Year 2000 fuels IT sales boom

The year 2000 will not be the disaster for the IT industry that many commentators suggest, according to the latest Ovum evaluation of corporate financial systems, writes John Stokdyk.

Report author Dennis Keeling predicts huge growth in sales of financial software systems. ‘At least 60% of organisations will replace their system before 2000,’ said Keeling. ‘Managers are using it as an excuse to replace their old financial systems with modern management information systems.’

The irony for customers is that many of the suppliers who sold them systems with electronic expiry dates will profit from the debacle.

Keeling’s Ovum evaluation is the latest installment of a subscription-only research service targeted at large corporate customers. It focuses on the functionality of ten major financial systems and examines the strength of the companies that make and sell the software. A subscription costs u1,500.

The evaluation covers packages catering for large, multinational organisations including SAP, Oracle, PeopleSoft, GEAC, JBA, Coda, JD Edwards, IBS, Computer Associates and Lawson.

The latest report cautions users to assess their systems for the challenges beyond the year 2000. In Europe, financial systems will need to cope with dual currency operation for the 1999-2002 transition period from national currencies to the euro. Users also need to asses the scalability of systems – their ability to function seamlessly from small, local or national subsidiaries up to the corporate financial centre. Multinational consolidation remains a weak spot.

‘Most of the leading packages are incapable of receiving information for consolidation from disparate computer systems,’ said Keeling. ‘This is why products like Hyperion, Comshare and CA Console are sold as consolidation tools.’

The software developers examined confirm the rapid acceptance of Windows NT as a platform for networked financial software. However, Keeling reports that reference-site experiences suggest Windows NT is limited to 300 concurrent users.

For big, centralised corporate financial systems, the mainframe is still king, particularly as a database server. IT managers are retiring older codes, but keeping their mainframes to hold data generated by new, standardised packages. Leading suppliers SAP, Oracle, PeopleSoft and JD Edwards have all introduced mainframe versions of their financial applications in the past year.

The same issues of scalability and central control are reflected by the continuing success of IBM’s mid-range AS/400 system. The big developers have all announced products for it, and the Ovum report states: ‘Existing AS/400 developers have had record sales in the last year and some have grown faster than developers on any platforms. Very few AS/400 users have found the alternative platforms of Unix and NT more inviting.’

The software companies currently enjoying the most success at the top end of the market are the ones that have embraced globalisation and delivered standardised tools for different platforms with built-in flexibility.

In this category, Keeling cites SAP, PeopleSoft, Oracle, JD Edwards and Agresso.

The software evaluation contains worrying news for IT consultants serving the accounting profession. Software suppliers are killing off the business process re-engineering boom by offering ‘vanilla’ packages that are quicker to install and cost as little as a third of typical BPR consultancy projects.

‘The Big Six are so busy with the year 2000 and EMU, they can afford to lose those customers,’ said Keeling.