Hype Cycle For Erp 2012 226953

This research note is restricted to the personal use of mark.robichaux@itc.hctx.
net
This research note is restricted to the personal use of mark.robichaux@itc.hctx.net
G00226953
Hype Cycle for ERP, 2012
Published: 30 July 2012
Analyst(s): Denise Ganly, Nigel Montgomery
The forces of the nexus are beginning to have an impact on ERP solutions.
Organizations should use this Hype Cycle to identify how these emerging
technologies can help to gain greater value, innovation, and user centricity
from their ERP investments.
Table of Contents
Analysis.................................................................................................................................................. 3
What You Need to Know.................................................................................................................. 3
The Hype Cycle................................................................................................................................ 3
Changes to the 2012 ERP Hype Cycle....................................................................................... 6
The Priority Matrix...........................................................................................................................10
Off The Hype Cycle........................................................................................................................ 11
On the Rise.................................................................................................................................... 12
Monolithic ERP Devolution........................................................................................................12
Pace-Layered Application Strategy and ERP............................................................................ 13
Big Data and ERP.....................................................................................................................15
Controller-Free, Gesture-Driven Applications for ERP............................................................... 17
Collaborative Decision Making.................................................................................................. 20
ERP-Based Implementation Tools............................................................................................ 23
Cloud ERP for Large Enterprises.............................................................................................. 26
Post-PC ERP............................................................................................................................28
User-Centric ERP Strategy....................................................................................................... 30
Application-Specific Data Stewardship Solutions...................................................................... 32
At the Peak.....................................................................................................................................34
ERP App Stores/Marketplaces................................................................................................. 34
Support Models in Global Deployments.................................................................................... 37
HCM and Social Software.........................................................................................................38
Model-Driven Packaged Applications........................................................................................40
Value Management Tools......................................................................................................... 43
Cloud ERP for Small or Midsize Businesses..............................................................................45
Application Portfolio Management............................................................................................ 47
Business-Process-Oriented Support.........................................................................................49
Process Templates................................................................................................................... 51
Platform as a Service................................................................................................................ 55
In-Memory Database Management Systems............................................................................ 58
Packaged Integration and Cloudstreams.................................................................................. 60
ERP Infrastructure Utility........................................................................................................... 63
Sliding Into the Trough....................................................................................................................68
Master Data Management........................................................................................................ 68
ERP-Specific Cloud Add-Ons................................................................................................... 70
Embedded Analytics.................................................................................................................73
Templated Implementation Methodologies................................................................................76
Social Software Suites.............................................................................................................. 78
Contract Life Cycle Management..............................................................................................79
Climbing the Slope......................................................................................................................... 81
Two-Tier ERP Strategy............................................................................................................. 81
Idea Management.....................................................................................................................84
Entering the Plateau....................................................................................................................... 85
Business Intelligence Platforms.................................................................................................85
Appendixes.................................................................................................................................... 86
Hype Cycle Phases, Benefit Ratings and Maturity Levels.......................................................... 88
Recommended Reading.......................................................................................................................89
List of Tables
Table 1. Hype Cycle Phases................................................................................................................. 88
Table 2. Benefit Ratings........................................................................................................................88
Table 3. Maturity Levels........................................................................................................................ 89
List of Figures
Figure 1. Hype Cycle for ERP, 2012....................................................................................................... 9
Figure 2. Priority Matrix for ERP, 2012.................................................................................................. 11
Figure 3. Hype Cycle for ERP, 2011..................................................................................................... 87
Page 2 of 91 Gartner, Inc. | G00226953
Analysis
What You Need to Know
This Hype Cycle focuses on trends and technologies relevant to an ERP strategist. It highlights the
technologies that need to be considered to ensure that the organization has an ERP strategy that
delivers value and innovation for the business and the users. As with 2011's Hype Cycle, this year's
Hype Cycle remains heavily weighted to the left, with the majority of technologies climbing the Peak
of Inflated Expectations over the next five years. This is because the convergence of four powerful
forces (social, mobile, cloud and information) is exerting a significant impact on established ERP
technologies (see "The Nexus of Forces: Social, Mobile, Cloud and Information"). The previous
year's trend of users seeking greater control of their ERPs through new interface methods and
better internal and external collaboration is given greater emphasis by the nexus, and the trend
continues unabated.
While the nexus is exerting influence on driving ERP further toward user centricity and away from
traditional monolithic ERP architectures, organizations continue to seek ways of exploiting existing
technologies and deriving further value from their existing ERP investments. To do this,
organizations need a clearly defined ERP strategy that incorporates pace-layering concepts (see
"ERP Strategy: Why You Need One, and Key Considerations for Defining One," "How to Use Pace
Layering to Develop a Modern Application Strategy," and "Applying Pace Layering to ERP
Strategy"). By supporting these critical strategies, ERP supports transformational strategic activities
that enable greater business agility and target investment optimization.
Understanding how the technologies in this Hype Cycle are being driven by the nexus and how they
can support user centricity while delivering greater value to the organization are important planning
components for ERP strategists. Organizations should plan investments in technologies to support
the trends they identify within their industries or regions to deliver value to the business or
enfranchise a greater number of ERP users.
The Hype Cycle
Over the past several years, four powerful forces social, mobile, cloud and information have
been evolving independently of one another. Through the rise of consumerization and the use of
connected smart devices, people's behaviors have caused these forces to converge (see "The
Nexus of Forces: Social, Mobile, Cloud and Information"). Within this convergence, known as the
nexus, information provides the context for delivering enhanced social and mobile experiences;
mobile devices offer the platform for effective social networking and new work patterns; social links
people to their work and each other in new, and perhaps unexpected, ways; and cloud enables
delivery of information and functionality to users and systems. The nexus is nascent but brings
significant changes with it, as people carry their expectations of seamless interaction, prolific
interactivity, and immediate information access into the workplace. However, this is a long way
removed from the traditional monolithic and IT-driven world of ERP that most organizations inhabit
today. Getting there will create some major challenges for many organizations.
Gartner, Inc. | G00226953 Page 3 of 91
Although the technology expectations of the workforce are changing rapidly, organizations have
significant investments in traditional ERP technologies that must continue to deliver value to the
organization. A balancing act must be played out between investment in the more mature
technologies and the technologies of the nexus as they mature and vendors begin to incorporate
them into their products and solutions. ERP strategists, application managers and CIOs should
review the technologies in this Hype Cycle to determine how they apply to their ERP strategies, how
they can help drive value in their organizations, and how the four forces of the nexus may have an
impact on their longer-term investment planning.
The balancing act will be facilitated by pace layering. Pace layering continues to have an impact on
application investment and the ability to deliver user centricity and continues its climb up the Peak
of Inflated Expectations. Strategists, CEOs, CIOs and enterprise architects should use pace layers
as a framework and common language for informed decision making regarding change initiatives,
optimizing timelines to capabilities, while matching efforts and investments to the impact and
urgency of change, and balancing agility with operational stability and competitive efficiency (see
"Applying Pace Layering to an ERP Strategy").
Application portfolio management (APM) is critical to the balancing act, and it continues to climb the
Peak of Inflated Expectations as organizations realize the need to overhaul their application
investments (see "Application Overhaul: The Critical IT Strategy for the Next 10 Years"). An
important component of APM is understanding the high-level business case for investing in a given
application. ERP vendors are responding to this need with value management tools, which are
climbing the Peak of Inflated Expectations. In a continuing attempt to deliver projects faster and
realize benefit sooner, organizations are turning to ERP-based implementation tools, which continue
to emerge as Technology Triggers, and templated implementation methodologies, which are
entering the Trough of Disillusionment.
Organizations interested in ERP usually seek integrated functionality from a single vendor, often
deployed in a single instance (see "ERP Consolidation: Convincing Others Requires 'The Art of
War'"). This has led to an increase in the need for new support models; as a result, support models
in global deployments and business-process-oriented support have emerged to climb the Peak of
Inflated Expectations (see "What Should CIOs Do to Prepare for ERP and Business Application Staff
Planning").
This monolithic approach to ERP is considered by many organizations as the foundation of their
application portfolios. However, the business continues to question the value they receive from their
ERP investments, users complain of inflexible and unfriendly processes, and ERP vendors struggle
to deliver innovation. The ERP foundation is cracking under the pressures it is encountering in
monolithic ERP devolution entering this year's Hype Cycle as a Technology Trigger. Although
organizations are likely to continue to seek the ideal of a single instance, the emerging technologies
of the nexus will begin to break down the monolithic, single-vendor, everything-in-one-place
paradigm, allowing ERP to become more user-centric and innovative through new best-of-breed-
type approaches (see "The Impact of Cloud on ERP and Business Application Planning"). Reality
prevents many organizations from deploying single instance, as smaller organizational units find the
global ERP choice too expensive and burdensome for deployment. In these instances, an
increasing number of organizations are looking to adopt a two-tier ERP strategy. Two-tier ERP is
climbing the Slope of Enlightenment in response to the maturation of offerings and concerted,
coordinated efforts in this space (see "Two-Tiered ERP Suite Strategy: Considering Your Options").
The ability to use analytics to make informed decisions is critical to delivering value from ERP
investments, and information is a key component of the nexus. This importance is evident when we
consider that the technologies supporting informed decision making span the length of the Hype
Cycle. Business intelligence (BI) platforms are on the Plateau of Productivity; embedded analytics is
sliding into the Trough of Disillusionment; while collaborative decision making continues to mature
as a Technology Trigger (see "The Changing Attitudes of Business Intelligence Users," "Embedded
Analytics Will Impact Business Application and BI Strategy" and "Information Innovation Will
Revolutionize Management Decision Making").
Informed decisions require data, and data continues to influence ERP strategies and investments.
ERP and its associated applications generate significant quantities of data. As the boundaries
among business applications (ERP suites, other packaged applications, legacy applications and
best-of-breed applications) blur, master data management (MDM) becomes increasingly important.
MDM's slide toward the Trough of Disillusionment reflects the realism now faced by users that have
invested in it to help deliver the entire customer, product or employee view, in addition to helping
manage complex data and metadata needs (see "Should Organizations Using ERP 'Do' Master
Data Management?"). Although it delivers on many of these fronts, MDM is not a panacea for the
organization's data ills. This is reflected in the emergence of application-specific data stewardship
applications as a Technology Trigger (see "The Emergence of Information Stewardship Applications
for Master Data"). The importance of data and the influence of the nexus are reflected in the
backward movement of big data and ERP in this year's Hype Cycle. Big data and ERP has moved
to a Technology Trigger, as awareness about its potential and the ramifications for ERP begins to
dawn (see "The Importance of 'Big Data': A Definition").
The nexus is also fueling the demand for greater process and application control from the users. In
response to this demand, we see user-centric ERP strategy and model-driven packaged
applications continuing their maturation as Technology Triggers, with process templates on the
Peak of Inflated Expectations (see "What Types of Model-Drive Applications Are Most Appropriate
for a High Pace of Process Change, "How to Learn to Love Your ERP (Again)" and "How to Deliver
a More User-Centric ERP Solution"). Users are also demanding the ability to interact with ERP in
new ways and to expand ERP in new directions. Controller-free gesture-driven applications for ERP,
post-PC ERP, and ERP app stores/marketplaces are emerging as Technology Triggers, while ERP-
specific cloud add-ons are climbing the peak attempting to meet that demand (see "Best Practices
for ERP Innovation: Toys for the Board, Essential Tools for the Disabled" and "Enterprise
Applications for Tablets").
ERP continues to evolve in line with the nexus, with two cloud ERP technologies continuing their
maturation on this year's Hype Cycle. Cloud-based ERP for large enterprises is slowly emerging as
a Technology Trigger, while cloud ERP for small or midsize businesses (SMBs) is approaching the
Peak of Inflated Expectations (see "The Impact of Cloud on ERP and Business Application
Planning" and "ERP/Business Applications and the Public Cloud: A Life Cycle Assessment
Methodology and Key Focus Areas"). Additional nexus technologies that help deliver value at a
lower cost are evolving in the Hype Cycle, with packaged integration and cloudstreams, platform as
a service (PaaS) and in-memory database management systems (DBMSs) moving down the peak,
while ERP infrastructure utility makes a significant move from the previous year's positioning at the
peak to sliding into the trough due to maturing offerings (see "Taxonomies, Definitions and the
Vendor Landscape for Application Integration Solutions, 2011" and "SAP Throws Down the Next-
Generation Architecture Gauntlet With HANA"). The social influences of the nexus can be seen in
technologies that span this year's Hype Cycle from human capital management (HCM) and social
software climbing the peak to social software suites in the trough to idea management on the Slope
of Enlightenment (see "Reach Peak Performance Through Employee Engagement," "Business Gets
Social," and "Case Studies in Ideation: Driving Distributed Innovation").
Changes to the 2012 ERP Hype Cycle
As we recast this year's ERP Hype Cycle (see Figure 1) from a cross-domain perspective to a user-
centric, value-focused view, significant additions, revisions and omission have occurred. We outline
these changes below. The technologies that have entered this year's Hype Cycle are:
Contract Life Cycle Management Contract life cycle management (CLM) is a process for
managing the life cycle of contracts created and/or administered by, or impacting, the company.
These include third-party contracts, such as outsourcing, procurement, sales, nondisclosure,
intellectual property, lease, facilities management and any other licensing agreements that hold the
company under some contractual obligation now or for the future.
HCM and Social Software As we begin to consider the effects social software is having on
traditional ERP functionality, HCM is at the forefront of areas feeling the change. Social software
technologies are transforming HCM-related processes and systems. Social networks have altered
recruitment strategies. Wikis, blogs and activity streams enable policies and procedures to be more
collaborative. Social software features have appeared in HCM applications such as recruitment,
performance management, learning and now core HCM.
Idea Management Idea management is a structured process of generating, capturing,
discussing and improving, organizing, evaluating and prioritizing valuable insight or alternative
thinking that would otherwise not have emerged through normal processes. Idea management tools
are typically used for focused innovation campaigns or events, but most also enable continuous
idea generation. Idea management plays an important role in enabling user centricity in ERP
through the promotion of alternative and innovative thinking.
Monolithic ERP Devolution ERP will devolve from the present monolithic, single-vendor,
integrated, global deployments to remote, autonomous, discrete, stand-alone ones. This is being
spurred by decreasing user satisfaction with large vendors, increasing frustration with maintenance
and support fees and models, and increasing issues with never-ending upgrade cycles while being
enabled by the emerging technologies of the nexus, in particular cloud and mobile capabilities.
