ERP Takes Throne As Most Ubiquitous Enterprise Application In European Automotive Industry

LONDON--Sept. 2, 2003--Enterprise resource planning (ERP) is set to retain its firm grip on the European automotive industry as other enterprise application contenders have failed to usurp its dominance, reveals a new survey by Frost & Sullivan, the international market consultancy.

Perceived as the crown jewel of enterprise applications amongst IT managers in the European automotive industry, ERP is the one application category that companies in this space are most likely to invest in.

"This is for the simple reason that maintenance and modification is ongoing in response to changes within the business," points out Andrew Ball, Industry Analyst at Frost & Sullivan.

"Efforts amongst automotive suppliers to standardize ERP applications across an enterprise, enabling them to provide a secure foundation from which to attempt collaboration with automotive manufacturers, will further help ERP to forge ahead with its lead," he adds.

The company's extensive primary research survey, based on telephone interviews with individuals responsible for IT or purchasing enterprise applications, reveals the attitudes and investment plans of European automotive companies for enterprise applications.

Frost & Sullivan questioned managers at medium to large European automotive companies with a minimum of 250 employees, surveying more than ten percent of all European automotive companies. The conclusions spell a bright future for established enterprise resource planning (ERP) vendors, but many other vendors will struggle to sell new applications to the industry.

IT managers in the automotive industry stressed their dependence on their ERP suites. Quotes like "Everything we do, we do through the ERP system," "Really, you can't do without it these days," and "Well, it's the business... it's got all of our data and everything" only serve to underline the sustained prominence of ERP.

There was clear consensus amongst respondents about the strategic importance of supply chain management applications (SCM), even if many of the companies surveyed have yet to make any significant commitment to investing in this functionality. The potential cost savings through reducing on-site stock and automating supply processes were widely recognized, the survey continues.

Frost & Sullivan is confident that SCM will emerge as the other significant application category that automotive companies plan to invest in over the next three years. Interestingly though, purchasers of enterprise applications in the European automotive industry do not regard SCM as an application category separate to their ERP application, but as an additional functionality to complement their ERP application. Consequently, automotive companies are looking to work with their existing ERP vendor rather than turn to a supply chain specialist.

The general reaction to both business intelligence (BI) and E-procurement was one of growing interest but little dedication to substantial investment in the next three years. Frost & Sullivan observes a growing awareness of the value proposition of BI and recognition of its role in helping a business to understand its direction.

Few respondents were willing to discount e-procurement, but no drivers for this application category were obviously identifiable. Survey participants cited an unwillingness to pass on any costs to suppliers and that the fact that companies were still getting to grips with EDI as key reasons behind the lower strategic importance.

The position of customer relationship management (CRM) as the category of application software that automotive companies are least likely to invest in is slightly surprising as CRM was the third most important application area for strategic significance. This investment ranking is deemed more crucial.

CRM's professed concern for the customer means there is a tendency to over-emphasize interest in this application category as a negative response can be thought of as being dismissive to customers, Mr. Ball explains.

"In reality, though, most automotive companies failed to see a business need that the software could address for them as CRM was associated with call centers rather than managing buying prospects and relationships. Many were therefore comfortable with their in-house development in this area," he concludes.

The full findings of the report, Understanding the Enterprise Application Opportunity In the European Automotive Market, include a description of expenditure and ownership of enterprise applications within the industry, the business trends that the automotive industry would like enterprise applications to try to address and the selection criteria used to discriminate between vendors.

Companies under review in this service include GEAC, Manugistics, i2, IBS, J.D. Edwards, Baan, QAD, SAP, Oracle, Siebel, Intentia and IFS.

                             Code: B217 
                   Publication Date: September 2003