Through a mix of acquisitions, bankruptcies and breakups over the past few years, JD Edwards users are finding that choices among third-party service providers are narrowing.
Compounding the JD Edwards support problem is that since the onset of the economic meltdown in the fall of 2008, an increasing number of JD Edwards users have become more reliant on the product because of its comparatively low cost of ownership. Also, Oracle’s Applications Unlimited program, which pledges to provide support to users for the life of the product, has encouraged users to hold tight to the venerable platform.
“What has surprised the market is how popular JDE still is," said Liz Herbert, senior analyst with Forrester Research Inc. in Cambridge, Mass., which just released a report on the topic. "One of the reasons is its low cost of ownership because it is such a stable environment. But strategies among end-user companies are constantly changing when you look at the growth and consolidation going on in corporate environments. They still need talent among third-party service providers.”
And that talent is dwindling. Many well known integrators specializing in JD Edwards have been snatched up over the past few years by either larger systems integrators or companies wanting to break into that market. Some examples include Dell’s acquisition of Perot Sysems, and Hewlett-Packard gobbling up both MphasiS and EDS. Also thinning out the ranks was BearingPoint’s bankruptcy, followed by either the breakup or buyout of other key players including Deloitte and PricewaterhouseCoopers.
“All of this means firms seeking JD Edwards talent are left with a much different landscape than the one they were familiar with five or 10 years ago when they last did a major JD Edwards project,” Herbert said.
The good news, however, is that some very capable service providers remain, including Systime, MarketSphere and Zanett, according to Herbert. The majority of service providers and other Oracle partners are smaller firms, though, typically with fewer than 100 consultants, and they often lack a broad range of skills such as business consulting, process expertise and project management, along with the financial backing to even get the attention of larger IT shops.
“You are looking at the typical tradeoffs with the smaller providers,” she said. “They tend to be more nimble and flexible to work with, but they tend to not have the deep pockets to invest in research to come up with as many innovations.”
Some shops agree with Herbert about the disadvantages of working with smaller service organizations. But if these smaller providers are used to focusing on a very specific task in a JD Edwards environment, most believe they can offer an attractive price-performance value.
“We use a couple of smaller organizations here locally that can do some minor tweaking via code changes for work we need done, and the price is almost always right these days. Sometimes, we might have some problems coordinating what they are doing with what we have our larger service company [IBM Global Services] doing, but we can usually work that out without too much trouble,” said Eugene Lee, an IT administrator with a large bank in Charlotte, N.C.
Herbert adds, however, that smaller service providers often create partnerships with larger support organizations to supplement their skills and resources, allowing them to better compete for larger accounts. One such example is the partnership Systime has with Accenture.
“You look at a company like Systime, which is huge into JDE and capable of supporting many complex JDE-specific environments," she said. "They are limited beyond JDE, but the partnership with Accenture can address those needs.”
Herbert added that some of the larger Oracle partners derive relatively small revenues from supporting JD Edwards’ installations and so are dedicating fewer resources to it.
Another factor that has siphoned technical talent from JD Edwards is Oracle’s increasing emphasis on Fusion and an assortment of acquired products that integrate with E-Business Suite, including Primavera for project management and Hyperion for business intelligence applications. Consequently, a number of service firms both large and small have switched their focus to these products, believing they will have more strategic value over the long term.
One positive development is that offshore service organizations appear more willing to take on support for JD Edwards environments and generally charge less than their counterparts in the U.S. These organizations have matured, Herbert points out, becoming more adept at handling long-distance technical support relationships, as have end-user companies in this country. Many accounts are pushing their implementation mix past 60% offshore, while the ongoing support mix is above 90% offshore, according to the Forrester report.
“We are seeing an evolution on both the providers’ side and the buyers’ side," Herbert said. "Providers have become more sophisticated in their methodologies, like putting in place the right governance, the right amount of meetings and determining … how often your team goes offshore.”