Social Software Suites Social software suites encompass a broad set of capabilities, such as
user profiles, groups, content authoring and sharing, discussions, wikis, blogs, microblogs, activity
streams, social tags, social bookmarks, content rating, and social analytics. Social software suites
facilitate, capture and organize free and open interactions among individual users.
Support Models in Global Deployments Organizations are increasingly deploying ERP globally
and require support organizations that can deliver ERP support services on a global scale. The
organizations much accommodate issues such as follow-the-sun support, language and cultural
difference, provide global governance, and ensure the right mix of support personnel is located in
the right place at the right time.
The following technologies have been revised since the previous year's Hype Cycle:
Big Data and Extreme Information Processing and Management This has been narrowed to
focus on how the emergence of big data will impact on the ERP architectures that have been
traditionally focused on a predictable stream of structured data and has been renamed big data and
ERP. Because big data in ERP is a much newer concept than the more generic profile of the
previous year, this technology has moved backward in the Hype Cycle. The more generic big data
and extreme information processing and management has also been renamed simply big data and
can be found on the forthcoming document, "Hype Cycle for Information Infrastructure, 2012."
ERP Mobility This technology has been revised from a focus on ERP functionality provided by
ERP vendors through mobile enterprise application platforms to a much broader focus on the
technological and governance requirements needed to integrate ERP capabilities across a growing
array of mobile devices, associated software platforms along with emerging design patterns and
languages. It is now named post-PC ERP. Mobile enterprise application platforms can be found in
the forthcoming document, "Hype Cycle for Application Development, 2012."
ERP-Specific Cloud Augmentation Applications This technology has been renamed ERP-
specific cloud add-ons for greater clarity.
Templated Implementation Tools This has been renamed templated implementation
methodologies to more accurately reflect the capabilities outlined in the technology's description.
User-Centric ERP Suites This technology has expanded from focusing on software that
supports user centricity to the strategies that support it. It has been renamed user-centric ERP
strategy. With the broader focus on strategy, this technology has moved backward in the Hype
Cycle.
Although this year's focus is on user centricity, deriving value from ERP investments, and leveraging
the nexus, cross-domain trends and technologies remain relevant, and many ERP-related
technologies can be found on domain-specific Hype Cycles. Please refer to the following
forthcoming Hype Cycles for domain-specific technologies that may influence ERP decisions in
your organization:
"Hype Cycle for Analytic Applications, 2012"
"Hype Cycle for Cloud Application Infrastructure Services (PaaS), 2012"
"Hype Cycle for Application Services and Outsourcing, 2012"
"Hype Cycle for Business Process Management, 2012"

"Hype Cycle for Business Use of Social Software, 2012"
"Hype Cycle for Cloud Computing, 2012"
"Hype Cycle for Cloud Security, 2012"
"Hype Cycle for CRM Customer Service and Support, 2012"
"Hype Cycle for CRM Marketing Applications, 2012"
"Hype Cycle for CRM Sales, 2012"
"Hype Cycle for Governance, Risk and Compliance Technologies, 2012"
"Hype Cycle for Human Capital Management, 2012"
"Hype Cycle for Master Data Management, 2012"
"Hype Cycle for Social Software, 2012"
"Hype Cycle for Software as a Service, 2012"
"Hype Cycle for Virtualization, 2012"
"Hype Cycle for Web and User Interaction Technologies, 2012"

Figure 1. Hype Cycle for ERP, 2012
Technology
Trigger
Peak of
Inflated
Expectations
Trough of
Disillusionment
Slope of Enlightenment
Plateau of
Productivity
time
expectations
Plateau will be reached in:
less than 2 years 2 to 5 years 5 to 10 years more than 10 years
obsolete
before plateau
Application Portfolio Management
Business-Process-Oriented Support
As of July 2012
Pace-Layered Application
Strategy and ERP
Big Data and ERP
Collaborative Decision Making
Application-Specific Data
Stewardship Solutions
ERP App Stores/Marketplaces
Post-PC ERP
HCM and Social Software
User-Centric ERP Strategy
Support Models in Global Deployments
ERP-Specific Cloud Add-Ons
Value Management Tools
Cloud ERP for Small or Midsize Businesses
Process Templates
Packaged Integration and Cloudstreams
In-Memory Database Management Systems
Platform as a Service
ERP Infrastructure Utility
Master Data Management
Social Software Suites
Contract Life Cycle Management
Two-Tier ERP Strategy
Idea Management
Business Intelligence Platforms
Monolithic ERP Devolution
Controller-Free,
Gesture-Driven
Applications for ERP
Cloud ERP for Large Enterprises
ERP-Based Implementation Tools
Model-Driven Packaged Applications
Templated Implementation
Methodologies
Embedded Analytics
Source: Gartner (July 2012)
The Priority Matrix
As we saw in the previous year's Hype Cycle, there are again no "hot" (transformational and now)
technologies this year. The hot technologies are at least two years away. However, organizations
need to plan for these upcoming transformational technologies, because the changes associated
with them are likely to be significant. In the short term, allocate resources to work cooperatively with
teams already working on business intelligence and idea management while carving out resources
to start planning for upcoming technologies that may be relevant to your organization in the medium
to longer term.
Mature technologies that are yielding benefits for users within the two-year window include:
Business intelligence platform
Idea management
These technologies continue to mature, with a range of large installed bases that have broad and
deep experiences. Vendors are bringing competitive offerings to market, and the business
processes supported by these technologies are approaching commodity status, as the wider
market adopts them.
Several technologies promise significant benefits in the two-year window and beyond, including:
Platform as a service
In-memory database management systems
Templated implementation methodologies
Contract life cycle management
Social software suites
Collaborative decision making
Big data and ERP
Collaborative decision making
Monolithic ERP devolution
Process templates
These solutions are a combination of newer technologies, strategies and processes that supports
alternative deployment options, sophisticated data needs, more efficient and effective
implementations, and user centricity in access and decision making (see Figure 2).
Figure 2. Priority Matrix for ERP, 2012
benefit years to mainstream adoption
transformational
In-Memory Database
Management Systems
Big Data and ERP
Collaborative Decision
Making
Process Templates
high
Business Intelligence
Platforms
Contract Life Cycle
Management
Embedded Analytics
Templated
Implementation
Methodologies
Application Portfolio
Management
Model-Driven Packaged
Applications
Pace-Layered Application
Strategy and ERP
Post-PC ERP
Support Models in Global
Deployments
User-Centric ERP
Strategy
moderate
Idea Management Application-Specific Data
Stewardship Solutions
ERP App Stores/
Marketplaces
Packaged Integration and
Cloudstreams
Business-Process-
Oriented Support
Cloud ERP for Large
Enterprises
Cloud ERP for Small or
Midsize Businesses
Controller-Free, Gesture-
Driven Applications for
ERP
ERP-Based
Implementation Tools
ERP-Specific Cloud Add-
Ons
low
As of July 2012
Off The Hype Cycle
One technology has matured off this year's ERP Hype Cycle: Single-instance ERP backbone is
achieved when a single instance of an ERP application suite runs a range of business processes for
all operating companies on a common process template, a single release of the application and a
single copy of the application's database, using a consolidated technical infrastructure and a
common data model.
On the Rise
Analysis By: Denise Ganly
Definition: Over the past two decades, ERP suites have extended their functional footprints to
cover a range of integrated, end-to-end business processes within a single suite. Technological
advancement, high support costs and accelerated business model changes are putting a strain on
these expanding suites. The forces of the nexus and the Pace-Layered Application Strategy are
beginning to exert their influence on ERP, resulting in movement away from monolithic solutions to
a more federated approach to delivering the needed organizational process support.
Position and Adoption Speed Justification: ERP will devolve from the present monolithic
solutions to autonomous, discrete, variably coupled components. This is being spurred by
decreasing user satisfaction with large vendors, increasing frustration with maintenance and
support fees and models, and increasing issues with never-ending upgrade cycles.
The devolution of monolithic ERP is fueled by the Nexus of Forces (the cloud, social, information
and mobile), which are rapidly maturing. The primary enabler is the emergence of cloud-based
application vendors that do not offer monolithic, end-to-end solutions, but instead use infrastructure
as a service (IaaS) and platform as a service (PaaS) to link offerings together. Cloud adoption can
remove the need for on-premises infrastructure, and social computing is shifting the collaboration
paradigm. Information sharing is removing the constraints of data consolidation, and is catering to
the needs of big data. Mobile deployment is better supporting remote and ad hoc users' needs.
User Advice: Many organizations consider monolithic ERP the foundation of their application
portfolios. However, the business continues to question the value it receives from ERP investments,
users complain of inflexible and unfriendly processes, and ERP vendors struggle to deliver
innovation. The ERP foundation is cracking under these pressures.
Organizations need to rethink how they use applications, collaborate internally and externally, and
acquire and manage their application portfolios. The ERP vendor relationship will no longer
necessarily be a long-term, 20-year-plus commitment. While allowing for process standardization,
this new ERP paradigm will enable greater local input, and will allow the broader ERP constituency
a greater voice in how it is used.
This will change the application market power base. The current megavendors may not provide the
functionality needed to drive innovation or differentiation. Smaller vendors and niche providers may
be better placed to meet local organizational needs. Ecosystems will likely breakdown and reform
along differing lines and alliances. The power base will shift back to the organization.
These shifts will not occur overnight. The technologies that enable devolution are not yet mature,
and neither are the marketplaces, vendors and ecosystems that are needed to support it. However,
there is evidence within the human capital management space that such a shift is already occurring.
Much of the excitement surrounding the promise of cloud integration is still unproved. However, a
new best-of-breed form driven by cloud vendors is beginning to emerge along domain areas. The
first adopters of this new approach are likely to be industries that are not seeking or do not need
monolithic end-to-end processes. Megavendors will not accept this challenge without a fight, and
are likely to begin buying cloud vendors in order to offer both approaches. While the devolution will
offer greater user centricity, differentiation, agility and innovation, the hybrid environment is likely to
be complex to manage.
Business Impact: The impact of all these influences represents a fundamental shift in the way
organizations think about, plan for, deploy and manage major application assets. It will enable more
user-centric, differentiated, flexible and innovative ERP. Organizations will also need to take closer
control over vendor relationships and interdependencies. The move would make the ability to hold a
single vendor accountable a thing of the past. This puts more onus on ERP supplier relationship
management capabilities.
Given the vast amount of time and money organizations spend on trying to achieve single global
instances via monolithic ERP, CIOs and application managers need to continue to drive value from
existing investments, planning for how elements of devolution may impact their ERP solutions.
Benefit Rating: Transformational
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors:
Recommended Reading: "The Nexus of Forces: Social, Mobile, Cloud and Information"
"ERP Strategy: Why You Need One, and Key Considerations for Defining One"
"How to Use Pace Layering to Develop a Modern Application Strategy"
"How to Get Started with a Pace-Layered Application Strategy"
"Applying Pace Layering to ERP Strategy"
Pace-Layered Application Strategy and ERP
Analysis By: Nigel Rayner
Definition: Gartner's Pace-Layered Application Strategy is a new approach to defining an
application strategy that separates applications into different layers: systems of record, systems of
differentiation and systems of innovation. Applying this model to ERP strategy allows organizations
to build more balanced application portfolios of suites sourced from strategic ERP vendors,
complemented by applications sourced from specialist vendors. This helps ensure that ERP
systems support differentiation and innovation, rather than stifle it.
Position and Adoption Speed Justification: Many organizations that have implemented ERP have
struggled to keep pace with the changes the business demands, while maintaining the stability and
consistency within the core ERP system. They find it hard to balance the cost and complexity of the
upgrade cycle dictated by ERP vendors with the need of the business to adopt differentiating and
innovative business processes. A Pace-Layered Application Strategy will help organizations develop
a more agile approach to ERP. However, as a relatively new concept, it has low market penetration.
We expect adoption to grow rapidly during the next few years.
User Advice: A Pace-Layered Application Strategy is a simple but effective approach to identifying
the business value of different applications, facilitating better dialogue with the business on how to
prioritize application and technology investments. Adopting a Pace-Layered Application Strategy
will help senior executives understand that ERP is only part of the answer to their business
requirements. By their very nature, ERP systems are only effective once common business
processes have become established across the industry; as a result, they are less likely to provide
differentiation and innovation. Thus, a pace-layered approach will help executives understand that
the organization's ERP vendor is not the automatic or preferred choice for every application need.
Pace layering is particularly useful in defining an ERP strategy, because it helps identify the
differentiation usually done by customizing ERP, and ensuring that the right approach is adopted
(often implementing a specialist solution). This helps the core ERP implementation remain simple
and easier to maintain. Identifying areas where differentiation and innovation are less important can
jump-start ERP consolidation initiatives.
Before embarking on a pace-layered approach to applications, ensure that you have defined the
application governance processes that are used consistently for the core applications that will be
systems of record, recognizing that many applications that make up the core ERP system fit in this
category. It also helps to assess your degree of application organization maturity using a tool such
as Gartner's ITScore for application organizations.
Establish a procedure for assigning existing and proposed applications to a layer based on strategic
focus and rate of change, and for determining when an application should migrate from one level to
another. Develop a mechanism for periodically reviewing and reclassifying applications, and
applying new governance model requirements. It is important to establish a set of "connective
tissue" technologies and governance policies that can provide the IT organization with the
necessary data management, security and integration, without constraining the flexibility and
responsiveness the business requires.
Business Impact: There are two key areas of business impact; one is short term, and the other is
longer term.
In the short term, using the pace layers to segment the application portfolio helps change the
conversation between the business and IT. Because the layers focus on foundational systems and
those that drive business differentiation and innovation, pace layers center the conversation on the
business impact of technology, rather than on the technology, which is a model business
executives easily understand. In the context of ERP, this will reduce the tendency of organizations
to buy more functionality from ERP vendors without adequately considering the alternatives, and
will ensure that ERP functionality is not forced on the business where it is not appropriate.
In the longer term, a Pace-Layered Application Strategy can help IT organizations deliver on the
promise of agility by providing a mechanism to identify which applications are rapidly changing, and
adjust the change management and governance processes to accommodate the applications. This
will help IT organizations create a more agile ERP strategy that will better support business
differentiation and innovation.
