CHAPTER 6 Future Directions in ERP

Chapter 6 Future Directions in ERP The only constant is change. No more so than in the constantly evolving, high-speed world of technical innovation. Therefore, the question is: How will these inevitable changes affect the ERP market? In this chapter, we will survey the industry landscape and find out what is on the horizon —keeping in mind that often what appears to loom large in the distance, turns out to be a mirage. ERP industry watchers are agreed on at least one point: 'one-size-fits-all', across the board integration is no longer seen as the unwritten law. As revolutionary as the ERP concept was, and to a certain extent still is, given the number of companies yet to implement it, it is doubtful whether it can hold onto its overall position as the 'hottest' dominating technology in the face of competition from new cutting-edge technologies such as Internet commerce and EDI (Electronic Date Interchange), and competitive new business practices involving supply chain and customer self-service.

Major ERP Vendorsand their Products: Vendor SAP AG OracleCorporation

Product R/3 OracleApplications

JD EdwardsWorld SolutionsCo. PeopleSoft Inc.

OneWorld

Baan Co.

Baan IV________

PeopleSoft

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NEW MARKETS: As larger enterprises become saturated with new-generation client/server ERP systems, vendors are being forced to find new markets for their product suites in order to grow. This pressure is causing ERP vendors to increase their appeal to small business clients through a number of initiatives. These initiatives include the following: 1. Supplementing their direct sales force with reseller channels 2. Lowering the entry price point of their software to make it financially viable 3. Stratifying their software offerings to appeal on the basis of reduced functionality 4. Improving the implementation methodologies for faster deployment 5. Porting the products to platforms such as Microsoft Windows NT. NEW CHANNELS

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Vendors such as SAP AG Inc., Oracle Corporation, and Baan Co. have been building reseller channels—both in the US and worldwide—to reach the smaller businesses that are looking for the complete-one-stop shopping for their ERP solutions. The ERP software is made more financially attractive by lowering the entry price point for each module and by ramping up the total costs by basing price on user licenses. Oracle is being particularly aggressive in this respect with software pricing comparing favourably with middle-market client/server offerings from companies such as Platinum Software and Great Plains Software. Although JD Edwards ventured in these waters by complementing its OneWorld suite with a lower-cost line called Genesis, most of the vendors have avoided producing lessexpensive 'lite' versions of their software. SAP abandoned its SAP Lite project some time ago and it looks as if the lite versions will have to wait for some more time.

FASTER IMPLEMENTATION METHODOLOGIES: All ERP vendors have suffered from the perception that their software is difficult and costly to implement. This perception has provided huge profits to the 'Big 6' accounting firms (now Big 5 with the merger of Price Waterhouse and Coppers SB Laybrand) that have generated billions in fees from their ERP software implementation 'practices.' Even though only 10-15% of the implementations have taken years to complete and have eaten up millions of dollars of consulting costs, the fact remains that implementing ERP packages is difficult. An ERP system may consist of dozens of modules that are deployed on a multinational basis to service hundreds of users from many different business departments. There may also be a complete change of infrastructure—say from a mainframe to a UNIX platform—while a number of core business processes are being simultaneously reengineered. ERP vendors have thus begun to focus their effort on making the implementation process easier by: 1. providing more effective tools 2. better methodologies to speed up the process, 3. creating elite consulting teams to intensify resources when required, and 4. Using model-based approaches and opening up their systems for easier integration. For example, SAP has introduced a program called Accelerated SAP (ASAP) that takes the knowledge gained from thousands of R/3 implementations to date and consolidates this expertise in a product called the Business Engineer. This product helps implementation teams configure the SAP modules to conform to the processing style of some 100 business operating scenarios. Methodologies such as ASAP help reduce SAP implementation times to less than six months in many cases. Oracle recently introduced a similar program called Fast Forward, to help speed up implementations of Oracle Applications suites and nail down the costs up-front.

Business models and business application programming interfaces (BAPIs): By: M H Lakdawla

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SAP has attacked the notion that the R/3 system is not open by releasing the specifications for some 170 business application programming interfaces (BAPIs), which help third-party applications interact with R/3 directly. BAPIs are simply, sets of methods that allow external applications to collaborate with specific R/3 business objects, such as customers, accounts, or employees. The fact that the R/3 data is addressable through these callable methods, (BAPIs) gives the third party application vendors a lot of flexibility to build supporting applications for the R/3 system. In a similar manner, Baan provides an offering called OrgWare that is based on the use of a tightly integrated business-modeling tool, combined with business-specific templates that help to automatically configure the software to suit specific operational needs. Baan is currently in the process of enhancing this tool with new setup wizards to accelerate software implementation on the Windows NT platform.

