Because businesses have distinct ways to run their business processes, as a result, they have very different business needs, and that's a very strong reason for businesses to align their choice of ERP systems with the actual business need. For that purpose I'm going to introduce to you a tool known as the Magic Quadrant. So, hopefully by the end of this introduction of the Magic Quadrant, you'll be able to answer the following question: What it is? What the Magic Quadrant does? Why is it important? Who should care about the use of Magic Quadrant? Also, when do firms consult the Magic Quadrant? So, the Magic Quadrant is nothing more than a two by two matrix that helps to categorize different ERP solutions into different buckets, so that as practitioners and decision makers are able the short-list a set of options that are appropriate for them. This is a tool that is published by Gartner. So, moving on, let's take a look at what the Magic Quadrant is. So, the Magic Quadrant is broken up into two main criterias. The first criteria that we see on the vertical axis is the ability to execute. On the horizontal axis we have the completeness of vision. So, the ability to execute is nothing more than whether the ERP systems bear sudden features or business processes that are sophisticated and are geared at addressing specific business needs. At the same time, if we look towards the completeness of vision, what this variable does is that it looks at whether the ERP vendor has a good understanding of the market, and also whether it has good knowledge of the entire industry for vertical integration to understand what are the future needs of a business operating in this industry. If they have a good vision of what might be needed by a firm operating in this industry, they would be coming up with new features that caters to this need. So, let's take a look at some of the examples within each of these different quadrant. So, at the top right corner we have the Leaders. Leaders are ERP softwares that have high ability to execute and also high vision. An example of that is the SAP Business All-In-One software. Going to the top left corner we have the Challenges. Challenges are rated high in terms of ability to execute but they have low completeness of vision. An example of that would be the Oracle Business Suite. Moving onto the bottom right side of the Magic Quadrant we have the Visionaries. As the name suggests, the Visionaries have a high level of completeness of vision, but they do not have high ability to execute. An example of that would be Microsoft Dynamics AX. Then, finally at the bottom left corner we have the Niche Players. The Niche Players are low in terms of ability to execute, and also low in terms of the completeness of vision. An example of that would be the Infor system. So, allow me to next explain and describe some possible companies and industries that match up to each of this four different quadrants. So at the top part, top right corner, we have the Leaders. An example of an industry that matches that will be that of the pharmaceutical industry because the processes needed for the approval of drugs can be very sophisticated, and the industry is known to be subjected to regulation which is why they have to be constantly on the lookout for new features that is required in the regulation and drug approval process. So, for a firm that's operating in this space where they have sophisticated need, and they have needs to change their way of operating over time rather frequently, they'll be best off engaging a system that falls in the Leader space. For instance, SAP Business All-In-One would be a good choice of ERP for them. For a company that operates in the Challenger [inaudible] an example would be wholesale retailing. For instance, a company such as Walmart has a lot of different products under inventory, and as a need to categorize these products in their warehouse, and to ensure that they do a good job and fulfillment. So, they'll be good in engaging an ERP system that is high in terms of the execution so that they could dedicate right resources and the fulfillment process. At the same time we know that companies operating in the wholesale retailing industry does not face many regulations or changes in the industries for several years. As a result, the ERP system that they use need not have an updated version of their features over a short period of time. At the bottom right corner, the Visionaries, that's an exercise that I will leave for you to think about an appropriate industry that has regular updates in terms of business needs, but they're relatively engaging on simple features. The last quadrant on the bottom left relates to the example of a mom-and-pop store that you see off your street. A mom-and-pop store is not a very sophisticated business, but still they would need an ERP system to help record the products that they're selling. So, for that purpose, they can engage an ERP system that has low ability to execute. At the same time because this business in the retail sector doesn't change much, the ERP system that they utilize need not have a high level of completeness of vision. As a result, they could spend less money buying a smaller system that can reap them more savings such as Infor. Now, you have learned about the Magic Quadrant. A question that you should be asking and be able to address is that is it true that when I'm selecting an ERP system I should always go for the best, which is a ERP system that has high ability to execute, and also a high level of completeness of vision? The answer should be no because depending on what your company is you should be choosing the right ERP system that fits your needs.