Benefit Rating: High
Maturity: Emerging
Sample Vendors:
Recommended Reading: "How to Use Pace Layering to Develop a Modern Application Strategy"
"How to Get Started with a Pace Layered Application Strategy"
"Applying Pace Layering to ERP Strategies"
"ERP Strategy: Why You Need One and Key Considerations for Defining One"
"Gartner's Application Pace Layer Model: Governance and Change Management"
"ERP Road Map Methodology"
"Use a Pace-Layered Application Strategy to Clean Up ERP During Upgrades and Consolidation"
Big Data and ERP
Analysis By: Derek Prior; Nigel Rayner
Definition: Big data is high volume, velocity and variety information assets that demand cost-
effective, innovative forms of information processing for enhanced insight and decision-making. The
emergence of big data will impact traditional ERP architectures that, to date, have largely been
focused on a predictable stream of structured data.
Position and Adoption Speed Justification: The hype around big data itself is almost at the Peak
of Inflated Expectations. However, the impact of big data on the established world of ERP will take
longer to be felt. Traditional ERP architectures have evolved over the last 20 years and are all based
on relational data models with the primary information use case being structured data. Although
there is some usage of content in ERP systems (such as document images or descriptive text
fields), these are still primarily managed in a structured manner (i.e., related to structured data such
as an order or an invoice). ERP applications can process large volumes of data for transaction
processing purposes, but cannot manage extreme data volumes nor provide analytics and insight
over such large data volumes. Instead, data has to be off-loaded to a separate business intelligence
(BI) repository for analysis.
The larger context of big data refers to the wide variety and extreme size and count of data creation
venues in the 21st century. Big data challenges existing ERP architectures with the concept that all
information can be integrated, not just the data required to process a business transaction, and that
technology should be developed to support this. The many sources of new information assets are
increasing geometrically (for example, desktops became notebooks and now tablets; portable data
is everywhere and in multiple context formats), which is causing exponential increases in data
volumes and increasing the demand for insight across all these data types. Additionally, the
information assets include the entire spectrum of the information content continuum, from fully
undetermined structures (unstructured) to fully documented and traditionally accessed structures
(structured). As a result, ERP architectures will need to change to accommodate massive data
volumes with subsecond response times and provide real-time embedded analytics across a variety
of information use cases. They will also need to access many data sources; the days of a single,
physical repository of ERP data are over.
The convergence of big data and ERP is still at its early stages. SAP started to develop big data
technologies in 2010 with its Hana in-memory platform and is using this to improve the performance
of some of its existing ERP functions. It has also started to introduce a family of new applications
based on Hana, as well as predictive analysis tools and a partnership with Cloudera, but has yet to
apply this architecture fully to its ERP suite. Other vendors like Oracle are starting to embed
analytics more tightly into their ERP architecture and leverage some in-memory capabilities, but it
will take 5 to 10 years before most vendors can rearchitect their solutions to accommodate the
demands of big data.
User Advice:
Identify existing business processes that are hampered in their use of information because the
volume is too large, the variety is too widespread or the velocity creates processing issues.
Then identify business processes that are currently attempting to solve these issues with one-
off or manual solutions.
Evaluate your strategic ERP vendor (or vendors') road map for changes to their architecture to
meet the challenges of big data.
Evaluate emerging new big data ERP applications from ERP vendors and their partners for a
close match to these business processes and use cases. Big data platforms are interesting, but
only if meaningful new business applications based on them are available and cost-effective.
Conduct systems of innovation-type pilot projects to fully test the applicability of new big data
business applications and measure the payback and ROI if they were to be deployed on a
larger scale.
Business Impact: Big data and addressing all the extreme aspects of 21st century information
management permits greater analysis of all available data, detecting even the smallest details of the
information corpus a precursor to effective pattern-based strategies and the new type of
applications they enable. Big data has multiple use cases. In the case of complex event processing,
queries are complex with many different feeds, the volume may be high or not high, the velocity will
vary from high to low, and so on. Volume analytics using approaches such as MapReduce (the
Apache Hadoop project, for example) are valid big data use cases. In addition to MapReduce
approaches, which access data in external Hadoop Distributed File System (HDFS) files, the BI use
case can utilize it in-database (for example, Teradata-Aster Data and EMC Greenplum), as a service
call managed by the database management system (e.g., IBM Big Insights) or externally through
third-party software and implementation services (such as Cloudera or MapR). Big data has the
potential to transform some, not all, data-intensive ERP business processes, especially those
requiring heavy planning, simulation and analytical calculations. Examples of such processes
include manufacturing resource planning (MRP) sales and operations planning, cash forecasting,
profitability analysis and end-of-financial-period processing. For some discrete manufacturers, the
ability to run MRP in a few seconds (as compared to the current limitation of many hours) would
enable a what-if approach that could enable a more real-time optimization of their factories,
especially if high volumes of real-time shop floor data could be integrated. SAP has recently
announced a range of new ERP-related business applications, plus a partner ecosystem, based on
its Hana platform. A second impact of big data for ERP is the ability to streamline the way that high
transaction volume industries run ERP processes. Enterprises in retail, utilities, distribution and
insurance, for example, would be able to process large ERP transaction volumes much more
efficiently and derive more effective business analytics. Gartner estimates that organizations that
have introduced the full spectrum of extreme information management issues to their information
management strategies by 2015 will begin to outperform their unprepared competitors within their
industry sectors by 20% in every available financial metric.
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: Cloudera; EMC Greenplum; HortonWorks; IBM; MapR; SAP; Teradata-Aster Data
Recommended Reading: "'Big Data' Is Only the Beginning of Extreme Information Management"
"CEO Advisory: 'Big Data' Equals Big Opportunity"
"SAP Throws Down the Next-Generation Architecture Gauntlet With HANA"
Controller-Free, Gesture-Driven Applications for ERP
Analysis By: Nigel Montgomery
Definition: Gesture recognition includes determining the three-dimensional (3D) movement of a
user's fingers, hands, arms, head, eyes or body through the use of a 3D camera. Controller-free,
gesture-driven applications for ERP use this natural user interface (NUI), based on camera
recognition, to interact with enterprise business systems.
Position and Adoption Speed Justification: In its widest context, gesture recognition involves
determining the movement of a user's fingers, hands, arms, head, eyes, or body in three dimensions
through the use of a camera or via a device with embedded sensors that may be worn, held or
body-mounted. A more limited subset of gesture recognition (in two dimensions only) has become
common with the recent development of multitouch interfaces (such as the Apple iPhone or
Microsoft Surface), in which multiple finger touches pinch and squeeze, flicks and swipe-type
gestures are used to provide a richer and more intuitive touch-based interface. However, what if
the user were unable to touch the screen, or what if the keyboard were remote from the workplace?
This is where the development of controller-free, gesture-driven apps for ERP become useful.
The most visible and easily accessible example of a controller-free NUI is provided by the Microsoft
Kinect gaming controller. However, a growing number of alternatives are becoming available, not
least because Kinect is not yet considered robust enough for hostile areas, such as factories.
Controller-free, gesture-driven applications for ERP include the potential for ERP users to follow
process workflows (e.g., in manufacturing/production and materials handling) to interact with an
ERP system at a distance from the keyboard and, most importantly, to do so without leaving the
workplace. In most instances, the technology also incorporates facial recognition, enabling
identification of the operative making the gestures. Applications for this NUI include:
In the factory Warehouse movements with operator validity would enable loading dock
personnel to communicate with the systems without leaving the loading dock or adding
expensive handheld devices. The key here is productivity, quality, conformance and cost
savings. The placement of touchscreens with camera interfaces could enable the warehouse to
be graphically represented, with hot spots showing high or low traffic or inefficient pick zones.
Hand-gesture movements would enable stock location movements to increase throughput by
shortening pick routes. Video recognition would ensure that only authorized operatives could
make changes. Another factory-based example might be a quality manager reviewing a batch
of goods. A simple gesture will provide enough knowledge to the system to determine whether
a batch is satisfactory or not, without the need for a keyboard, or even any bar code scanning.
Combined with modern manufacturing execution system (MES)/radio frequency identification
(RFID) technology to identify the goods, the communication between man and machine
suddenly accelerates, without a loss of attention by the operator. (Cultural differences must be
accommodated. For example, in the U.S. and Western Europe, a "thumbs up" sign means okay
or fine. In Middle Eastern countries, West Africa and even parts of South America, it is a
pejorative gesture.)
In hostile environments For companies that must adhere to regulatory requirements

such as ATEX (an EU directive that describes the equipment and work environment allowed in
an explosive atmosphere, where dust, gas and fuels are involved) touchscreens could
minimize the cost of procuring specialist IT equipment; however, controller-free gestures add
significant productivity value because the operator doesn't need to move to the screen, wasting
valuable time or creating a potential hazard. Today, it can cost up to 25,000 for each
protective PC housing in such environments, when all that is undertaken are simple control
commands.
Enabling the disabled In some cases (for example, gaming controllers such as the Nintendo
Wii Balance Board or the Microsoft skateboard controller), weight distribution is being added to
supplement the data available. This type of additional interface capability could deliver value in
business when used by employees with physical disabilities, such as those who are wheelchair-
bound, to interact with the company's business systems (see "Best Practices in ERP
Innovation: Toys for the Board, Essential Tools for the Disabled").
In the boardroom Another key area in which controller-free, gesture-driven applications for
ERP will emerge is assisting collaboration in the boardroom. Microsoft's recent announcement
of its intent to acquire Perceptive Pixel Inc. (PPI), the manufacturer of 82-inch
multitouchscreens, paves the way for wall-size boardroom or workplace collaborative screens,
akin to the technology used in the science-fiction film "Minority Report." As Microsoft absorbs
PPI into its ranks, a Kinect-style interface will spawn new application developments by
Microsoft and cloud-based independent software vendors (ISVs).
The design of an ERP-centric user interface, based on gestures, is a considerable task. From a
technical standpoint, buttons (icons) on a screen that are used to determine actions, such as enter
and back, need to be larger when using gestures, although new technologies are beginning to
recognize and respond to precise movements. In addition, screen layout is likely to differ to enable
viewing to take place at a distance.
Despite the challenges, controller-free gesture control is attracting considerable interest from
researchers, and the ability to create mashup-style interfaces from readily available components
makes experimentation accessible. The technology continues to advance. There are already a
number of live examples, plus hundreds of university-centric pilots taking place. During the next two
to five years, gesture-based solutions that interact with ERP will emerge. The retail industry is likely
to witness the early emergence of controller-free, gesture-driven applications. Cost per unit is the
major inhibitor, not technological advancement. Today, the initial costs for purchasing and
installation are high; however, that will eventually be mitigated by productivity gains and lower
operational costs, which will drive adoption and result in lower unit costs.
In terms of ERP, interest in controller-free gesture recognition is embryonic. No ERP vendor has
presented the technology to Gartner as part of its ERP solution to date, though some are
investigating its potential (multitouch is now an embedded option in a number of ERP solutions). To
progress quickly, it requires thought-leading ERP, using businesses to pilot and embrace the
technology beyond its current nurturing by university-based research teams, technology providers
and pioneering consultants.
Although mainstream adoption in consumer gaming is already mature, time to plateau in the ERP
space is easily seven to 10 years away, unless there is significant investment from leading industry
companies and their supporting ERP vendors.
User Advice: Monitor the progress made by innovative vendors and start exploring potential
application areas as part of your overall ERP strategy.
Look for ways that gesture-based technologies can aid less-able-bodied employees.
Consider how technology inclusions, such as gesture, may be combined with location-based
information and augmented-reality displays to provide a rich employee and customer interaction
experience.
Look carefully at developments in the gaming and entertainment sector; these advances will
support a variety of early prototypes for business applications (e.g., Microsoft's Project Milo).
However, if you implement such systems now, then you'll be at the leading edge of the technology
for at least two to three years.
Companies in the retail sector should evaluate the viability of adopting controller-free computing
early, where it can provide market-leading interactive sales and marketing opportunities.
Business Impact: The potential of controller-free interaction with devices, and the ability for several
people to collaborate using large datasets, opens up a wide range of business applications
applicable to ERP. This includes data visualization and analytics in design, retail, manufacturing,
teaching, healthcare (such as sterile or explosive environments) and other scenarios where the use
of IT systems had been impractical or prohibited.
Benefit Rating: Moderate
Maturity: Embryonic
Sample Vendors: Microsoft; Sony
Recommended Reading: "Hype Cycle for Human-Computer Interaction, 2010"
"Technology Trends That Matter"
"Best Practices in ERP Innovation: Toys for the Board, Essential Tools for the Disabled"
Analysis By: Rita L. Sallam
Definition: Collaborative decision making (CDM) platforms combine business intelligence (BI) and
other sources of information used for decision making with social and collaboration capabilities and
decision support tools and methodologies, to help knowledge workers make and capture higher-
quality decisions. CDM brings the right decision makers and information together with decision
tools and templates to examine an issue, brainstorm and evaluate options, agree on a course of
action and then capture the process to audit and mine for best practices.
Position and Adoption Speed Justification: Collaborative decision making is early on the Hype
Cycle because, while there are no commercial offerings that comprehensively deliver on its vision, a
number of products have emerged over the past two years such as Decision Lens, SAP
StreamWork, IBM Lotus Connections, Microsoft SharePoint, Lyza (from Lyzasoft), and products
from Calinda Software and Purus Technologies that integrate multiple pieces and could be (and
indeed are being) enhanced to enable a broader CDM vision. Moreover, culturally, most
organizations are evolving to support more transparent, fact-based decision making and social
business concepts, which will be a key requirement for widespread adoption.
Over the past year in particular, we have seen these vendors enhance their collaboration and social
capabilities, add decision tools and, in the case of SAP StreamWork, provide integration with SAP's
enterprise applications and BusinessObjects BI platform. Moreover, a number of BI and analytics
vendors, such as QlikTech, Tibco Spotfire and Panorama Software, are adding social software
capabilities to their BI platforms to facilitate collaboration among decision makers around specific
BI content (such as the ability to collaborate on a result in a dashboard or a specific analysis), with
more BI vendors planning to release similar capabilities over the next year. While many vendors
already provide the capability for users to tag comments to specific reports, analysis or
dashboards, collaborative BI may also include social capabilities to find the right people (based on
social profiles), to include in a discussion thread to comment, rate and blog on a specific result and
then dynamically recommend additional analysis based on past user behavior and similar content.
