To All: (As info)
Excerpt from today's IBD.........
But ERP maker PeopleSoft Inc. is starting to break the customer-supplier tension. Late last year, the
company began using a new method of billing. It's ''value based.'' Rather than counting users, fees are
based on measurable numbers, such as the corporate customer's revenue or number of employees.
The new system has forced rival SAP AG, the industry leader, to implement billing changes. Oracle Corp.
is considering them. Oracle and PeopleSoft are vying for the No. 2 ranking in the industry.
ERP vendors soon may begin competing on methods of pricing, Hodges says. ...........
Customers like PeopleSoft's new billing method, Hodges says, because it makes pricing more predictable.
And this pricing model puts PeopleSoft's money where its mouth is. If the ERP system truly makes the
company more efficient and boosts sales, PeopleSoft gets more money. ........
But SAP, like PeopleSoft, is changing the way it bills. It's gradually created six different ''classes'' of users.
Each is billed differently.
Charged the highest fees are ''developmental benchmark'' users, workers who make changes to the
system itself. Charged the lowest fees are ''enterprise office'' users, who use the SAP system for simple
things like looking up employee benefits. Corporate customers pay only about $25 a month for each
enterprise office user added, Rubino says.
The industry has to find ways to charge more as corporate customers grow and add more users, says
Rubino, who isn't convinced PeopleSoft has the right formula.
In one way, SAP's method is simpler. Users get to use all the software's features. PeopleSoft's rate
changes as customers install more features. It has 35 ''modules'' that can be added, or removed, from any
user's system. ..............
Things will only get more complicated as companies make their ERP systems accessible to customers and
suppliers over the Internet.
Let's say a company opens a Web site where customers can order products. That means that customers
technically become ''users'' of the ERP system. Under traditional pricing models, the company would have
to pay a licensing fee for each of these ''users,'' creating a disincentive to put the ERP system into
widespread use. |
