Challenges for Chinese ERP Vendors.pptVIP

Challenges for Chinese ERP Vendors LJL Email: conbry @ yahoo . com January 2013 Market Overview Chinese companies Locals Big loss in 2012 Less business and fight for survival in 2013 SAP and Oracle Big Two Double digits growth in 2012 More market shares in 2013 Strategic Analysis Do the right thing? Three Engines of Growth The Sticky Engine of Growth The Viral Engine of Growth The Paid Engine of Growth Weak Engines of Growth The Sticky Engine of Growth Trivial profit contribution from existing customers The Viral Engine of Growth Bad word of mouth over promise and under delivery No big Individual Software Vendors ISV The Paid Engine of Growth Profit mainly from new customers more expensive to acquire a new customer Evolution of product competition Four phases Functionality Reliability Convenience Price Market Maturity Product functionality overshoot customer demand Lack of functional differentiators Reliability and convenience become the selection criterion Fierce Competitions from Big Two Comparable license fees Entrance into SME market Product is more reliable Chinese ERP products are general buggier Product is more convenient to use Chinese ERP products are more difficult to use Local RD facility responds quickly to customers in China Customer Choose Less risky consequence to buy Big Two Seek long term return of using system than lower purchasing price Deference of spending, due to economy slow down impact on non state-owned enterprise Operational Analysis Do things right? Defective Values Managers are smarter, decide first priority. Employees do not raise question or give feedback to managers Conflicting rule of priority setting Quantity, Schedule is more important than Quality Growth over profitability Employees know business processes better than users Processes Emphasis on plan to execute. Dominance of belief “Plan well, work hard, better result” Ineffective procedures, such as criterion of project initiation, release quality. Bureaucra