In collaborative BI, the focus is really on the BI artifact, such as a performance measure or query
result. In collaborative decision making, the focus is on the decision itself, such as "do we change
our pricing model, enter a new market or hire more employees?" In addition to BI vendors, some
corporate performance management vendors, such as Cogniti and Actuate, are enhancing the
quality and transparency of planning and performance management processes by adding
collaboration capabilities, value-based planning optimization tools and closed-loop monitoring of
key performance indicators (KPIs) tied to a plan to their platforms. We characterize these
capabilities as collaborative performance management (PM). In collaborative PM, the focus is on
decisions specific to the planning and performance management process. Collaborative BI and PM
capabilities are purpose built and provide pieces of what a broader CDM platform would enable
and, therefore, could be and are often the first step in a road map to providing broad and deep
support for CDM initiatives within an organization.
A complete environment for CDM today is likely to require some custom integration and
development. However, technology is not the primary barrier to collaborative decision making. Most
large IT organizations could customize a social software environment with some basic templates for
decision making that visually depict a decision, options, pros/cons and tags to relevant information.
The real challenge to CDM adoption is cultural. Gartner believes that CDM will continue to ascend
the Hype Cycle during the next 18 months because much of the technological foundation is in place
to support this use case. Additionally, high-profile decision-making failures in the public and private
sector have acted as a catalyst for improved decision-making quality and transparency.
User Advice:
Find a senior business executive willing to sponsor cultural change in support of fact-based,
transparent decision making. This champion should excel at collaboration and the use of BI and
analytics in decision making. The BI and analytics competency center is a logical place from
which to spearhead a CDM initiative.
Demonstrate the value of CDM through pilot projects, decision audits and simulations. Linking
decisions to performance metrics, training decision makers in decision-making best practices,
and using CDM in trade-off and optimization decisions will further demonstrate the value of
CDM and build cultural acceptance of decision optimization as a core competency.
Focus initially on definable departmental, line-of-business or process-specific decision

processes, such as vendor selection, portfolio optimization, strategy management or
forecasting, where the benefit of higher-quality and transparent decision making is easy to
measure.
Provide incentives for decision collaboration and transparency to help reduce resistance.
Business Impact: CDM platforms are helping to solve the perennial challenge that despite
significant investments in BI and analytics, made in the name of improving decisions, the vast
majority of organizations make thousands of increasingly collaborative decisions, often with poor
outcomes, without insight into how decisions are made or their effectiveness. Collaborative
decision-making platforms can dramatically improve the quality and auditability of decision making
by alerting decision makers to events and changing patterns that indicate an early need to act.
These include:
Visually depicting what decision needs to be made, what the options are, what the weighted
criteria are, and what information is relevant to the decision.
Identifying and bringing together the right people, the right information and the right analysis
tools.
Alerting decision makers to events and changing patterns that indicate the need to make a
decision.
Allowing participants to discuss an issue, assess and capture assumptions, brainstorm and
evaluate options, and agree on a course of action, thus enabling a new style of consensus-
driven leadership.
Capturing details of the collaboration and the information and assumptions used to make
decisions.
Providing decision tools, engines and methodologies to optimize decisions.
Reducing the risk posed by personal bias, group think, failure to consider contrary views and
blindness to the secondary effects of a decision.
Improving the transparency and audit trail of decisions by capturing the details of the decision-
making process and recording the "who," "what," "when," "where," "why" and "how" of a
decision, including all inputs and assumptions.
Linking the decision-making process to the actual outcome of the decision itself, so that it can
be measured and mined for decision-making best practices, patterns that could provide leading
indicators of changes in the business environment, and templates for future decision making.
Maturity: Emerging
Sample Vendors: Calinda Software; Decision Lens; IBM; Panorama Software; Purus Technologies;
SAP
Recommended Reading: "Who's Who in Collaborative Decision Making"
"Tutorial for Collaborative Decision Making"
"The Rise of Collaborative Decision Making"
"Overcoming the Gap Between Business Intelligence and Decision Support"
Analysis By: Christian Hestermann
Definition: ERP-based implementation tools are used to manage the implementation of an ERP
system, but reside inside that system. They comprise tools for project and cost management,
project accounting, and costing, resource scheduling and allocation, documentation and more.
These tools are not to be confused with template-based implementation methodologies.
Position and Adoption Speed Justification: Tools to help with the complexities of an ERP
implementation have been available for a long time. Almost every system integrator (SI) or service
provider that offers implementation services has its own set of tools, and consultants undergo
significant training on how to best use them. ERP-based implementation tools have only recently
been considered by ERP vendors. One prominent example is SAP's on-demand Business
ByDesign, which offers a fully embedded and expandable training and help system. A dashboard
enables organizations to check which key users and end users have successfully completed
assigned tasks (e.g., design and configuration, data migration and cleansing, and documentation
and training) and have passed all necessary exams. Another vendor that is exploring this
opportunity is IFS, which has focused itself as an ERP vendor for project-oriented businesses.
Using the project management capabilities of an ERP system offers benefits for both parties of an
implementation, the SI and the end-user organization. Reducing the costs for ERP implementations
and shortening the time for implementations will be especially important for vendors that want to
sell to smaller organizations with limited IT budgets. The more the established vendors target these
market segments, the more they will leverage the advantages of ERP-based implementation tools.
Two other scenarios will help to drive adoption. First, in the case of a software as a service (SaaS)-
deployed ERP system, the initial installation and availability of the project planning modules and
some basic accounting functionality are already givens, so the project team can start using these
tools right from the start (see "SaaS ERP Only Reduces Part of the Effort Needed to Implement and
Operate Your ERP"). Second, the growing importance of fixed-price implementations, often
embedded in a rapid deployment approach, will make the possible cost savings more attractive to
the SIs involved.
However, adoption of ERP-based implementation tools will not occur overly quickly, because SIs
and other parties have heavily invested in tools and methodologies, and ERP project managers find
it hard to compare these tools with the capabilities built into the ERP that they are about to
implement. Therefore, the SIs would first need to migrate their current tools to the ERP system. This
is especially complicated when SIs implement ERP systems and other business applications from
multiple vendors. Gartner sees the biggest potential for adoption in the case of SaaS-based ERP
targeted at project business. For all these reasons, the progress in adoption since 2010 has been
fairly limited.
User Advice: Implementations and rollouts of ERP systems and other business applications are
among the most complex and longest projects for many IT organizations. IT needs to build and
execute a complex project Implementations and rollouts of ERP systems and other business
applications are among the most complex and longest projects for many IT organizations. IT needs
to build and execute a complex project plan, with many dependencies between subprojects and
tasks, and to coordinate many constrained resources inside and outside the organization. As a
result, overruns in time and/or budget are widespread. A Gartner survey shows that 13% of ERP
initiatives were considered problematic or even failures (see "CFO Advisory: ERP; Risk Mitigation
and Management"). Application managers need to make sure to use the strongest tools available to
them to ensure project success.
To overcome these issues, vendors and SIs have developed methodologies and built tools that
support the project teams. The tools cover many tasks, including staffing and coordinating team
members, planning and managing the project schedule, and keeping costs controlled against the
budget. Often, these tools are an instrumental part of successfully completing the implementation
project, and their proper use is described in detail in the methodology (see "Additional Tools for a
World-Class ERP Infrastructure").These tools normally reside outside the application that is to be
implemented. This creates additional work to synchronize the application with the tools (e.g.,
synchronizing data about the staff working on the implementation, documenting and controlling the
training progress of key and end users, or the correct billing for time and effort). Despite the
additional effort, project managers need to enforce the use of embedded tools if available, or
external ones.
ERP systems that offer strong project management capabilities can provide a different approach, by
letting the members of the implementation team make use of these ERP-based capabilities, rather
than using external tools. The implementation project can be defined and controlled similar to other
projects that the company will undertake using the application after go-live. Data about project
members, their skills and availability can be drawn from the HR module. Scheduling the project
phases and controlling the progress of the implementation project are routine jobs in every project.
Training courses and exams to be taken, together with their results, can be stored centrally. In case
the ERP application offers an expandable help system, the end-user documentation can be
developed during the course of the daily implementation and training. Documented procedures can
be produced and maintained by the system, from which they can be retrieved easily for future
project phases. Time and expense booking can be done directly in the application, and checking
bills from the service provider and its potential subcontractors can be done more efficiently. The
usage of the application in the early phases of an implementation lets users become more familiar
with the application's functionality before go-live. And last, but not least, because of their high
integration into the ERP system itself, ERP-based implementation tools can offer improved
capabilities for integrated testing and change management after go-live.
If project management is an essential part of your company's business, and if an ERP system has
been selected that fully supports all tasks related to project management, then you should leverage
the capabilities of your new ERP for the implementation or rollout project. If your SI chooses to use
its own tools in addition to the ERP system, then you should insist on using your ERP as the primary
source of data and processes for the implementation and rollout.
In the case of a new implementation of an ERP system, those parts of the ERP that offer the project
management capabilities need to be installed and operational before the rest of the implementation
project can begin. ERP systems that are available as SaaS offer benefits because their initial setup
is easier. Also, in the case of an upgrade or a rollout of the ERP to other business units, countries,
etc., the existing core ERP is already up and running and can be used.
If project management is not an essential part of your daily business, but your ERP system still
offers sufficient project management capabilities, ensure that you do not overpay for the licenses
for project management modules, as you will only be using them during the limited time during
implementation or rollout.
Business Impact: ERP-based implementation tools will be especially helpful for organizations that
run all or part of their daily business as projects. Using the ERP as a base for the implementation
will help them better control, schedule, plan and manage all financial and contractual aspects of the
ERP implementation. It will help the organization's staff familiarize themselves with the ERP system
from the beginning, and will allow them to reduce double entry of data. For example, sourcing and
procuring additional deliveries (e.g., services and hardware) for the project, handling the orders and
the payment processes, and booking into accounts payable can all be done within one integrated
system. It will enable the organization to clearly see the training progress of all employees and other
parties involved. Tasks like technical installation, data migration and data cleansing, testing,
training, and certification of users can directly be managed and controlled inside ERP. Early
examples offer a dashboard to view the status of all implementation-related activities centrally.
In multiphase projects, where an initially developed solution is later adapted and deployed to other
organizations or countries, these later phases are easier when everything resides within the ERP
system, especially if new SIs and implementation partners become involved. Rather than
reactivating separate tools, the data, project plans, etc., residing in the ERP can be used. However,
these new or additional parties may need to be trained on the project management capabilities of
the ERP system.
Maturity: Emerging
Sample Vendors: IFS; SAP
Recommended Reading: "Additional Tools for a World-Class ERP Infrastructure"
"SaaS ERP Only Reduces Part of the Effort Needed to Implement and Operate Your ERP"
"Rapid Implementation Packages for ERP Deliver Results, but Handle Them With Care"
"Successful ERP Projects Require Good Change Agents, 2010 Update"
"Address Five Key Factors for Successful ERP Implementations"
"The 10 Components of Effective ERP Support Governance"
"CFO Advisory: ERP; Risk Mitigation and Management"
"10 Best Practices for Managing Multiple ERP Instances"
"Usefulness of Rapid Implementation Methods and Tools in ERP"
Definition: Cloud ERP is a collective term encompassing off-premises-based, service-based ERP
delivery solution configurations. It incorporates software as a service (SaaS) delivery models,
platform as a service (PaaS) development capabilities, and cloud infrastructure scenarios. It does
not include remote hosting, where ownership (i.e., a perpetual license) remains with the customer.
Position and Adoption Speed Justification: The term "cloud," as it applies to ERP, is frequently
used by vendors and market watchers to signify any ERP-centric solution that is delivered from an
off-premises data center, regardless of the licensing terms. Gartner's definition does not
incorporate hosted solutions where ownership of the license (perpetuity) lies with the customer. The
ubiquitous use of the term is, in itself, increasing the acceptability of cloud as an approach, even the
solution to every issue. But the generic misuse of the term has led to potential devaluation and
over-hype.
In our definition, cloud ERP encompasses:
Cloud computing a style of computing where scalable and elastic IT-related capabilities are
provided as a service to external customers using Internet technologies. For business
applications like ERP, this is how and where the infrastructure and data is managed externally
to your organization.
SaaS a software delivery and technology model in which external providers own and
remotely manage software, delivered in a set of common code and data definitions, on a pay-
for-use or subscription basis. This is the commercial end of cloud ERP that relates to the
vendor product and service offerings and associated pricing structures.
ERP deployment the delivery of an integrated suite of business applications that shares a
common process and data model covering administrative and operational business processes
such as finance, HR, distribution, manufacturing, service and supply chains.
Combining the delivery model of SaaS and the infrastructure of cloud, when related to ERP,
becomes cloud ERP.
Cloud ERP is a relatively new business application and infrastructure model for ERP, unlike some
other application areas, such as sales force automation in CRM, or HR within human capital
management (HCM), where cloud is already mature. Yet, the expected benefits have made cloud
ERP a firm and persuasive inclusion criterion when selecting an ERP system. Cloud ERP is
particularly attractive because it is funded as an operational expense, not as a capital expenditure
(i.e., payment for cloud ERP is based on a subscription, negating the need for upfront capital
payments). Cloud ERP has the potential to accelerate time-to-value and enable companies to easily
scale the number of users on the system while providing elasticity in terms of processing and
storage availability. It can also ease set-up, maintenance and upgrade challenges while at the same
time reducing IT resource requirements, although the integration costs to other systems within the
organization can add complexity and cost, as well as the control of master data, access control,
etc. Security remains a concern for companies considering the cloud, especially for organizations
with highly sensitive processes or data.
The last year saw a significant benchmark reached with the first deployments of cloud
administrative ERP suites (covering financials and other administrative functions) in applications in
organizations with revenue more than $1 billion (by NetSuite, Workday and Oracle with Oracle
Fusion Applications), plus Plex Systems also claims some success, with multibillion-dollar
customers implementing Plex Online as their core ERP system of record. This shows that these
solutions are now credible for larger organizations as well as midsize ones. However, cloud ERP is
still not mature enough for the majority of large enterprises, especially those with manufacturing and
supply chain requirements.
Large enterprises are currently adopting cloud-based ERP solutions in one of the following guises
as:
A point solution (albeit comprehensive suites in their own right) for particular functional areas.
An administrative ERP solution focused on financial applications and/or HCM. NetSuite and
Workday are making progress in this segment while Oracle Fusion Applications will increase its
presence in the next year.
A two-tier ERP suite to support subsidiaries; where the cloud-based solution operates at the
subsidiary level only. Sample vendors include SAP (Business-ByDesign), NetSuite and Plex
Systems.
User Advice: Organizations considering cloud ERP with revenue more than $1 billion but below $5
billion should consider cloud ERP for administrative ERP as a viable deployment option.