APPLICATION PLATFORMS ERP vendors already deliver comprehensive suites of application modules that support multinational deployment, Year 2000 compliance, and the Euro (European single currency). But each vendor is trying to extend the reach ofits software and make it more like an application platform than a suite of modules. SAP is already ahead in this race; its R/3 product is one of the few that can be managed, centrally using popular platform management tools from vendors such as Computer Associates (UniCenter TNG) and Tivoh (TME),

NEW BUSINESS SEGMENTS: All the ERP vendors are now capable of delivering specialized variants of their applications to service vertical markets such as government, healthcare, financial service, or retail environments. Some vendors are also moving into more specialized areas, such as supply chain management and demand forecasting or sales automation and marketing. PeopleSoft bought Red Pepper Software to enhance its supply chain offering while Baan recently acquired Aurum Software for its Aurum Customer Enterprise suite of customer relationship management tools. To strengthen its financial modules, Baan also teamed up with Hyperion Software to link Hyperion's financial accounting, budgeting and reporting solutions to Baans distribution and manufacturing modules.

MORE FEATURES... Improving decision support has been another focus of almost all the ERP vendors. Baan is linking its applications to the Gentia product (from Gentia Software Inc.) to provide OLAP capabilities, and for the setup and monitoring of key performance indicators. JD Edwards teamed up with Information Builders to deliver a data mart, based on Information Builders Inc.'s. SmartMart suite'of database access middleware, data transformation, reporting, and OLAP tools.

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Oracle provides a data mart designer and builder tool for creating data marts, and Oracle also offers Oracle Discoverer, an end-user tool for querying, charting and reporting data from Oracle's Applications suite. The next version of PeopleSoft will include closer integration between PeopleSoft applications and both, the client-based Cognos Corp. PowerPlay multidimensional OLAP tool and Arbor Software Corp.'s multidimensional Essbase server. SAP has also previewed its own Business Information Ware-house product for synchronising the R/3 transaction system with a data warehouse that can manage both R/3 and non-R/3 data, through use of a metadata repository and a front-end OLAP engine.

WEB ENABLING As with every other software market, ERP vendors are being forced to move from a client/server to browser/server architecture to Web-enable their software and thus, deliver self-service and electronic commerce capabilities. Baan is working to deliver a Java-based Web interface to all its products. The company is also focusing on the automation of supply-chain relationships via the Internet, on ecommerce via the Microsoft Merchant Server (now known as Site Server), and on using Hyperion Software Corp.'s Spider-Man technology for report and alert distribution across the Web. PeopleSoft is set to deliver its Universal Applications—Java-based self-service applets— with its PeopleSoft 7. JD Edwards is also using Java to allow its OneWorld functionality to be available either through a Windows client or a Web browser. While Oracle has used Java to deliver its Oracle Web Employees, Oracle Web Customers, and Oracle Web Suppliers modules. In 1997, SAP released 25 Web applications for version 3.1 of the R/3 and recently previewed links to online catalogs for Web-based procurement. Unlike the Microsoftcentric middle market applications, the ERP vendors are all using Java, rather than Microsoft's ActiveX, for their first generation of Web-enabled applications. The move by the ERP vendors to embrace Java as a means to deliver and deploy their Web functionality is the first move away from proprietary technologies to more open tools. One reason why implementing solutions from SAP and PeopleSoft can be expensive is because the tools for customizing their products—ABAP4 and People-Tools—are proprietary. Whereas many lower-tier software vendors have built their application front ends using popular commercial tools—such as PowerBuilder, Visual Basic, or MicrosoftAccess—the ERP vendors have not taken this route. As a result, the customer will have to pay a premium for ABAP4 and PeopleTools programmers, instead of leveraging the PowerScript or Visual Basic expertise that they may already have in-house. Because Oracle is already a tool vendor, the company uses Oracle Forms, Developer 2000, and Designer 2000 to develop its Oracle Applications. .

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