ERP & ENTERPRISE SYSTEMS
To ERP or Not to ERP in
Central Eastern Europe?
Central Eastern Europe (CEE) is
developing into a lucrative
market for ERP software integrators and solution providers.
With economies in most CEE
countries undergoing structural changes and modernization
across a variety of industries,
there is a growing need for
more robust enterprise information technology infrastructure. The demand is increasing
across multiple industries,
especially in manufacturing,
utilities and the public sectors.
—Viktoria Sadlovska, managing direc-
tor and CRO at Prameya Research
entral Eastern Europe is an increasingly attractive market for ERP
technologies. While countries comprising this region have many
local specifics, they are common in that their economies have
been recently undergoing rapid modernization and/or transition
in an effort to improve performance, increase economic competitiveness and
more fully integrate into the European and global economic systems. This
process has meant significant restructuring and modernization across industries, which has included taking a new look at the enterprise software automation requirements.
Systemic transformation within many industries and supply chains has
meant a steadily growing relevance of ERP technologies, which are necessary
in many industries in order to obtain adequate operational efficiency and
regional or global business competitiveness. CEE countries that are already part
of the EU (Poland, Hungary, Czech Republic, etc.) are ahead of the curve in the
number and scale of implementations compared to their CEE neighbors, with
vendors such as SAP, Oracle, Infor, Sage, QAD, etc., holding strong market
positions. In Russia and Ukraine, the choice of a vendor often depends on
whether a company is publicly traded and whether it is integrated or trying to
further integrate into the European or global markets. In such cases, companies
tend to select well-known global ERP vendor solutions, which ensure adherence to global process and quality standards. In the case of non-publicly traded
mid-sized businesses, companies tend to favor either lower-cost solutions from
local vendors or moderately priced solutions from foreign vendors. At the same
time, the number of local ERP vendor solutions in CEE has been growing over
the past decade. It is also more common for Russian and Ukrainian companies
to adopt in-house developed IT systems, since the business philosophy is still
entrenched that the total cost of ownership of such developments is lower. This
is caused in part by the absence of benchmark data on deployment costs at similar enterprises.
In recent years, global ERP vendors have begun to establish or intensify their
presence in the CEE market.
C
The Outlook
In 2012 and beyond, the CEE market for ERP software is likely to continue to
strengthen, with competition intensifying among the global and local software
vendors. With more choices of available solutions, local end user companies will
need to increase their efforts to conduct proper analysis of total cost of ownership
of different solutions and approaches to automating their core information management processes.