Cloud ERP can be an attractive two-tier ERP option for large organizations that do not want to pay
upfront capital costs for licenses to support subsidiaries. It can also be an attractive option for
subsidiaries with limited IT capability, as it requires fewer on-site resources and can reduce the
complexity of managing version upgrades. Organizations should evaluate two-tier cloud ERP
offerings, as well as on-premises offerings, as part of their portfolio management process.
Like other software sectors, mergers and acquisitions are occurring in this area and vendor viability
should be monitored. Although cloud ERP entry fees are potentially lower than those for on-
premises, savings over traditional deployments should not be assumed. Watch for the long-term
total cost of ownership (TCO) and for hidden costs, such as sandboxing (a testing environment that
isolates untested code changes) development, storage, and integration, that can substantially affect
your TCO. Not all vendors offer strong SLAs or disaster recovery policies that are critical for
reliability, especially for core systems like ERP. Scrutinize agreements thoroughly and seek external
legal advice if your internal counsel does not have experience with cloud ERP licensing.
Business Impact: The greatest early impact of cloud ERP on the market will be the ability to adopt
solutions for subsidiaries quickly, with minimal on-site disruption and with initially lower costs;
however, organizations should not assume that cloud ERP will always be a less-expensive
alternative to an on-premises deployment. The solution may appear to be less expensive for the first
few years, but may end up being as expensive, or more expensive, as comparable options over
time. Additionally, consider the potential need to revert to an on-premises or hosted model if
business circumstances change for example, a company divesting itself of a particular business
unit or dissembling a joint venture. Debate persists regarding the importance of multitenancy in
cloud ERP (see "Four Components Define Software as a Service"), but it is well-recognized that a
shared-service model can reduce overall ERP costs.
The cloud deployment model for large enterprises has proved viable for CRM. Cloud ERP will
become a viable option for companies of all sizes and complexities of companies. It is merely a
matter of time and solution maturity before that happens.
Maturity: Embryonic
Sample Vendors: Oracle; SAP; Workday
Recommended Reading: "The Impact of the Cloud on ERP and Business Application Planning"
"CIO and ERP Leaders' Guide to Gartner's 2012 Cloud Predictions"
"Deciding If or When to Adopt Oracle Fusion Application"
"Understand the Impact of Cloud on Your Financial Application Strategy"
Post-PC ERP
Analysis By: Brian Prentice
Definition: Post-PC ERP encompasses the technological and governance requirements needed to
integrate ERP capabilities across a growing array of mobile devices and associated software
platforms, along with emerging design patterns and languages.
Position and Adoption Speed Justification: For more than a decade, enterprises have been
integrating ERP capabilities with mobile devices. This has largely focused on specific roles with a
high percentage of off-site work (i.e., sales staff and field service representatives) and targeted to
mobile phones. Traditionally, the combined solution has been tightly controlled by the IT
organization.
The expansion of device categories (e.g., smartphones and tablets), new OSs (e.g., iOSs, Androids
and Windows RT), software design metaphors and user-directed acquisition is ushering in what is
generally termed as the "post-PC era." What was once a mobile ERP strategy now has to be
redefined more broadly as a post-PC ERP strategy.
In previous ERP Hype Cycles, mobile ERP was moving toward a position at the Peak of Inflated
Expectations. However, as we redefine the profile of the mobile ERP technology within the broader
context of post-PC ERP, it naturally falls further back down the Hype Cycle.
While the work organizations have done to deliver ERP capabilities to mobile devices through
mobile enterprise application platforms (MEAPs) remains valid and valuable, post-PC ERP requires
an even broader perspective. For example, to what extent do media tablets displace PCs and
laptops as the primary computing device, and does this require a dramatic expansion of target
roles, if not an elimination of role-based assumptions? To what extent do the capabilities of specific
device OSs need to be exploited natively? How can business capabilities within an ERP system be
delivered to users in application form? Many of these issues are not well-understood by enterprise
IT organizations.
User Advice: A post-PC environment requires IT organizations to abstract enterprise application
and data services from the physical point of consumption. Enterprises must start from the baseline
premise that all device types will be treated as equal-access points to ERP capabilities, and will
evolve their mobile strategies appropriately. In some cases, this will require homogeneous access
through mobile Web browsers. In other cases, IT organizations will need to consider combining
device- and platform-specific capabilities. These decisions need to be made carefully to avoid
stranding some users with limited or no access to key solutions.
Beyond supporting a broader range of different devices and OSs, enterprises must understand that
a central part of the post-PC phenomenon is the emergence of the app. This is a fundamentally
different approach to software design than the comprehensive application model that has defined
ERP systems. Enterprises should leverage, where possible, ERP systems that provide a service-
oriented architecture to begin exploring small functional compositions that match the new app
metaphor.
Business Impact: Effectively implemented, the business impact of post-PC ERP is high. Ultimately,
this involves contextualizing ERP capabilities for a broader spectrum of users, and across a broader
range of devices and scenarios.
Maturity: Emerging
Sample Vendors:
Recommended Reading: "The App and Its Impact on Software Design"
User-Centric ERP Strategy
Analysis By: Nigel Rayner
Definition: A user-centric ERP strategy involves:
Accepting that ERP functionality can't be forced into every business process area
Ensuring that technical and operational concerns, such as upgrades and consolidation, don't
overshadow users' business needs
Simplifying the casual user experience
Ensuring that the ERP architecture is model-driven
Linking business intelligence (BI) capabilities with ERP suites to support information users'
needs
Expanding the focus of ERP by supporting new, multienterprise business process styles
Position and Adoption Speed Justification: The demand for user-centric ERP strategy is
increasing for two reasons. First, many ERP implementations suffer from user fatigue due to the
complexity of the systems and their perceived inflexibility. Users perceive ERP systems as being
hard to use and to change, and the proliferation of devices on which they expect to access ERP
systems only makes this worse. Thus, many users who are not transactional power users resist the
adoption of ERP, and often purchase departmental or line-of-business cloud applications to provide
the functionality they feel is easier, compromising the overall ERP business case. Second, the
Nexus of Forces is creating the expectation that enterprise business applications should better
leverage mobile and cloud technologies, while delivering the ease of use of social technologies. So
far, few organizations have effectively implemented a user-centric ERP strategy. Many ERP vendors
are showcasing mobile add-ons and new self-service capabilities, while acquiring some cloud
vendors that have provided more user-centric applications (for example, SAP's acquisition of
SuccessFactors and Oracle's acquisition of Taleo). This is starting to create hype and expectations
among end users, so IT professionals supporting ERP implementations will face increased pressure
to adopt a more user-centric approach to ERP.
User Advice: User-centric ERP is more than just making better user interfaces or making the ERP
easier to use, although this is often what highlights user discontent with ERP. A user-centric ERP
strategy must be much richer than this. Users won't be placated by vendors putting new user
interface elements on top of processes and systems that value IT concerns over user concerns.
Instead, ERP leaders must transform all elements of the ERP strategy to support and extend user
needs.
The most important action ERP leaders can take is to adopt a Pace-Layered Application Strategy
for ERP (see "Applying Pace Layering to ERP Strategy"). This will help achieve a balance between
the integration and process efficiency benefits of ERP, and the differentiating and innovative
functionality from best-of-breed solutions. It also helps identify where simplifying the user
experience will add value, rather than just pandering to users' unfamiliarity with the ERP suite.
The following actions can help establish a user-centric ERP strategy:
Track benefits realization to remind business users and senior management of the value of the
underlying ERP investments to ensure that a user-centric ERP strategy is not just an excuse to
cover poor change management practices.
ERP leaders must adopt the continuous innovation approach of faster business governance
cycles and release schedules to escape the logjam of enhancement and upgrade requests, and
to respond more readily to the needs of end users.
Simplifying the user experience can involve using new capabilities from ERP vendors that are
targeted at casual users (often some form of self-service functionality), and that increasingly
leverage mobile technologies (see "Using the Hype Around iPads and Tablets to Make ERP
More User-Centric"). However, these often do not go far enough, so you may need to consider
third-party solutions to enhance the ERP user interface (for see "Case Study: Using a User-
Centric Design Approach to Improve the SAP User Interface").
If the current ERP suite version doesn't exhibit model-driven capabilities, understand the road
map of the vendor to deliver these in future releases and products, and factor this into upgrade
planning. Model-driven applications enable modifications to business processes without
resorting to code changes or complex configuration tables, allowing you to be more responsive
to changing business user requirements (see "What Types of Model-Driven Applications Are
Most Appropriate for a High Pace of Process Change?").
Ensure that the information needs of ERP users are part of a wider business analytics strategy,
and ensure that ERP business users are represented in a BI competency center (if you have
one). Understand the current analytic capabilities and future road map of your ERP vendor, as
most ERP vendors are delivering more embedded analytics, and their (potential) adoption must
be part of a wider business analytics strategy.
Evaluate how business processes supported by your ERP suite need to extend outside the
enterprise. Evaluate B2B e-commerce capabilities that can extend the ERP suite beyond the
enterprise's four walls.
Business Impact: To support business process and information-driven innovation in the context of
truly integrated new technologies, ranging from cloud computing to software as a service (SaaS),
mobile, analytics and user devices (such as the iPad), IT leaders need to see their ERP initiatives not
as a legacy back-office investment, but as a platform to drive more end-to-end business processes,
deliver analytics and information to business users, and support needed business-driven innovation
at the pace of business.
IT leaders cannot dictate that users continue to live within their ERP model, and cannot rely on their
ERP vendors to address all their needs. By focusing on user-centric ERP strategies, leaders can
create an environment where business users choose ERP as the foundation for business innovation,
change and growth, and complement this with capabilities that add business value. This is the key
to delivering a successful ERP strategy and project in today's IT world.
Ultimately, the business impact is to ensure that the original goals of the ERP initiative are met and
even exceeded, and that the ERP suite becomes a foundation for enterprise agility, rather than a
deterrent.
Maturity: Emerging
Sample Vendors:
Recommended Reading: "How to Learn to Love Your ERP (Again)"
"How to Evaluate Your Vendor's ERP Strategy"
"Model-Driven Packaged Applications: Using SOA and BPM to Modernize Packaged Applications"
"How to Deliver a More User-Centric ERP Solution"
Application-Specific Data Stewardship Solutions
Analysis By: Andrew White
Definition: Application-specific data stewardship solutions are designed to help users manage the
data required to operate specific business applications. Such data includes master data even if
managed by an external master data management (MDM) hub purchased data from enrichment
services, reference data, derived data (pricing, for example) and other data specific to an
application as well as any configuration data. This includes data created in these business
applications as well as data integrated from external sources.
Position and Adoption Speed Justification: MDM emerged as a response to the difficulty
organizations faced in trying to maintain a "single version of the truth" for important data such as
"customer" and "product" across their business applications. Even organizations that had invested
substantial sums of money in large-scale packaged applications, such as ERP products,
experienced the same outcome inconsistent master data even if their application
environments looked different.
Adopting programs like MDM requires a lot of change management. Reports from users indicate
that those with the large, complex, or multiple packaged business application suites sometimes
called enterprise resource planning (ERP), find their ability to change is as hampered as those with
highly heterogeneous environments but for different reasons: the ERP environment is not a
homogeneous application and information environment. It is just a large "lump" of data that needs
to be managed along with any other smaller applications. ERP often represented a major portion of
the organization's data model but it was rarely the only one. Additionally, some other application
vendors such as Soft Solutions and Aldata started to externalize their traditional master data
management capabilities in order to integrate their data more easily with, or operate as if their
solutions were, an MDM-type hub. These were thus originally built as if they were "application
specific data management" tools but, through externalization, became more application
independent and more akin to MDM. With the launch earlier in 2011 of SAP's Master Data
Governance offering, the emergence of this category of tools is now complete.
Application-specific data stewardship solutions should mature much faster than MDM technology in
general. This is because the scope of what they manage is much smaller in terms of physical
organizational boundaries and more narrowly focused on the requirements of a specific application
or single data model. As such, application vendors will be able to develop and mature these
solutions quite quickly. These solutions will, however, be more complicated than MDM solutions in
one respect: they will try to manage much, if not all, of the data inside the targeted application.
MDM solutions, on the other hand, generally target only the commonly reused attributes, albeit
across all applications. There is a large gray area here between the two simple ideas of application-
specific data stewardship and MDM and every organization that adopts information governance will
have to figure out where to draw the line between application-specific data governance and
enterprisewide information governance using MDM.
User Advice: If your business application environment centers on a single vendor (such as Infor,
Oracle or SAP) or is a large, industry-specific suite (such as core banking systems or telco billing
systems), review the capabilities of that vendor's or package's application-specific data
management tools. Conduct detailed proof-of-concept evaluations as these tools are not yet
mature. Note that adoption of these tools does not and will not meet your enterprise requirements
for MDM since their data models will be designed to support just one specific application or suite.
Although these solutions will play a role in an MDM program (like any other data store) they are
unlikely to be its most important part. These solutions are not designed to govern all master data, or
data in all applications, or even data in any application: their scope is limited to the one application
(a single data model) for which they were designed. An MDM program would treat these solutions
as key data stores to be managed, governed and linked to MDM solutions.
Design your MDM program independently to support your business application architecture and
landscape. Even if you do not identify the need for any application-specific data stewardship apps,
it is more likely that you will identify needs for a traditional MDM solution. It is also possible that
some MDM solutions will negate the need for an additional application-specific data stewardship
solution.
Business Impact: Many users of large packaged or industry vertical applications wrongly assume
that these applications or suites already do a good job of managing the data they use. They might,
therefore, be shocked to find their strategic vendor partner launching, in 2012 or later, a tool that
accomplishes what they thought its application package had been doing all along. What is most
often lacking are the capabilities focus on governance and stewardship of the business rules,
workflows and metrics reporting on data consistency across the application, for the entirety of the
data life cycle. To be fair to the vendors, however, the need to manage this data formally has
emerged only recently due to the increasing complexity of application environments (even those
labeled ERP) and the growing need to ensure there is a "single version of the truth" for master data
across organizations.
The benefits of application-specific data stewardship solutions will not likely be realized
independently of your MDM program. For organizations in which the vast majority of master and
application data is supported by one unified data model, the impact of these solutions will be
significant. For organizations with several large application silos, the impact of these solutions will
be small, unless they are aligned with a broader MDM program.
Maturity: Emerging
Sample Vendors: Aldata; Epicor; Oracle; SAP; Soft Solutions
Recommended Reading: "MDM 'Primer': How to Define Master Data and Related Data in Your
Organization"
"Should Organizations Using ERP 'Do' Master Data Management?"
