On the Impact of Standardization on the Provision of ERP-Systems

Comparing pure product features framework based software seems to dominate standard software when it comes to the question how ERP-Systems should be built. Nevertheless one cannot observe that framework vendors begin to threat the market position of vendors of established standard software. Our microeconomic model analyses the competition between vendors of ERP-Systems differentiating their products by the way the software is developed. The model incorporates the network effect which is especially important within the software industry. We show that the introduction of a standard helps to establish framework technology on the software market and increases social welfare. Finally we are able to give recommendations for all market participants: established standard software providers, framework vendors as well as new entrants.