Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : SAP A.G. -- Ignore unavailable to you. Want to Upgrade?

To: MDC who wrote (763)	4/22/1998 9:29:00 AM
From: JJ	Read Replies (1) \| Respond to of 3424

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.