External forces driving competition in the erp industry, Software Engineering

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Cloud computing is becoming an unrelenting force that is driving competition in the ERP industry and can no longer be ignored by legacy systems, such as Oracle and SAP. Larry Ellison, CEO of Oracle and "the most hostile guy in tech" (Vance 56), evident by hisruthless acquisition of PeopleSoft, had written off the cloud computing wave until now. Duffield, original founder of the acquired PeopleSoft, and co-founder of the cloud-based HR software company known as Workday, which now threatens to drastically change the software market coupled withEllison's view on cloud computing, has learned some valuable lessons from the aggressive business actions of Ellison. Duffield learned not to take your eye off the ball and to always keep the external environment in the forefront, especially your competitors.

Duffield has learned his lesson and is applying it to Workday byreturning the favor to Ellison. Duffield and Bhusri, co-founders of Workday, have created a cloud-based company that services the HR side of businesses and are focusingonfurther ways to implement their strategy. That strategy is to upend the HR market, which generates "about $10 billion a year in software alone" (Vance 56), and turn it into a Web-based service that is "as simple to learn as shopping on Amazon.com" (Vance 57), "replacing legacy systems in a $40 billion dollar market" (Warren 1). While SaaS solutions account for only a small percentage of revenue for ERP systems globally, Forrester Research "expects worldwide spending on Web-based ERP software to rise about 21 percent annually through 2015" (Freeman 1). HR functions will be accessible and executable from any location with an internet connection. One would only need a smartphone, or any internet accessible device to perform various HR functions, such as examining the profile of an applicant and hiring them through the click of a button or tapping 'hire' on the screen.HR functions could be addressed anywhere -even during lunch! This eliminates the need for companies to conduct costly trainings and invest in expensive HR software as well as computerhardware that consumes valuable workspace.

Utilizing Porter's five forces, shown in Exhibit 1, integrated with an external SWOT analysis, the external environmentcan be analyzed to assess Workday's competition and their position in the market. The five forces along with the competitive advantages Workday hopes toretain, as well as pressures exerted by the competition are: 1.) Threats of new entrants -Workday is protected by barriers to entry through a high cost of capital requirements. Workday also jumped on the opportunity to be the first to market andcreated distinct differentiations in their product, illustrated in Exhibit 2, in an effort to win customer loyalty by "fostering brand identification" (Pearce 106).2.) Threat of substitute products and services - The tech industry is dynamic and fast paced, with Oracle not far behind, so there is a considerable threat of future substitutes.


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