"MDM for ERP Requires a Different Mind-set"
"MDM for ERP: Governance and Data Stewardship"
At the Peak
Definition: An ERP app store is an online store where business users can browse, download, install
and provision ERP-related applications. Two kinds of app stores pertain to ERP:
Those run by the ERP vendor to sell apps created by the ERP vendor or other commercial
partners
App stores developed by and controlled within an enterprise that contain commercial apps, as
well as custom, homegrown and user-developed apps, screened for use in the enterprise
Position and Adoption Speed Justification: Little has changed in the construction or use of
marketplaces/app stores since the last Hype Cycle, although catalogs have matured through the
addition of more apps and there are more in commission. As a result, marketplaces/app stores are
now widely recognized by user companies, moving the node on the Hype Cycle. The promise of
app stores still outweighs their delivered value; however, they are expected to be successful in
coming years as a means to connect with, and provide for, end-user-level augmentation application
requirements, because they provide functionality in a timely manner, potentially specific to an
individual user. As a result, this provides a means for companies to deliver a user-centric,
personalized environment without excessive complexity.
Each ERP vendor is beginning to populate its own catalog, but app stores themselves seem to have
lost emphasis as a marketing differentiator among vendors. Most of the megavendors are relying on
their partner ecosystems to develop additional apps to populate the catalog. This is a slow process,
because many prefer to work on a one-to-one basis with customers. In addition, a large number of
partners do not have the ability to provide international support for augmentation apps if they were
loaded to the app store. As a result, although they continue to be populated, they are becoming a
background capability, with little additional development being invested, which results in continued
uncertainty regarding how marketplaces (app stores) will mature. All the leading ERP vendors are
challenged with this same issue as each develops its version.
Given the complex nature of ERP applications, it remains unlikely that most ERP-specific
applications can be provisioned directly from the app store. Many customers prefer personal
contact, and requirements are so complex that no automated configuration ability can enable more
than the simplest apps. Even then, the procurement organization is likely to be involved in any
buying decision, and the IT department will be involved for security and licensing purposes. As app
stores (marketplaces) grow to include more ERP-specific applications, many customers are likely to
download qualified apps into their own enterprise-specific app store before user-level self-
provisioning is enabled from that library alone, rather than directly from the vendor's marketplace.
Two kinds of users may be customers of an ERP app store:
Users that self-provision apps related to the ERP for their own use (such as analytical
dashboards or mashups)
Individuals acting on behalf of an entire enterprise that license and download or enable
applications for overall company use, presuming they have the rights to do so
Applications in an app store vary in cost, from free downloads to thousands of dollars, depending
on the functional area the app addresses (the value to the user), who developed the application and
the complexity of the app. Most chargeable downloads directed at end users are relatively low
priced to encourage uptake. The app catalog generally segments by target platform and operating
systems (iOS-iPad, iSeries, Windows, etc.), ERP system (SAP ECC, Oracle EBS, etc.) and version.
As is the case with Google Apps Marketplace or iTunes, apps can be browsed, downloaded,
installed and provisioned for use immediately, providing users with access to data and technology
resources, including access rights and privileges. As the use of app stores widens, three general
types of selection mechanisms have emerged for ERP-specific apps:
Catalog and refer Vendors provide an online catalog of apps, but the link against each app
sends an email alert to the vendor or one of its partners to be followed up in the traditional
manner. The app may even be downloadable, but is not provisioned for use until the license is
signed through a normal sales process. Larger ERP-specific cloud or on-premises
augmentation apps tend to be processed this way, due to the complex nature of the apps and
the integration touchpoints that prompt the need for consultation and integration before the app
becomes operative.
Managed file transfer (MFT; formerly FTP) In this case, the catalog is little more than a
download site linked to the vendor's support structure and is used as a means for downloading
new functionality and upgrades to existing applications. Most ERP vendors provide this
capability, and some are portraying this facility as their app store. Enterprises also use MFT in
their own internal app stores.
Full app store A full app store provides search, download, installation and provision as an
executable from the site as would be experienced using an app store such as iTunes. Again,
this could apply to an app store run by a single vendor or an internal enterprise app store.
User Advice:
Users should set up governance mechanisms to ensure that users only download and use apps
that are certified by the vendor, and have experienced a minimum level of quality assurance by
the customer's IT group or partner to prevent the system or its data from being corrupted.
Consider creating a company-specific app store, but strenuously assess ongoing costs and
complexity before doing so. Screening apps before they are accessed by users can overcome
two tangible risks: infringement of the company's security (firewall) and the infringement or
compromise of the customer's intellectual property (IP). It also ensures that apps are not
downloaded and used illegally, thereby infringing on the IP of a vendor and exposing the
company to risk.
Downloading software gives the vendor the right to audit the company's systems. Never
download apps unless you are certain of the vendor's rights, as well as your own, under the
law.
Most ERP vendors do not allow app downloads to customers that are not on some sort of
support agreement. Companies should clearly define their governance policies related to app
stores and provide this information to end users to avoid contravention of the policies.
Beware of "bait and switch." If browsing an app store, be aware that you may be tracked.
Vendors are beginning to understand the value of demand signal recognition systems as a
means to identify sales opportunities. Gartner believes that live chat facilities will begin to be
offered on ERP-specific app stores as a means of consulting with customers. Ensure that end
users understand the company's confidentiality policies.
Account for license transfers. Ensure that the app license agreement allows transfer of the
named user for a given app. Determine whether the app might have been downloaded to a
single machine (i.e., to another named user) in the event of an employee leaving the company.
Business Impact: ERP-related app stores are likely to become the primary means for providing
ERP suite and augmentation application functionality to customers over time. Most vendors are
already using the app store as a means of initial interest gathering. They have the potential to shift
the buying focus to line-of-business users, rather than IT, which could fundamentally alter how
companies license software and administer IT systems.
Maturity: Emerging
Sample Vendors: Google; Infor; Microsoft Dynamics; NetSuite; Oracle; SAP; WorkXpress
Recommended Reading: "Outsourcing Trends, 2011-2012: Exploit Changes in Application
Services"
"Hype Cycle for Application Development, 2011"
"Market Trends: Cloud Computing and SaaS Adoption in Manufacturing and Natural Resources,
Worldwide, 2012"
Support Models in Global Deployments
Analysis By: Pat Phelan
Definition: Global ERP requires a support organization that can deliver ERP support services on a
global scale. This includes follow-the-sun support and language and cultural accommodations. It
also includes standards and processes that ensure consistent support, and eliminate duplicate or
conflicting support requests. Finally, it includes global governance, as well as strategic sourcing that
ensures the right mix of support personnel is located in the right place with the right skills in the
right numbers, whether sourced internally or externally.
Position and Adoption Speed Justification: We've placed global support models at pre-peak on
the Hype Cycle, with a horizon of five to 10 years before most enterprises with globally deployed
ERP solutions will have successfully made the shift to a global ERP support organization model.
ERP globalization is occurring at a steady pace. This often takes the form of expanding the ERP
solution into new geographies or business units, or consolidating ERP solutions into one or few
global instances.
Restructuring the support organization to align with the global business tends to lag behind the
business process and application globalization efforts by as much as two years, with the associated
organizational changes, governance mechanism deployment and support process adoption taking
as much as three to five additional years. For example, adoption is challenged by the need to gain
enterprise consensus on the global support format and obtain the right (best) people to represent
each global constituent. Another factor that affects adoption speed is overcoming global
communication challenges across time zone and language barriers. We anticipate that ERP
globalization will continue for at least five years, which pushes the associated support globalization
efforts out to the 10-year horizon.
User Advice: When ERP globalization is being planned, also start planning for global ERP support.
Begin designing the support organization while the ERP globalization effort is under way. Start
making governance, process and staffing changes during the globalization project, so that the
global support model is in place when the globalization project goes live. When globalization occurs
in phases or stages, craft a global support transition plan to align with the phasing of global support
needs. This almost always requires one or more increments of change to continue to support the
nonglobal legacy ERP components and the incrementally migrated global components until all have
been globalized.
Business Impact: One important impact of deploying a global support model is a reduction in
support complexity by coordinating change approval and change control. This minimizes duplicate
services, and helps the enterprise avoid support efforts that conflict with the needs of other
business users sharing the global solution. Another impact is the ability to reduce staffing costs by
sharing scarce resources globally and strategically sourcing skills based on enterprise need, rather
than by individual business unit. Finally, global support encourages global governance over the ERP
road map, which improves the enterprise's ability to manage the evolution of the global ERP
solution through its life cycle.
Maturity: Emerging
Sample Vendors:
Recommended Reading: "Global ERP Template: Management and Maintenance"
"Global ERP Template: Scope and Content Guidelines" 214004
"Toolkit: ERP and Business Application Support Strategic Staff Planning Tool"
"ERP Road Map Development Methodology"
"Toolkit: ERP Road Map Development Guide"
"How to Tackle the Challenges of Running a Global SAP Competence Center"
Analysis By: Thomas Otter
Definition: Social software technologies are transforming elements of human capital management
(HCM)-related processes and systems. Social networks, such as LinkedIn, Xing, Twitter and
Facebook, have altered recruitment strategies. Wikis, blogs and activity streams enable policies and
procedures to be more collaborative. Social software features have appeared in HCM applications
such as recruitment, performance management, learning and now core HCM.
Position and Adoption Speed Justification: It is important to understand that social software isn't
just becoming part of established HCM solutions. Employees are leveraging social software tools
and networks like Facebook, and tools like wikis and blogs are being used to manage and improve
policy creation and communication. Although these tools will affect how HCM processes are done,
the bigger impact will be on how the HR function will shape organization policy and practices
toward social software and network use by the broader organization. Social software is largely
about the relationships among people. Whether it is blogging policies, collaboration networks or
contact management, they all require HCM involvement.
Inquiry demand has grown rapidly in 2012, and HR-HCM departments now grasp that social
software can improve HCM processes, and vendors continue to enhance the collaborative features
in their applications, either through development or acquisition. In the last year or so,
SuccessFactors acquired Cubetree and Jobs2web, PeopleFluent acquired SocialText and
salesforce.com acquired Rypple. Some vendors are offering social-software-centric solutions for
recruitment (e.g., Jobvite and Jobs2web). Leading HR-HCM departments are making extensive use
of blogs internally and external to their organizations. Wikis are being used to document and
collaborate on policies (see "The 'Collective' Offers HR Leaders the Opportunity to Improve
Recruitment, but Don't Stop There"). Social networks have altered the recruitment and e-learning
landscape, with social learning receiving considerable attention from both startups and established
vendors.
HR is under pressure to define guidelines and policies for broader social software use in the
organization. What practices should be encouraged? What should be prohibited? Questions arise
over how to reward for contribution and collaboration. Privacy remains a poorly understood
challenge and risk.
User Advice: HR departments should look to develop awareness about social software and social
networking. Organizations should first look for quick wins in HR, such as alumni management,
onboarding and recruitment referral management. Companies must focus on building policies and
procedures that enable the broader organization to benefit from social software and networks. HR
leaders should work with employees, managers and the legal department to build policies and
procedures that enable employees to use these tools responsibly.
We've already seen social software used in HCM processes such as recruitment, performance
management, learning succession planning and compensation as firms gather richer data and
speed up collaboration. For new initiatives, ensure that you include social software features in HCM
solution evaluation criteria. Companies should broaden their RFPs to examine emerging vendors for
innovative new processes, such as social-network-based referral recruitment and onboarding (see
"The Business Impact of Social Computing: Real-World Results for Recruitment"). Also assess
integration to broader social tools such as Yammer and Chatter.
Business Impact: Social software capabilities are impacting HCM systems today. The bigger
business impact of social software in the HR context will be on the organization's culture. Social
software can alter the organizational fabric and culture, creating a more open and collaborative
work environment. This, in turn, creates demands for new policies and pay, succession, learning
and recruitment strategies. HR departments will be strongly affected by these changes. The long-
term success and failure of social software in organizations will depend on how well HR adapts to it.
Maturity: Adolescent
Sample Vendors: Appirio; Avature; Conenza; Cornerstone OnDemand; Jobvite; Oracle;
Peoplefluent; salesforce.com; Saba; SAP-SuccessFactors; SelectMinds; SilkRoad technology;
Talent Technology; Taleo; umantis; Yammer-Microsoft
Recommended Reading: "SuccessFactors to Go 'Social' by Acquiring CubeTree"
"With Rypple Buy, Salesforce.com Converges HR and Social Capabilities"
" Yammer to Give Microsoft Needed Dynamism in Enterprise Social Networking"
"Cool Vendors in Human Capital Management, 2011"
"The Business Impact of Social Computing: Real-World Results for Recruitment"
"The Effects of Social Software on Your Employer Brand"
"The Business Impact of Social Computing on Corporate Learning"
"The 'Collective' Offers HR Leaders the Opportunity to Improve Recruitment, but Don't Stop There"
Definition: Model-driven packaged applications refer to enterprise applications that have explicit
metadata-driven models of the supported processes, data and relationships, and that generate
runtime components through metadata models, either dynamically interpreted or compiled, rather
than hardcoded. The essential difference is that models can be modified by business analysts or
key users without having to involve programmers, bridging the gap between business requirements
and technical implementation that often causes "lost in translation" phenomena.
Position and Adoption Speed Justification: Many enterprise applications embody business
processes, data, roles and relationships; however, they do not represent these business elements in
ways that are accessible, intuitive and manipulatable by various business and technical users. Even
applications that provide an explicit business process model do not provide a dynamic link to the
executable application, and require user intervention to maintain the model-to-executable link, often
using static configuration guides that do not cover all possible scenarios.
A new generation of packaged enterprise applications is entering the market that uses the key
design principles embodied in the business process management (BPM) disciplines, and applies
other metadata models relevant to the particular process or domain that the application supports.
Some early adopter supply chain management (SCM) and CRM vendors have embraced this
technology, specifically in the process arena. We also see efforts to adopt this model across the
wider landscape of ERP and point solution applications with the introduction of larger products
based on a model-driven approach, such as Workday, Epicor, Microsoft Dynamics AX, SAP
Business ByDesign and Oracle Fusion Applications.
A major issue in the broader adoption of this technology will be service-enabling legacy packaged
applications, to the extent they can support this model-driven approach. Many legacy applications
will require substantial rewrites before this service-enabling or metadata-driven architecture can be
accomplished, with the implication that end users may need to reimplement versus upgrade if they
have a very customized version. Because they have various applications in their portfolios,
enterprises likely will have one or two applications that can adopt this quickly, while their other
applications will be laggards. However, as vendors drive new model-driven versions of their
applications into the market, users will adopt and shift to this model.
