Event
Summary
With the Internet
quickly shaping up as the major battleground in the ERP arena, SAP's formal
announcement might have been earthshaking. It takes an early lead among the
ERP vendors and positions itself to meet growing challenges from such software
component manufacturers as Ariba, Commerce One and Concur. However, neither
the stock market nor news analysts seemed to care very much. Almost simultaneously,
Best Buy announced second quarter earnings of $59 million (28 cents per share)
which were up 34 percent from its Q2 earnings ($44.1 million; 21 cents per share)
of a year ago. However, the company also noted that its Internet strategy would
not be implemented in time for the holiday buying season. Best Buy's stock fell
about 10%.
Market
Impact
Both of these
announcements are important in themselves. We believe that a strong Internet
presence is crucial for ERP vendors to demonstrate in a fairly short time. By
rolling out a solution on time, and ahead of the competition, SAP has established
itself as a credible player in the future ERP playing field. Best Buy is a hot
company, and any stumble will show up on the analysts' radar screens. But one
might have expected more cheers for their financial success. While missing the
holiday buying frenzy on the Internet is not good news, Internet buying is still
a tiny piece of the consumer market. Furthermore, the company's claims that
they prefer to get it right rather than rush to the Internet with something
less than solid will certainly find approval from IT professionals, even if
market analysts and investors still haven't gotten the picture.
User
Recommendations
The moral is
a familiar one. There is a magnifying glass focused on any E-Commerce project,
and company after company is learning how difficult it can be to launch a major
Internet initiative. (For years SAP has been developing architectures for its
desktop projects which have been especially conducive to being extended to the
Web). While we don't know what problems Best Buy may be facing, it's not hard
to imagine that they have encountered both technical difficulties and the challenge
of a moving target, as the business strategy changed in response to the fast-moving
Web. There is no magic bullet, but it is clearly more important than ever for
IT and the business side to work together in evolving strategies and schedules.