The other Monopoly

Christopher Koch had already posted The Monopoly that Matters More than Microsoft in November last year. In his piece for CIO Magazine he compared Microsoft’s perceived (but irrelevant) OS monopoly with SAP’s underestimated (but really mattering) monopoly in the enterprise applications market

SAP has long dominated the enterprise application market for big companies, but today, you can safely call it a monopoly in that sphere. Let’s consider the numbers, all from AMR Research. In the traditional core market of enterprise applications, ERP (Enterprise Resource Planning), SAP’s 2005 market share of 42 percent was more than double the 20 percent of its nearest rival, Oracle (whose share would be a lot smaller if it hadn’t acquired some of its ERP rivals in recent years). All other companies, mostly niche providers serving smaller companies or specific industries, were in the single digits.

But the real story is in other areas of enterprise applications, because these demonstrate the real market power of SAP. In supply chain software, procurement software, and customer relationship management software, SAP is now number one. In HR applications, it is merely second by one percentage point to Oracle. The only market in which it lags at all is product lifecycle management. Together, these categories comprise nearly all of the major business processes of a large company.

Interestingly to notice that more and more enterprise customers combine the two monopolies for improving their business operations and adding additional value to the business.

Mr. Koch also connects SAP’s success to the immaturity of IT in general (quoting Alan Greenspan) and to the lack of innovation.

Very worthwhile reading.

About Thomas Dreller

Live is too short for unhealthy food, sour wine, stressful relationships, or unprofitable business. Bio on http://www.linkedin.com/in/tdreller
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