This is the second part of an extended note on the current market trends for Enterprise Resource Planning.
The growth of ERP has been a direct result of the fierce global competition, short product life cycles, highly distributed operations, and information-driven management that characterize today's business environment. The vast majority of companies have always hoped to purchase an information system as a product, not as a collection of technologies, components and services. Leading ERP vendors have been successful so far because they have been attempting to build such a product.
A typical ERP system today offers broad functional coverage; vertical industry extensions; a robust technical architecture; training, documentation, implementation and process design tools; product enhancements; global support and an extensive list of software, services, and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.
Pressures on ERP vendors (discussed in the TEC Technology Note Essential ERP - Current Market Trends - Part I) lead us to believe that the following trends in the ERP market are the direct consequence of vendors' attempts to 1) resolve current ERP functional and/or technological deficiencies, and/or 2) expand software sales both within their existing and potential customer bases, particularly in the lower-end of the market.
About This Note
The ERP Market Trends covered in the TEC Technology Note Essential ERP - Current Market Trends - Part I are:
1. ERP Functional Scope Expansion
2. Sharper Vertical Focus
3. Flexibility Enabled by Adaptable Architecture
The ERP Market Trends covered in this note are:
4. Web- and E-commerce Enablement of ERP Systems
5. Intensified Market Merger & Acquistion Activity
6. Advent of Application Hosting Services
4) Web- and E-commerce Enablement of ERP Systems
Indisputably, one of the most significant trends in the ERP market today is the advent of e-business. No industry remains unaffected by the changes created by the explosive development of the Internet. As the reality of enabling seamless web-based collaboration between companies and their customers and suppliers becomes more of a reality each day, ERP applications are poised to play a pivotal role.
The concept of e-commerce is not really new to ERP: electronic data interchange (EDI) and electronic funds transfer (EFT) have been a part of ERP applications in varying forms for years, and are now in the process of being redefined (and given a makeover at the same time) to embrace the Internet and Web. The focus of EDI, EFT, and e-commerce in general is on transactions, which is something that traditional ERP applications excel at handling.
While extending these transactions beyond the corporate walls to the world of the Web poses its own set of challenges - namely, maintaining transaction integrity and security - the real challenge for ERP is enabling intelligent collaboration between companies and their customers and suppliers. This is the notion of e-business, of which e-commerce and its transactional focus play a role. Traditional ERP applications have so far proven inadequate in this new world of e-business because their primary focus has been on automating internal processes and coordinating transactions, not on enabling external collaboration between a business and its constituents. However, this is rapidly changing as the notion of extended ERP takes hold. Extended ERP takes a different view of the world, and has been promoted by most of the major ERP vendors in the form of two emerging application areas:
* Supply chain applications - The focus here is on extending the production planning, scheduling, and delivery execution processes to a company's suppliers and trading partners. While there are transactional components to supply chain, the primary focus to date has been on business-to-business (B2B) planning and collaboration. Business-to-business procurement can also fall in this category, yet the focus is often on procuring non-production related goods from suppliers.
* Customer management applications - These applications focus on extending sales, marketing, and customer service/support beyond corporate boundaries to the customer doorstep. There are transactional components here as well, as in the case of Web storefronts and unassisted sales. The broader picture includes Web-based self-service, promotions and one-to-one marketing, and content delivery.
Extending ERP to the Internet stems from the intent of many IT organizations not to reinvent the wheel in their scramble to create e-commerce applications. By extending the existing ERP system to support e-commerce, organizations not only leverage their investment in the ERP solution, but can also speed the development of their e-commerce capabilities.
However, as mentioned earlier, ERP systems have proven difficult to change and extend. Barricaded behind complex, proprietary APIs and based on complex, nearly indecipherable relational database schemas, ERP systems do not readily take to e-commerce. Nevertheless, IT managers are finding an increasing set of options for not only extending these systems to support the Web and e-commerce but for other key activities, such as decision support.
Underlying the new options are ongoing initiatives to break ERP systems into separate components (componentization), open up the core databases and proprietary application interfaces, and provide tools for customization.
Leading ERP vendors have been trying to oblige users' demand for e-commerce capabilities in their ERP solutions. SAP revealed a slew of Web and e-commerce solutions at its last SAPPhire conference in 1999. Since then, SAP introduced mySAP.com, a suite of e-commerce components for SAP. Oracle has numerous initiatives, including one that will allow its ERP, CRM, and e-commerce solutions to share the same database. Baan and J.D. Edwards have both rolled out some e-commerce modules. Finally, Peoplesoft's newest version includes a number of e-commerce capabilities, including support for online procurement and eStore, PeopleSoft's online sales and customer management solution. Lawson Software, Epicor Software, Infinium Software, Great Plains Software, Symix Systems, and American Software are the mid-market ERP vendors with similar initiatives, to name but a few.
