A very interesting post from Josh Greenbaum of ematters frames the ongoing ERP market in terms of the “stack”, the hardware, operating systems, databases, development kits an so on that are behind the curtain of any ERP software product.
So, with Ellison talking Oracle into a corner with SAP, HP, and IBM – one based, in my opinion, on a theory about the value of the hardware “stack” that is hugely outmoded – it’s interesting how little time he spends dissing Microsoft.
The implication is that for Oracle and Microsoft the primary value of ERP is in the additional revenues from otherwise generic products that form each firm’s stack. The ERP is the vendor monopoly foot in the door, and the revenue pulled in behind that foot is surprisingly huge.
Today, every dollar of Dynamics generates from $3 to $9 in additional software sales for Microsoft. Now that is what I call a stack sale.
Thus a $100,000 Dynamics ERP license sale turns into a $400,000 to $1,000,000 license event for Microsoft. Microsoft’s distributor reaps the services dollars needed to make it all work, often measured in increments of $100,000. That explains why Dynamics is the “former bastard step-child” of Microsoft. No numbers are presented, but if Oracle pulls through a similar pile of additional stack money it explains why Ellison is willing to fight his old friends at SAP, HP, and IBM.