uniformity in business processes

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 7 Forces Driving ERP Vendors to Market to Mid-Size Firms  ERP market for Fortune 1000 firms is saturated –Declining in North American by 12% per year  Mid-market ERP demand growing –Estimates between 32%-50% per year through 2003  Far more midsize companies (30, ,000)

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 8 Factors Inhibiting Mid-Size ERP in Past  High costs –Installation –Maintenance –Training  Complexity of system  Necessity of hiring full-time IT support staff

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 9 Inhibiting Factors Continued  Fear that system won't keep pace with changing nature of organization  Concern that vendor won't be available for long-term support  Unacceptably long waits for ROI

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 10 Mid-Market ERP Selection Criteria  Best-fit for business processes (most important)  User friendliness  Scalability  Support  Training

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 11 Selection Criteria Continued  Ability of system to integrate with legacy and future applications  Price point below $1 million  Modularity of applications  Web delivery

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 12 Emerging Technologies  Hosting & ASP –Delivered over Internet/VPN, leased-lines –System installed & maintained at vendor facilities –Infrastructure and software issues diminished for customer –Low monthly rate per user

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 13 Emerging Technologies  Pay-by-the-drink –ERP applications offered as modules –Customer only purchases services they use

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 14 Thank you for your time Thank you for your time

MBA 253 PegasusGroup MBA 253 Mid-Market ERP (Pegasus) 15