There is some confusion about the distinction between a model-driven packaged application and a
process template. The main difference between these two technologies is that a model-driven
packaged application can be run as a packaged application. This means that, in addition to having
the process, data and user models, it also has the executables to instantiate at least the base
versions of the model as an application. In a process template, there is process, data, user or
relationship content, but not all of the executable content to instantiate and operate the envisioned
business process, although it may contain some of the executable content. A process template or
composite content application (CCA) might be a model-driven packaged application if it contains a
full set of commercialized services with which to run the executable for the metadata-driven
application out of the box. A model-driven packaged application contains a process template to
describe the base functionality of the application, but if you deviate from the packaged process
template, it is akin to customizing (see "Manage ERP Customizations, Don't Avoid Them," "Process
Templates Broaden Application Options in a Pace-Layered Application Strategy" and "Balance
Process Agility and Process Integrity Choices Along the Application Continuum"). Additionally, a
process template is not necessarily tied to a particular application.
User Advice: It is important not to overfocus on the technology as the linchpin of the definition;
instead, application managers need to focus on the user-centric results achieved. That is,
ultimately, a model-driven packaged application is defined by how many end-user requests can be
met through manipulation of the metadata model, rather than through access to parameters or
customizations, because the ultimate goal of these applications is to support business process
agility, not to deploy some new technology term. We have traditionally viewed model-driven
packaged applications as primarily consisting of business process models, but recent moves in the
market have caused us to expand our definition to consider other models, such as data, process,
rule and role/organizational relationship models. However, we continue to see primarily process-
oriented modeling in the market today.
The BPM environment can be a part of a corporate standard business process management system
(BPMS) into which commercially provided flows are maintained and services are registered. This
process modeling and execution environment can also be a separate process modeling
environment specific to the application. Model-driven business process applications rely on the
availability of service-oriented components of the business application. They exploit service-
oriented architecture (SOA) capabilities to make for more agile application development.
This technology is not limited to composite applications, which generally refer to the use of services
intended for other purposes that are recomposed into new applications to meet a new process
need. Model-driven business process applications can be composites of services used within other
applications to create new applications. They can also be how an out-of-the-box commercial
application is delivered, if that implementation fully exposes and provides users access to the
process model used to construct the processes embodied in the application. Application managers
need to understand which of these approaches is to be chosen to achieve the goals set by the
business (see "What Types of Model-Driven Applications Are Most Appropriate for a High Pace of
Process Change?").
Many traditional, packaged enterprise applications have an implicit representation of process or
other components, but it is not intuitive or graphical and is, many times, hardcoded. This
representation may be embodied in rules, policies or parameters. Gartner research into BPM as a
business discipline has found that nongraphical process representations are inferior to graphical
representations. One major issue is that users don't understand, can't easily support and can't
easily change the processes embodied in their packaged applications. Often, this issue extends to
custom-made applications with their own implicit process models. Providing and exposing the
process model explicitly will enable users to address some of the challenges associated with
packaged applications.
Some vendors' implementations will allow greater levels of process agility by fully enabling
manipulation of the application through the metadata model, while others will only enable this within
certain limits and will resort to parameters for other changes. This is a qualitative difference among
model-driven packaged applications, rather than a categorical distinction. That is, Gartner doesn't
take a purist view of model-driven packaged applications. All applications that enable change
through manipulation of a metadata model would be considered model-driven packaged
applications, but some implementations are better than others. The fewer limits the model has, the
higher the value for the users.
Some vendors are using swim lane process models to describe the implicit process model
embodied in a parameterized application; however, because this is not the executable and changes
cannot be enacted by manipulating the process model, it would not be a model-driven packaged
application.
Become familiar with the management principles espoused by the BPM disciplines, as well as other
model-driven design approaches. For now, focus on the process-oriented elements of model-driven
packaged applications, as this is the primary vector for development of these applications today.
Build a BPM strategy that incorporates considerations for modeling processes that custom,
composed and packaged applications can execute. Establish proper governance mechanisms, and
address cultural issues before the enterprise employs this application model. Determine whether
your vendors' service-enabling strategies for existing applications will be sufficient to support the
model-driven approach. Many applications will need services that conform to representational state
transfer design principles to meet this requirement.
Business Impact: The model-driven business application approach will deliver dramatic advances
in business process agility, and in the ability to manage business processes, data, roles and
relationships. Enterprises will be able to more efficiently upgrade applications and respond to
changing business requirements. Many systems of innovation and systems of differentiation will
require model-driven packaged application approaches to support the agility required for these
pace layers. Also, fewer high-priced IT personnel or external consultants are involved because the
majority of work can be done by business analysts and/or key users.
Maturity: Emerging
Sample Vendors: Epicor; IBM; Microsoft; Oracle; PearlChain; SAP; Workday
Recommended Reading: "What Types of Model-Driven Applications Are Most Appropriate for a
High Pace of Process Change?"
"Manage ERP Customizations, Don't Avoid Them"
"Process Templates Broaden Application Options in a Pace-Layered Application Strategy"
"Model-Driven Packaged Applications: Using SOA and BPM to Modernize Packaged Applications"
"The Changing Concept of Model-Driven Approaches"
"Balance Process Agility and Process Integrity Choices Along the Application Continuum"
"Composition and BPM Will Change the Game for Business System Design"
"Three Types of Model-Driven Composition: What's Lost in Translation?"
"Process Templates Emerging as Key Tools in SOA Projects and Applications Strategy"
Analysis By: Bill Swanton
Definition: Value management tools are provided by ERP vendors to help their customers construct
a high-level business case for implementing ERP or to justify making addition investments in new
capabilities. These tools differ from earlier value-based selling approaches by providing the
customer with tools and content to construct their own business case, lending more credibility to
the process than if the vendor's application engineers do the work. The tools can be applied to
initial implementations, as well as to upgrade and extension projects.
Position and Adoption Speed Justification: Executives and boards of directors have complained
bitterly for years that there is little discernible business value generated by large investments in ERP
suites. As described in "How Do You Expect To Get Value From ERP If You Don't Measure It?,"
most companies simply concoct a business case to get a project funded, and only 37% actually try
to measure the benefits after the fact. This reluctance to do a serious business case will mean that
the adoption of these tools will be a slow process. The tools will mature faster than they penetrate
the user base, perhaps accelerating the slide to the Trough of Disillusionment once they reach the
Peak of Inflated Expectations.
Continued adoption of these tools, as evidenced by conversations with ERP teams, has moved this
technology slightly further along on the Hype Cycle this year.
User Advice: Too many project teams are avoiding strict measured accountability. This lax use of
the business case has three major negative effects:
Executives are skeptical of the business cases presented.
There are few specific performance goals to drive the blueprinting, implementation and testing
process.
There are no performance expectations that can be measured to ensure that business units
adopt the new system and deliver the expected benefits.
Value management tools help customers get off to a good start by developing a clear initial
business case with specific performance goals.
Users should take advantage of any tools, content, services and benchmarks their vendors can
provide to help develop a credible initial business case. They should expect to get a credible top-
level business case that will indicate if there is potential for business improvement by applying new
technology. A more detailed business case i.e., listing costs, benefits, benefits allocation, risks
and mitigation will still be required if this initial case is favorable and detailed business cases are
outside the scope of value management tools. It is important to capture baseline business
performance and IT costs at the outset of the project, so that ongoing benefits can be compared
with the base case to avoid ERP benefits amnesia.
Always recognize that the vendor's primary goal is to drive further sales of software and services.
However, these tools are valuable because they help companies understand cost and benefit
drivers. In addition, they can help companies with a completed, but underperforming, ERP suite to
identify areas to get more value, as well as investigate process and training improvements to
capture value, even if no new software is implemented.
Value management tools cannot be based on general financial improvements, but must build the
business case from the point of improving a key performance indicator (KPI) and then translating
that into a financial benefit based on customer-specific data (e.g., cost of capital and average hourly
wage rates). This is consistent with the approach explained in "The Gartner Business Value Model:
A Framework for Measuring Business Performance." The most comprehensive tools provide
benchmark data from other customers, allowing companies to compare performance with others
that have implemented the software, lending more credibility to the target KPI value and the
financial benefits.
The logical expansion of these tools is to provide a framework for tracking actual benefits during
and after the implementation. This capability is rare at this time (see "Application Benefits
Realization Framework: Metrics and Roles to Improve Business Processes").
Business Impact: Value management tools can provide customers with a framework for building a
business case and content on what metrics can be improved. Other benefits are possible by
implementing portions of an ERP suite.
Sample Vendors: Lawson; Oracle; SAP
Recommended Reading: "The Gartner Business Value Model: A Framework for Measuring
Business Performance"
"Application Benefits Realization Framework: Metrics and Roles to Improve Business Processes"
"How Do You Expect to Get Value From ERP If You Don't Measure It?"
"Vendor Focus for SAP: SAP Value Management Services"
"SAP: Helping clients justify investments and maximize value"
Cloud ERP for Small or Midsize Businesses
Definition: Cloud ERP is a collective term encompassing off-premises-based, software as a service
(SaaS) licensed, ERP delivery solution configurations. It does not include remote hosting, where
ownership (i.e., a perpetual license) remains with the customer. Cloud ERP for small or midsize
businesses (SMBs) pertains to companies with total revenue not exceeding $1 billion.
Position and Adoption Speed Justification: Cloud ERP adoption among SMBs continues to
increase. New implementations and references plus familiarization with the term "cloud" as an
accepted deployment option, together with the absence of overt horror stories hitting the headlines,
is increasing acceptance of Cloud ERP for SMBs and moves the node beyond the peak.
There is emerging growth over previous years of cloud ERP being chosen for or by decentralized
subsidiaries of larger companies, including Brazil and Mexico. In Eastern Europe and Asia, mature
regions are beginning to adopt, but in emerging areas adoption is patchy.
SMB adoption remains with companies with fewer than 200 users/seats, with most examples less
than 100 users. The growth of cloud ERP adoption above this threshold remains very slow. Cloud
ERP usage among SMBs is particularly popular for administrative ERP, but remains less prevalent
for operational deployments, such as manufacturing, partly because of the availability of offerings
but mostly due to cultural or organizational or complexity constraints that are often linked to
security concerns or decentralized organizational structures.
What has still to become evident are long-term total cost of ownership (TCO) examples citing
substantial savings of adopting cloud ERP over traditional perpetual licensing terms. Evidence is
emerging that savings cannot be assumed.
SMB adoption of cloud ERP suites is expected to remain ahead of large enterprises cloud ERP suite
adoption for the foreseeable future. By volume, enterprise deployments of point (departmental or
functional silo) solutions are more prominent.
User Advice: Organizations should evaluate cloud ERP offerings, as well as on-premises offerings,
as part of their portfolio management process. Often, the inclusion of a cloud or SaaS option in a
selection process can influence how traditional on-premises solution vendors price their offerings,
so even if for cost-comparison purposes only, inclusion of a cloud ERP offering in a selection
process can provide benefits. However, cloud ERP is not appropriate for all industries and
functional requirements.
Cloud ERP vendors tend to offer less on-site presales services. This is to be expected due to the
lack of upfront revenue from licenses and is inherent in the business model. It does not imply less
capability or interest. Cloud ERP vendors, by the very nature of the architectural and deployment
model, seem more prepared to create a customized demonstration environment to enhance the
ability of the purchasing companies to "try before they buy." This is forcing vendors of traditionally-
deployed solutions to become more personalized.
Partner solutions to augment core ERP or tackle additional functional areas should also be
considered not just the native solution from the core ERP vendor. Partners often provide
solutions that add functional or microvertical competitiveness.
Like other software sectors, mergers and acquisitions are taking place in this area, and vendor
viability should be monitored.
Although cloud ERP initial license fees are lower than those for on-premises deployments, watch for
the long-term TCO and hidden costs, such as sandboxing, testing and development, storage, and
integration, that can substantially affect your TCO. KPI due diligence is vitally important for
companies, regardless of deployment choice.
Not all vendors offer strong SLAs or disaster recovery terms in license and support contracts.
Scrutinize agreements thoroughly, and seek external legal advice if your internal counsel does not
have tangible experience.
Business Impact: The biggest impact on the business of cloud ERP is the ability to adopt the
solution quickly, with minimal on-site disruption and with initially lower license costs. Consideration
should be given to the potential need to revert to an on-premises or hosted model if business
circumstances are altered, such as divesting a particular business unit or disassembling a joint
venture.
Many SMB users of cloud ERP cite ease of maintenance and upgrade as a major benefit of
deploying a cloud-based solution for their businesses. Cloud ERP also enables fast-growing
businesses to deploy quickly to new business units without IT infrastructure. The ability to
customize even multitenant solutions is also evolving, reducing resistance due to the compromise
of sharing a solution with another business, which effectively is what is happening in cloud ERP.
Cloud ERP is also one of the stimulations for companies to consider a move away from a monolithic
ERP systems approach to a more federated model.
Maturity: Emerging
Sample Vendors: Epicor; FinancialForce.com; Intacct; NetSuite; Oracle; Plex Systems; SAP
(Business ByDesign); Workday
Recommended Reading: "The Nexus of Forces: Social, Mobile, Cloud and Information"
"The Impact of the Cloud on ERP and Business Application Planning"
"CIO and ERP Leaders' Guide to Gartner's Cloud Computing Definitional Research"
"Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies"
Analysis By: Jim Duggan
Definition: Application portfolio management (APM) processes profile the characteristics of an
organization's applications, evaluate their value or fit to current and anticipated business needs
relative to cost and risk and select spending strategies to maintain, replace, recondition or retire
assets. As one element of the overall application management discipline, APM practices support
application strategy formulation, and contribute to the project and portfolio management (PPM) and
enterprise architecture (EA) domains.
Position and Adoption Speed Justification: APM initiatives help define the road maps that lead
from the current state to the future state defined by EA. Initiatives in APM are important specifically
for IT modernization, and for dealing more broadly with the evolution of business process and
technology portfolios.
Corporate reorganizations, emerging business needs, changes in user wants and needs, and
changes in technology increase the size and complexity of application portfolios. Organizations
must mount explicit efforts to combine or retire applications to offset this increase and the
associated demands on resources.
Management entails the collection of stakeholder, cost and risk information, as well as continual
business value reviews of individual elements, groups of similar elements and the portfolio as a
whole. Business value reviews use identification, risk, cost and business value assessments to rank
potential strategies. Selected strategies are continuously assessed and refined to reflect portfolio
changes, as well as business and IT initiatives, priorities and resource constraints.