The first stage in the ERP's conquest of the Web is to allow browser access through support for HTTP, HTML, and Java. This stage has almost been completed by a majority of ERP vendors. The next stage, which has just begun, is to extend the ERP applications themselves to the Web, where they can be accessed and run by outside partners and customers. These Web-based applications are hybrid in form, bringing together proprietary legacy elements, either host-centric or client/server, with thin client interfaces.
In order for traditional ERP systems to be Internet ready, they will have to be:
1. Fully browser enabled
2. Redesigned to be available to all corporate users, not just the special few
3. Redesigned to be available to customers and suppliers
4. Redesigned to use new data interchange language, most likely extensible markup language (XML), rather than proprietary protocols
With an Internet-only ERP system in place, client-side software upgrades become unnecessary. Browser-based applications significantly simplify the training, and tying together far-flung locations of an enterprise becomes simpler too.
Enterprise portals on intranets leverage this architecture's value in aligning intranet workplace resources more closely with business objectives. Leading ERP vendors have also made moves to adopt web portal strategies.
The basic goal is to create a virtual workplace and marketplace for ERP users, where the ERP applications, other disparate back-end systems, and external content and services (catalogs, directories, travel services, benefits administration, etc.) can be seamlessly and transparently accessed by users via the Web. By personalizing, profiling, and presenting its information, business applications and inter-organizational interfaces in the context of roles and work processes, an enterprise portal provides a thin-client link to work-based resources within the enterprise.
While the concept of an ERP portal is an interesting one, we identified the following challenges for vendors pursuing this route:
* Integration - the success of a portal is predicated on how well it ties together internal and external transactions, content, and services.
* Effective partnering - ERP vendors face a whole slew of potential new partners, many of which are not traditional technology companies.
* Pricing and, more importantly, an ERP portals' business model are still very obscure.
Nevertheless, with these Web initiatives, ERP vendors are falling into line with what their customers actually want and need. We believe that, within the next four years, over 40% of Fortune 1000 Companies will manage their own enterprise portals to enable effective use of personalized decision content, to provide role-based access to internal business applications and workflow, and to facilitate B2B e-commerce integration (70% probability).
SOURCE:-
http://www.technologyevaluation.com/research/articles/essential-erp-current-market-trends-part-ii-15720/
The growth of ERP has been a direct result of the fierce global competition, short product life cycles, highly distributed operations, and information-driven management that characterize today's business environment. The vast majority of companies have always hoped to purchase an information system as a product, not as a collection of technologies, components and services. Leading ERP vendors have been successful so far because they have been attempting to build such a product.
A typical ERP system today offers broad functional coverage; vertical industry extensions; a robust technical architecture; training, documentation, implementation and process design tools; product enhancements; global support and an extensive list of software, services, and technology partners. While it is not a system-in-a-box yet, the gap between its desired and actual features is becoming smaller every day.
Pressures on ERP vendors (discussed in the TEC Technology Note Essential ERP - Current Market Trends - Part I) lead us to believe that the following trends in the ERP market are the direct consequence of vendors' attempts to 1) resolve current ERP functional and/or technological deficiencies, and/or 2) expand software sales both within their existing and potential customer bases, particularly in the lower-end of the market.
About This Note
The ERP Market Trends covered in the TEC Technology Note Essential ERP - Current Market Trends - Part I are:
1. ERP Functional Scope Expansion
2. Sharper Vertical Focus
3. Flexibility Enabled by Adaptable Architecture
The ERP Market Trends covered in this note are:
4. Web- and E-commerce Enablement of ERP Systems
5. Intensified Market Merger & Acquistion Activity
6. Advent of Application Hosting Services
4) Web- and E-commerce Enablement of ERP Systems
Indisputably, one of the most significant trends in the ERP market today is the advent of e-business. No industry remains unaffected by the changes created by the explosive development of the Internet. As the reality of enabling seamless web-based collaboration between companies and their customers and suppliers becomes more of a reality each day, ERP applications are poised to play a pivotal role.
The concept of e-commerce is not really new to ERP: electronic data interchange (EDI) and electronic funds transfer (EFT) have been a part of ERP applications in varying forms for years, and are now in the process of being redefined (and given a makeover at the same time) to embrace the Internet and Web. The focus of EDI, EFT, and e-commerce in general is on transactions, which is something that traditional ERP applications excel at handling.
