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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 Product

SAP AG R/3
OracleCorporation OracleApplications
JD EdwardsWorld OneWorld
SolutionsCo.
PeopleSoft Inc. PeopleSoft
Baan Co. Baan IV________
M H Lakdawala
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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 less-
expensive '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):

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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 e-
commerce 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 Microsoft-
centric 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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