Domestic ERP software gets brand recognition

Mentioning "China's Top Brands", people will tend to think of household appliances, garment or food brands. But now, ERP (Enterprise Resource Planning) software also has their "China's Top Brands". The 2007 China's Top Brands List released by General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) recognized ERP brands for the first time ever. Three ERP enterprises, namely Inspur, UFIDA, and Kingdee, were awarded as China's first top ERP brands, which filled the gap in China's ERP sector.

The statistics of Analysys International showed that in the first quarter this year, the overall scale of China's ERP market reached RMB 1.011 billion. On the other hand, fierce competition is ongoing on the mid and low-end market between local ERP suppliers and their international counterparts, and between themselves as well. On the mid and high-end market, the products and services of local ERP suppliers cannot catch up with the fast-growing demands from corporate users. ERP market is right now entering into a second turn, under which circumstance the release of ERP top brands is timely and fitting.

The first selection of ERP top brands was very prudent. Except for the necessary "high benchmarks" in terms of product quality, self-innovation and market share, there were also concrete standards set for corporate social responsibility and honesty. Meanwhile, it is required that all brands submitted have not suffered a single accident in quality, safety and environmental influences in the past three years.

It is introduced that of the total score of 1000 for assessment, 300 are given to "market", 300 to "quality", 200 to "benefits", and 200 to "development", with as many as 30 specific indices. An average of the grades in 2004, 2005 and 2006 was taken for each index. Also, to ensure the authenticity, all the statistics of "China's Top Brands" this year have been put on a provincial public show.

The prudent attitude is just what the ERP corporate users want. As a matter of fact, ERP market is selecting its own "top brands" by itself. The statistics last year showed that ERP brand concentration has been intensified. The top 10 brands in 2006 covered for 5% more than 2005. However, there has not been a brand that is absolutely "safe". A single brand can claim no more than 15% of the market shares. There is still room for further integration of the entire market.

The pressure from the market highlights the questions --- Where is the breach to integrate the ERP market already filled up with fierce competition? After being awarded as "China's Top Brands", will local ERP be potential "World's Top Brands" in the real sense?

The answer probably lies in the manufacturing sector. On one hand, 1.35 million Chinese manufactures are still lack of sufficient IT application. Therefore, they have a big potential demand. The current ERP market shows that demand from the manufacturing sector covers as much as over 50% of the total. The manufacturing and distribution sector, which catalyzed the birth of ERP products, remains the key to ERP market scale.

In the context of economic transformation, local manufacturers are facing with industrial restructuring, and suffering the doubled pressure from greatly shortened product life and booming branches while they are striving to expand and strengthen themselves. It is highly imperative to use advanced information technologies in management and operations. Various demands for management on a higher level are highlighted as well. For local ERP suppliers who started their business with finance software, the one who can get an exact understanding of these demands and meet them is the one able to enter a new development field. "This is a battle to conquer the summit. We cannot afford wandering at the foot of the mountain." said Wang Xingshan, senior deputy president of Inspur Group. If they don't, Chinese ERP can hardly rival against world-famous counterparts in the real sense.

Despite numerous low-level competitions that demand re-arrangement, the whole sector needs further integration. After over 10 years of development, ERP sector is becoming mature. Whether the industry is mature is an important standard for the "China's Top Brands" selection. Relevant sources said that what "China's Top Brands" selection was intended in the very beginning is to set a model to lead the sector, purify and improve the industrial competition. The "China's Top ERP Brands" this time also gives clear directions and guidance to the market development while the guidance does not only show itself in the profit growth of the ERP suppliers despite the fact that Kingdee's latest report shows that their net profits in the first six months totaled RMB 39.797 million, 30% more than last year (30.615 million).

The three winning ERP suppliers are all trying their best to find the new direction for local ERP software development to bring new inspirations to the whole sector. Kingdee has joined hands with China UnionPay, trying to make a breakthrough in the payment link. UFIDA has established the Dept. of Mobile Development, and set up a joint venture with NTT DoCoMo, Japan's biggest mobile telephone operator. It has made a big investment in developing business platform. As a matter of fact, UFIDA has passed the most important benchmark for the access to mobile ERP market after UFIDA Mobile has got the ICP license and SP license.

Inspur still attaches great importance to the communication with high-end users for innovation. For a long time, Inspur ERP has adhered to the model of "innovation together with the users", which is to actively get to know quality demands of strategic users, and incorporate the strategic users into their ERP innovation and R&D system. Wang Xingshan said that ERP innovation is not an issue for any single software supplier alone, and that it should get strategic users with quality demands, international partners and R&D partners all involved.