While extending these transactions beyond the corporate walls to the world of the Web poses its own set of challenges - namely, maintaining transaction integrity and security - the real challenge for ERP is enabling intelligent collaboration between companies and their customers and suppliers. This is the notion of e-business, of which e-commerce and its transactional focus play a role. Traditional ERP applications have so far proven inadequate in this new world of e-business because their primary focus has been on automating internal processes and coordinating transactions, not on enabling external collaboration between a business and its constituents. However, this is rapidly changing as the notion of extended ERP takes hold. Extended ERP takes a different view of the world, and has been promoted by most of the major ERP vendors in the form of two emerging application areas:
* Supply chain applications - The focus here is on extending the production planning, scheduling, and delivery execution processes to a company's suppliers and trading partners. While there are transactional components to supply chain, the primary focus to date has been on business-to-business (B2B) planning and collaboration. Business-to-business procurement can also fall in this category, yet the focus is often on procuring non-production related goods from suppliers.
* Customer management applications - These applications focus on extending sales, marketing, and customer service/support beyond corporate boundaries to the customer doorstep. There are transactional components here as well, as in the case of Web storefronts and unassisted sales. The broader picture includes Web-based self-service, promotions and one-to-one marketing, and content delivery.
Extending ERP to the Internet stems from the intent of many IT organizations not to reinvent the wheel in their scramble to create e-commerce applications. By extending the existing ERP system to support e-commerce, organizations not only leverage their investment in the ERP solution, but can also speed the development of their e-commerce capabilities.
However, as mentioned earlier, ERP systems have proven difficult to change and extend. Barricaded behind complex, proprietary APIs and based on complex, nearly indecipherable relational database schemas, ERP systems do not readily take to e-commerce. Nevertheless, IT managers are finding an increasing set of options for not only extending these systems to support the Web and e-commerce but for other key activities, such as decision support.
Underlying the new options are ongoing initiatives to break ERP systems into separate components (componentization), open up the core databases and proprietary application interfaces, and provide tools for customization.
Leading ERP vendors have been trying to oblige users' demand for e-commerce capabilities in their ERP solutions. SAP revealed a slew of Web and e-commerce solutions at its last SAPPhire conference in 1999. Since then, SAP introduced mySAP.com, a suite of e-commerce components for SAP. Oracle has numerous initiatives, including one that will allow its ERP, CRM, and e-commerce solutions to share the same database. Baan and J.D. Edwards have both rolled out some e-commerce modules. Finally, Peoplesoft's newest version includes a number of e-commerce capabilities, including support for online procurement and eStore, PeopleSoft's online sales and customer management solution. Lawson Software, Epicor Software, Infinium Software, Great Plains Software, Symix Systems, and American Software are the mid-market ERP vendors with similar initiatives, to name but a few.
The first stage in the ERP's conquest of the Web is to allow browser access through support for HTTP, HTML, and Java. This stage has almost been completed by a majority of ERP vendors. The next stage, which has just begun, is to extend the ERP applications themselves to the Web, where they can be accessed and run by outside partners and customers. These Web-based applications are hybrid in form, bringing together proprietary legacy elements, either host-centric or client/server, with thin client interfaces.
In order for traditional ERP systems to be Internet ready, they will have to be:
1. Fully browser enabled
2. Redesigned to be available to all corporate users, not just the special few
3. Redesigned to be available to customers and suppliers
4. Redesigned to use new data interchange language, most likely extensible markup language (XML), rather than proprietary protocols
With an Internet-only ERP system in place, client-side software upgrades become unnecessary. Browser-based applications significantly simplify the training, and tying together far-flung locations of an enterprise becomes simpler too.
Enterprise portals on intranets leverage this architecture's value in aligning intranet workplace resources more closely with business objectives. Leading ERP vendors have also made moves to adopt web portal strategies.
The basic goal is to create a virtual workplace and marketplace for ERP users, where the ERP applications, other disparate back-end systems, and external content and services (catalogs, directories, travel services, benefits administration, etc.) can be seamlessly and transparently accessed by users via the Web. By personalizing, profiling, and presenting its information, business applications and inter-organizational interfaces in the context of roles and work processes, an enterprise portal provides a thin-client link to work-based resources within the enterprise.
While the concept of an ERP portal is an interesting one, we identified the following challenges for vendors pursuing this route:
* Integration - the success of a portal is predicated on how well it ties together internal and external transactions, content, and services.
* Effective partnering - ERP vendors face a whole slew of potential new partners, many of which are not traditional technology companies.
* Pricing and, more importantly, an ERP portals' business model are still very obscure.
Nevertheless, with these Web initiatives, ERP vendors are falling into line with what their customers actually want and need. We believe that, within the next four years, over 40% of Fortune 1000 Companies will manage their own enterprise portals to enable effective use of personalized decision content, to provide role-based access to internal business applications and workflow, and to facilitate B2B e-commerce integration (70% probability).
SOURCE:-
http://www.technologyevaluation.com/research/articles/essential-erp-current-market-trends-part-ii-15720/
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