ERP Vendors Moving to Aerospace and Defense Markets

ERP Vendors Moving to Aerospace and Defense Markets
P.J. Jakovljevic - February 21st, 2000

Event Summary

According to new strategic research conducted by Frost & Sullivan, "North American Aerospace and Defense Enterprise Software and Service Markets,' total market revenues totaled $1.33 billion this year, an increase of 7 percent over 1998. As the Aerospace and Defense industry redefines business dynamics, enterprise resource software and service markets are projected to experience strong growth. While legacy system replacement will further warrant ERP implementation; system expense, coupled with Y2K expenditures, are expected to inhibit market growth in the short term. Hence, ERP companies are setting their sights on SCM markets, adapting to Aerospace and Defense requirements, and improving systems' return on investment (ROI)."

"Key technology trends such as the Internet, electronic data interchange (EDI), and extensible markup language (XML) are prompting enterprise software and service companies to optimize process control applications and focus on manufacturing and maintenance, repair, and overhaul (MRO),'' says Sermin Taber, an industry analyst at Frost & Sullivan. "As aerospace and defense companies examine best practices and re-engineer business processes, incorporation of new technology will be imperative. By focusing on issues such as cost, maintenance, and obsolescence, aerospace and defense companies hope to increase their overall competitiveness. While ERP process control applications attempt to meet these needs, lack of technical support and reluctance to adopt new systems still hinder market expansion. Additionally, lack of qualified personnel and automated installation continue to impede revenue growth. Important opportunities exist for companies that improve their system and service ROI and institute technologically advanced protocols."

Frost & Sullivan has identified the following companies as some of the participants in the North American aerospace and defense Enterprise Software and services market for the purpose of this study:

ABBASOFT Technologies
Access International Group
American Software Inc
AremisSoft Corporation
Aspect Development Inc.
Baan Company
Cincom Systems Inc.
Computer Sciences Corporation
Dynamics Research Corporation
Ernst & Young LLP
Enhanced Systems & Services
Epicor Software Corporation
ESI/Technologies Inc.
The Fredrick Group Inc.
Glovia International LLC
Hewlett Packard (Services & Solutions)
I2 Technologies Inc.
IBM (Global Services)
Intuitive Manufacturing Systems
J.D. Edwards & Co.
Jobscope Corporation
Lilly Software Associates Inc.
LPA Software Inc
Manugistics Inc.
MatrixOne Inc.
Oracle Corporation
PeopleSoft Inc.
PS Industry Inc.
Relevant Business Systems Inc.
SAP America Inc.
SET Technologies
ShopPro Software Inc.
Smart Shop Software
Synergistic Computer Solutions LLC
Thru-Put Technologies
TRW Inc. (Integrated Supply Chain Solutions)
TTW Solutions LTD
webPLAN Inc.
Western Data Systems
Xdata solutions Inc.

Market Impact

While this is certainly good news for sales starved vendors, they will also have their work cut out for them. Those who can deliver solutions that satisfy the exacting, stringent requirements of some vertical markets are in the driver's seat to capture that market segment. As an illustration in this particular case, A&D producers are typically high-tech or electronic manufacturers, and must handle complex production processes and large, complex supplier networks. Sophisticated customer order management applications are typically not required. Instead, customer service needs are more oriented toward contract management and cost reporting. Additional tracking and reporting requirements are another big issue, to name but a few.

Meeting the Aerospace and Defense industries' dynamic needs will require ERP and SCM vendors to improve ease of installation, ROI, interoperability, and service support networks. Moreover, escalating competition in the aerospace and defense markets will definitely make price a critical competitive factor.

User Recommendations

The importance of a thorough, well-structured ERP software selection process can never be over emphasized. Neglecting any of TEC's six parent ERP market evaluation criteria (Product Functionality, Product Technology, Product Cost, Corporate Service and Support, Corporate Viability, Corporate Strategy) can result in a selection with disastrous consequences.

A&D organizations currently initiating an ERP software selection are advised to research the major ERP players in this niche, seek assistance in the selection process from unbiased service providers, and base their decisions only on existing functionality that the vendors are able to demonstrate during scripted scenario sessions. 'Bolt-ons' should be selected only from official business partners of the primary ERP vendor, after making sure that partnership is not a mere marketing pitch.


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