In a previous post, I talked about the entry and acceptance of Enterprise Resource Planning (ERP) software systems among Davao companies. This is a boon to the city’s industries and the local economy, because it is one sure sign of our local companies’ coming of age.

However, is this a threat to local software developers? Yes and no.

For one, there are still many companies who won’t shell out the P1.5 million cash price on an entry-level ERP system. So these companies remain the bread and butter of local I.T. companies.

Software development houses that target large corporations, on the other hand, might face a challenge. Such companies are now more aware of the huge benefits of ERP systems, so that locally-developed software may not stand up to the standards of, say, SAP Business One. Davao-made software programs are in fact world-class, and can actually compete internationally. However, none can compare to the power of integrated systems such as ERPs.

ERP systems integrate back-office applications — accounting, inventory — with human resource, sales, marketing. Basically, it’s a single point of reference upon which management can base sound decisions.

The good news for Davao software developers is, ERPs have an open architecture which allows third-party programs to integrate and share data. This means that our local developers will be able to provide extension programs to the ERP system. For example, a point-of-sale module could be made to communicate with the ERP platform, thereby extending the latter’s functionality.

However, according to Rodney Jao of Lane Systems, not many local software developers at present have the capability to take advantage of ERP’s APIs. Jao says that it takes a certain level of maturity and commitment and resources in order to successfully develop and provide third-party software that can integrate with ERPs. But the salient point here is that it’s possible, Jao adds. And this is the challenge to software developers here in Davao.

The ERP market is a gold mine. It has the potential to move hundreds of millions of pesos within the local economy, and so it’s a lucrative venture for those I.T. firms that have the resources and willingness to tap this market.

The P1.5 million price tag is only the cost of the ERP software itself. There’s still the cost of implementation, training, after-sales service. This means that, once the ERP market booms in Davao, it will generate ripple effects across the entire I.T. industry. Not only software engineers, but consultants, trainors and other support personnel will become necessary. This is why the provision of ERPs is a booming business in the West. And it might already be on the rise as well in the Philippines and in Davao.