There's an interesting post on Forbes about IBM, Sterling Commerce, customer relationship management (CRM) software, analytics and other like subjects the week of March 14 that answers a question I posed months ago: Why Is IBM Getting Back into EDI?
Forbes answer: Because the 50-year-old electronic data interchange (EDI) concept that morphed into electronic commerce 20 years ago is now something called "social commerce." And IBM thinks the opportunity is bigger than ERP. In fact the opportunity is so big that IBM is deploying several thousand salesmen, programmers and consultants in a new "practice" to take advantage.
But that launches three new worrisome questions for investors in my opinion: What's "social commerce?" How big was/is ERP? Why do I need a "practice" to take advantage of it? So here's my take:
What's "social commerce?"
As defined by Forbes (meaning apparently by IBM), it could
"change not just the way companies sell products and services, but also their creation and production, and servicing — in effect, a new type of enterprise software platform."
My problem is that that definition sounds like every piece of information technology I've done market research on from the GE Model 58 in 1970 to LinkedIn. From a software point of view, that would mean it's an amalgam of ERP, EDI, CRM (the concept, not the company), business analytics and every variation of the word platform I've heard from IBM's own Project San Francisco in 1994 to CRM's (the company, not the concept) force.com. But it most closely sounds like ERP.
How big was/is ERP?
At its height when it dovetailed with Y2K paranoia, ERP was doing a couple of hundred billion a year in software and services. Those are 1998 dollars. Those are both kinds of services: implementation/training and on-going maintenance (which isn't about fixing things as I've explained elsewhere on this blog). I am not even counting the dollars companies spent with management consultant companies to tell them they needed ERP software and services.
Today the local stamping plant can get what Boeing paid Baan and others a gizillion dollars for in the 1990s from Intuit (INTU) Quickbooks. (Of course, the local stamping plant can't build 747s.) The modern day ERP capability even has a lot of things 1990s ERP didn't have like Internet deployability, CRM, real-time analytics, business process management, and more (which all kind of sound to me like "social commerce.") Yet, as happens, the "opportunity" has shrunk to about a hundred billion a year. In 2010 dollars.
Why do I need a "practice" to take advantage of it?
Apparently, IBM is talking about the opportunity that needs management consultants to tell enterprises they need the concept. Those are the guys that work in "practices." This is not about three guys pulling all nighters to turn your Facebook page into the Sears catalog. Or even your force.com platform with Unit 4's Coda into a working ERP capability.
That doesn't surprise me given that I think IBM's long term strategy is about consulting and business process outsourcing, not software and technology. According to Forbes, IBM will have more salesmen than consultants and developers combined dedicated to the "social commerce" practice. That should tell the savvy investor all they need to know.
-- Dennis Byron