Do you think cloud computing will enable a "free-market ERP"?

I agree with Robert. The cost, risk and disruption caused by making any change to your existing ERP shuts down most innovation in IT.

The true value in the statement you quoted is "means enterprises are no longer locked in or beholden to their ERP provider". Cloud, SaaS, free-market ERP - those are effectively new naming conventions for the same technology that has been available for 30+ years. Mainframe computers are/were highly centralized and available in the "cloud" and as SaaS (Time Share). Mid-range computers are decentralized (i.e. Fat Client) and available in the "cloud and as SaaS (ASP). With the internet, the worlds largest network, computing has shifted back to the "mainframe model" which is highly centralized. None of these deliver the value of releasing the enterprise from the ERP Death Grip.

Since an ERP is a tightly integrated set of features, I would be cautious about buying pieces from disparate vendors. Invariably this raises the other Achilles heel that Robert mentions: migration costs and integration costs. Modifying an ERP is only slightly better than Integrating an ERP. Both stink and only perpetuate the Lock Down of the ERP.

The reason companies haven't been able to shed their shackles isn't because of on-premise v. SaaS. The reason they haven't is because they take an inside-out perspective. The rationale that the ERP is the system of record and the only source of all data, process and technology is amazingly naive. Business is about change: customers, products, markets, compliance, regulation, competition, geographies, cultures, etc. The reality of business that delivers the escape from ERP serfdom is that Operations requires an outside-in perspective.

30 years ago when the first ERP's climbed out of the mainframe ooze (as MRP's, FinApps and HR, by the way)they perpetuated a rip and replace strategy. The next generation of enterprise software, delivered by companies such as mine, flip this strategy on its head. Leave the ERP alone. Don't touch a single line of code or hair on its head. Take what it offers and enhance the process, data and technology your business needs to survive or thrive today. The outside-in enterprise solutions can then seamlessly collaborate across multiple ERP's, innovate changes in process and technology and make available more data to employees, vendors and customers that drive on-going improvements in revenue and margin.

ERP doesn't create lock-in because of the infrastructure... It creates lock-in due to the way in which it manages and processes the underlying data and hooks into your other applications.

At the end of the day, organizations are trying to make money, and they will attempt to lock you in, whether maliciously or benignly. Any vendor that creates a complex enabling product that you can just as soon switch away from is going to have an exceedingly difficult time generating new revenues, as any little glitch or perception of problems could cause/facilitate a huge exodus.

None of these dynamics are changed because of the location of the application: on-premise vs hosted

What I expect cloud computing to offer in the ERP space are a set of less complex, more flexible and more cost-effective options that target smaller businesses that can take advantage of ERP at a better price-point. Also, there will be a greater push for common APIs to create better balance between the vendor and the customer as it pertains to lock-in.

Andrew is right about the "lock-in" and how ERP companies achieve that position. We are guilty of his accusation that we have created a "complex enabling product that you can just as soon switch away from..."

Our belief is that when the customer stops receiving value from our software, they should be able to just stop its use. We have such a short implementation timeframe (Toyota took 90 minutes) and agile technology that morphs to exactly what the customer needs (i.e. custom software that is faster than off-the-shelf) that we encourage the customer to buy our solution only after it has proven its value. We are willing to take the chance that the customer will continue to see our value long after the first App is deployed.

I believe I know what you are trying to get at here, but I get a bit upset when folks misuse the term "free market."

Most ERP software is (insomuch as is possible under current government interventions) "free-market" software. However, it is also true that once the ERP software is selected, all to frequently, the dominant ERP software provider becomes the driver of all other IT (and sometimes business process) activities.

I'm all for anything that will reduce the apparent "stranglehold" that "Everything Replacement Project" vendors hold on their clients. I think it's bad for business and economic growth.