The 25$ ERP system

My last post touched briefly on an observation I suddenly realised could be something to write about; some well-known figures in the SaaS industry seems to be in high demand in India and China. This suddenly reminded me of something interesting I've been reading a few articles about lately: the growing car industry in the two largest countries in the world.

For the last couple of decades India and China has been very eager on attracting the biggest car manufacturers in the world. Most of the bigger players in this industry are well established the region and are now competing in what effectively is the worlds second biggest car marked. But the Chinese had a plan; by attracting foreign competence, they have also successfully managed to establish a significant local car industry. There are now for instance hundreds of Chinese car companies, and it is believed that the Chinese car industry is about to surpass the German industry in terms of volume.

This enormous, growing marked has also sparked another race. A race to produce really, really cheap cars in order to open up an enormous market. India's Tata Motors plans to launch a $2,500 car next year, about what a moped costs here in Norway.

So why is this relevant to the computer industry? India and China is attracting an enormous amount of IT companies these days. And just like with the car industry we will soon see that India and China will be some of the biggest players in the global computer industry, just like they will be a massive exporter of cheap cars in a few years.

Another, and in my opinion even more significant, reason takes us back to the start of my article. How do you produce really cheap cars? Or cheap clothes? Or cheap electronics? Or cheap toys? Really low production costs. Labour cost is of course the most common discussed advantage of the East. But if you want to create a really large company that sell really cheap cars in a global market place you also need a lot of computer systems supporting your operations, also known as ERP systems. And just as with labour, you want it to be cheap. Oracle isn't cheap. SAP certainly isn't known to be cheap.

So my prediction: in a few years we will see Indian and Chinese 25$ ERP systems - based on the low cost SaaS delivery model.