IT service companies in the UK are eyeing enterprise resource planning software as a new driver for growth. The big multinational companies have, of course, been in the market for some time, alongside many small, specialist companies. Now the mid-sized companies are looking to establish a sizable presence. ICL Plc, a subsidiary of Fujitsu of Japan, quietly set up an ERP base in Finland last year and revealed earlier this month that it plans to specialize in SAP R/3 installations. It has already bought skills in the market after also buying a 51% holding in PC Dir, a Brno, Czech Republic-based company which is one of the biggest implementers of SAP AG software in that country (CI No 3,491). Moreover, FI Group, not content with an order book of 253m pounds – 86% up on last year’s figure – said this month it planned to move into ERP by specializing in PeopleSoft and Oracle ERP packages. ERP strength has traditionally been in the manufacturing sector, the company says, while FI’s clients are primarily in the retail and finance sectors. The spread of ERP into these markets, with products targeted at specific sectors, means that companies such as FI have to be able to offer ERP installations to their clients. Indeed, the role of ERP into the services sector is well illustrated by the fact that FI has just rolled out a PeopleSoft installation in its own organization. In sectors such as retail, which have traditionally relied on bespoke applications, there is a growing awareness that ERP now offers a way to gain competitive advantage. While revenues in IT services have been racing ahead in recent years, any company that fails to offer ERP skills risks losing not just revenues from ERP installations to rivals – but is likely to see clients defect to those who offer a full service. Those IT companies which specialize in ERP such as Druid Plc appear unworried by the arrival of new competitors. They point to the fact that business skills are essential to successful ERP installations, as is a knowledge of specific vertical markets. Druid’s skills in this regard are such that has been used by large services companies such as EDS for ERP installations. Those services companies preparing to plunge into the ERP business are confident that they can offer the necessary skills. ICL, for example, is particularly strong in the retail sector. It wants to complement ERP’s supply chain tools with its own software for analyzing customer behavior. ICL has already interfaced its GlobalSTORE retail trading software and its Corema sales and marketing analysis system with SAP’s R/3 retail component. While the company is cautious about predicting the future, the first R/3 installation in the UK is likely to be announced later this year. Other service companies will also be trumpeting their own, first successes in ERP. The growing consensus is that any service company with high ambitions for growth will need to start the new millennium with a strong and growing ERP division.