Application management surveys show APM to be the least mature of the eight measured
application management disciplines. Although up to 50% of organizations have partial inventories,
few assemble a full picture of application values, costs and risks. Two significant barriers slow the
maturing of APM practices. The first is the difficulty in engaging business stakeholders in
application strategy. Effective APM practices must operate on the assumption that business
stakeholder involvement will be inconsistent, and that significant executive sponsorship will be
required. The second difficulty is the need to build awareness of the lifetime cost of maintenance
and operations imposed by bloated portfolios. Successful APM initiatives have combined significant
business sponsorship with major IT initiatives, such as a new ERP, facility consolidations and other
driving factors.
APM and application strategy processes show value when their assessments lead to the conscious
management of application investments. Building relationships among all application stakeholders
takes time and leadership commitment, and is a major inhibitor to the expanded use of APM.
User Advice: Move from simple inventories to mapping applications to business initiatives. Using
existing data sources, build a documented view of the portfolio that shows, by application and
related group, the assessment of business fit or value, projected total cost of ownership (TCO) and
projected risk. Collect just enough information to drive the selection of an investment plan or road
map for each application. Taken together, these plans form a multiyear view of the desired evolution
of the portfolio elements. Begin with relatively simple elements of the portfolio, then try to identify
the process areas in which APM can bring the greatest early benefit. The portfolio should eventually
include a full assessment for the largest 20% of the applications, and a streamlined assessment of
the remaining 80%.
Develop the community of stakeholders around each application, and use APM to bring the
community assessment and strategy recommendations into the yearly budget process. Move
rapidly through data collection to the value review, and to strategy selection. Document all
opportunities for overhaul, but focus remediation on the organizations that are most adaptable to
change, and those portions of the portfolio with smaller groups of stakeholders. Although all
opportunities are documented, sustained progress will occur only when business stakeholder
agreement can be achieved.
Business Impact: The ability of IT organizations to meet business expectations is hurt by spiraling
maintenance costs. Effective APM will be demonstrated in a smaller and simpler portfolio, well-
managed portfolio risk, redirected investment yielding lower and more predictable recurring costs,
and a higher percentage of the IT budget being directed toward growth or transformative initiatives.
Despite the difficulty of coordinating business process change with IT redeployment, companies will
eventually be forced to acknowledge and emulate peers that successfully develop continuing
application overhaul cultures.
Sample Vendors: alfabet; CA Technologies; Compuware; HP; Innotas; Instantis; Microsoft;
Planview; Troux
Recommended Reading: "A Framework for the Lifetime Total Cost of Ownership of an
Application"
"Application Overhaul Key Initiative Overview"
"Planning for IT Modernization: Start From the Top With APM"
"Application Portfolio Triage: TIME for APM"
"Plan Legacy Application Retirements Carefully"
Analysis By: Pat Phelan
Definition: How-to support helps ERP customers understand how to use application functionality
to support a user's business processes. It includes assistance with how to leverage new
technologies, products and functionality to complement the customer's ERP solution. It embraces
topics such as how the product's capabilities can be combined and, in this sense, configured, to
enable a business process. How-to support requires a broad understanding of the business area
being addressed and a deep understanding of industry best practices.
Position and Adoption Speed Justification: Although users are migrating toward business-
process-focused approaches to application investments, and vendors are introducing more process
configuration into ERP products (see "How to Deliver a More User-Centric ERP Solution" and
"Process-Centric Business Application Life Cycle Management"), we have placed this technology at
pre-peak, because fewer than 50% of organizations have moved to the process-focused approach
for support. As the trend progresses, it will increase the need for support on how to achieve the
best composition of product and services to support the business processes.
ERP products can generally be classified as highly configurable or built on a fixed process model.
Legacy products tend to be built on the fixed process model that offers a fixed set of configuration/
composition choices. Newer products and cloud-based ERP components are highly configurable
i.e., they may be combined in various ways to meet differing business requirements. Some vendors
offer product suites that contain a mixture of approaches, with some modules having attributes of a
fixed model (such as inventory management), while other modules (such as human capital
management and CRM) are designed with configuration in mind.
For highly configurable products and solutions with cloud-based components, business-process-
oriented how-to support is more difficult to deliver than for those that require less configuration or
operate on a fixed process model, because introducing variation into the solution (e.g., package,
process and service configuration) means that support personnel must understand the impact of
each configuration decision, not only to the module in question, but also as it relates to other
modules, products, services and business processes that comprise the total ERP solution. The
complexity of how-to support will be exacerbated as even-more-flexible application designs, such
as model-driven architectures, mature and provide even more deviation from a core set of common
application configurations.
As more products are introduced or redesigned to be business-process-model-based and more
highly configurable, users will need to plan for business-process-oriented how-to support. Some
will respond to this requirement by deepening product and business process expertise in the
internal ERP support organization, while others will look to external sources of expertise. They will
also press vendors to handle an increasing number and frequency of support requests that include
process-based requirements in the issue and solution. Finally, users will look to business process
management tools for support and continuous improvement.
Because the introduction of model-driven architectures and highly configurable products is on the
rise, vendors are in the early stages of preparing for this increase in process-oriented how-to
support requests. They are also in the early stages of preparing support personnel to field this type
of call (which requires a deeper expertise on the products and business processes than before).
Finally, customers are in the early stages of exploiting business-process-model-based solutions.
For these reasons, we do not expect business-process-oriented how-to support to plateau for at
least two to five years, given the time it will take to develop, market and implement new products,
and for users to adopt a business process model focus to implement ERP solutions.
User Advice: When evaluating ERP products, determine whether the product is based on a fixed
process model or a model that provides a high degree of configuration. Understand the vendor's
plans for migrating to a business-process-model-driven architecture.
For highly configurable products, assess the strength of the vendor's support team, as well as the
level of business process expertise offered for the product set being purchased.
Assess the vendor's willingness to provide business-process-oriented how-to support as part of the
standard maintenance program.
Confirm whether how-to support is handled by the vendor or is outsourced, because this could
affect the quality of the service being delivered.
For new vendor offerings that contain a high degree of configuration, determine the vendor's plans
and time frame for developing support expertise.
Because how-to support must be tailored to the individual customer's business-process-based
configuration, plan for providing vendor access to a copy of the configured system. Some vendors
offer tools to facilitate this (e.g., SAP's Solution Manager and Oracle's Software Configuration
Manager).
Business Impact: The business can feel the effect of how-to support for highly configurable ERP
products in several ways. During implementation, the effect of inadequate how-to support can
result in project delays (and cost overruns), due to the process composition/configuration being
revised and retested to correct problems caused by inappropriate design decisions. Effective how-
to support can expedite implementation efforts and result in a more efficient solution based on
good process composition/configuration decisions. Once implemented, the effect of poor how-to
support can be higher operation costs due to system inefficiencies caused by suboptimal process
design. The quality of the vendor's how-to support can affect troubleshooting production errors that
involve unique business-process-based configuration, as well as enhancements that require new
configuration or process design changes.
Maturity: Early mainstream
Sample Vendors:
Recommended Reading: "Use the BPM Sweet Spot Framework to Identify the BPM Technology
You Need"
"What Types of Model-Driven Applications Are Most Appropriate for a High Pace of Process
Change?"
Process Templates
Analysis By: Michele Cantara; Janelle B. Hill
Definition: Process templates are prebuilt design, execution and management artifacts based on a
business process management (BPM) platform that creates a process-centric, model-driven
application. Process templates are immediately executable, although most are modified and
extended using the underlying BPM platform. Changes to solution behavior are made by altering the
metadata model instead of changing code, flipping switches or altering tables/configuration files.
Solutions can be more easily changed without needing special application coding skills.
Position and Adoption Speed Justification: Gartner has followed the evolution of process
templates since 1998, which was their earliest incarnation as document-enabled vertical
applications (DEVAs; see "IDOM Suites: Ready or Not, Here They Come!" Present-day process
templates are more than solution assets. They are process-centric, model-driven applications
based on BPM platforms. For example, the Pegasystems CRM Solution Framework, evaluated in
"Magic Quadrant for CRM Customer Service Contact Center," is a CRM application based on the
Pega BPM platform. A BPM platform minimally consists of all the following:
A graphical business process and/or rule modeling capability, in which the models represent
the behavior of business processes and/or business rules
A process registry/repository to handle the modeling metadata
A process execution and state management engine and/or a rule engine

A process-centric, model-driven application uses:
A metadata-driven, model-driven approach to influence solution behavior
A business process or business rule model as the primary abstraction to influence solution
behavior (although other metadata constructs or solution facets may play a supporting role)
In a direct process-centric, model-driven application, the application's behavior with respect to
business processes or rules is determined through direct manipulation of the explicit process
model, rather than through configuration models. Instead of having the application read
configuration settings to determine how it should operate, the underlying BPM platform is capable
of reading the explicit business process model and business rules. The process model is directly
executable (possibly requiring intermediate-stage transformations). Often, this explicit process
model will be in the form of a graphical process model, in combination with a set of modeled
business rules. Process templates based on a BPM platform that produces a process-centric,
model-driven application provide higher levels of process agility and more support for user-defined
process integrity (see "What Types of Model-Driven Applications Are Most Appropriate for a High
Pace of Process Change?").
Process templates have moved to nearly a peak position on the Hype Cycle this year, because they
are being hyped by a variety of vendors, who are looking to penetrate the market for flexible
business applications. Process templates are an option for companies that are looking for systems
of differentiation and systems of innovation in a Pace-Layered Application Strategy (see "Balance
Process Agility and Process Integrity Choices Along the Application Continuum"). Process
templates are available from independent software vendors (ISVs), external service providers
(ESPs), BPM platform providers, BPM suite providers and cloud providers. They are also known by
various names, such as "solution frameworks," "solution templates," "solution kits," "starter kits,"
"process accelerators" and "process pods."
Process templates are one type of application content for ecosystems of BPM software providers,
ISVs, cloud vendors and IT services vendors. To date, Gartner has identified more than 300 process
templates, mostly from BPM software vendors and ESPs. However, the barriers to entry in these
ecosystems are relatively low, and smaller ISVs and consulting firms are creating new process
templates. These often are available as software as a service, business process utility or business
process as a service. For example, Symbox (see "Cool Vendors in Business Process Management,
2011") is a provider of process templates for the media and entertainment industry. eBuilder
provides process templates as cloud business processes for travel and expense management, e-
procurement, and order fulfillment services (see "Cool Vendors in Cloud Services Brokerage
Enablers, 2012").
Despite the proliferation of process templates, it will still take five to 10 years for process templates
to reach the Plateau of Productivity. In "Predicts 2011: Business Process Management
Competencies Will Expose the 'Haves' and 'Have-Nots,'" we stated, "By 2014, process templates
from 'nontraditional application vendors' will be included in the shortlisted options for 70% of
application purchases." Consequently, the adoption of process templates will vary by industry and
application area. The application refresh cycle for ERP (a system of record) can be 10 to 15 years,
while the application refresh cycle for CRM (more frequently, a system of differentiation or
innovation) is shorter (typically five years). Process template adoption is already quite prevalent in
CRM, as evidenced by business process management system (BPMS) vendor, Pegasystems. In
addition to its own CRM process templates, Pegasystems acquired CRM vendor Chordiant (see
"Pegasystems Strengthens Its CRM Presence by Acquiring Chordiant") to expand its portfolio of
customer-facing templates. As a result, process template adoption is likely to proceed more slowly
in ERP than in CRM.
Lack of expertise in managing user-defined process integrity will also slow down process
templates' progress toward the Plateau of Productivity. Although packaged applications feature
built-in process integrity, process templates may not. Process integrity is the degree to which all
process elements tasks, users, systems, information and so forth are intact and functioning in
ways that ensure sustainability and long-term adaptation to changing conditions and human uses.
Process integrity requires information, transaction and interaction integrity (see "Introducing
Process Integrity: Critical to Business Applications, SOA Compositions and Processes"). A third
factor contributing to the lengthy time to plateau is fragmentation in the BPM software market.
Market share is very dispersed across more than 50 providers. Thus, process template providers
have to use their own BPM platform or partner with a select few, market-leading platform providers
to minimize platform-specific implementations. Reminiscent of the market development for
packaged applications in the 1980s, growth really accelerated once the relational database
management system market consolidated from approximately 25 providers to approximately 12.
More consolidation among BPM platforms will help accelerate the market for process templates.
User Advice:
Consider process templates when you need higher degrees of process agility in systems of
differentiation and systems of innovation.
Evaluate process templates from software vendors and ESPs.
Recognize that because process templates are purpose-built for "design to change," they may
not have the "built-in process integrity" of a packaged application, and you may need to
increase your process governance efforts to compensate.
Balance your need for process agility with process integrity.
Process template vendors often augment their templates with content from customer
engagements. Understand your intellectual property rights, and negotiate a deal that reflects
the contribution of your process insight to the ongoing value of the template.
Process templates are typically tied to specific BPM platforms, which means that each template
requires a unique authoring tool and runtime engine. Uncontrolled usage of process templates
will bring heterogeneity into your environment. Try to leverage a BPM platform with a rich
ecosystem of process template partners to better control heterogeneity.
Business Impact: Process templates are slowly changing the application landscape:
Although process templates are not likely to completely replace already-installed enterprise
applications, they can complement existing applications and be alternatives to new application
purchases. For example, customers are replacing less-repeatable and less-structured
processes in their ERP systems, such as invoice exception management, with process
templates. The process template acts as a system of differentiation and complements the ERP
as a system of record. As a result, over the next five to 10 years, process templates are likely to
have a growing and disruptive impact on the application software and application service
markets.
BPM vendors, such as Adobe, Appian, Cordys, Metastorm (now OpenText), Pegasystems and
Singularity (acquired by Kofax), have made considerable investments in process templates.
Process templates are one of the major evolutionary paths that BPMS vendors are pursuing
(see "Signs That a BPMS Vendor Is Following One or More Technology Evolutionary Paths").
Customers are beginning to view these process templates as alternatives to traditional
applications, allowing the BPM vendors to compete in the more mainstream application market.
IBM's introduction of three industry packs certified to run on IBM BPM v.7.5. is further evidence
of nontraditional application vendors' use of process templates to enter the application market
(see "IBM Business Process Manager Industry Packs V7.5 Delivers Assets to Accelerate
Implementation of Banking, Healthcare, and Telecom Solutions").
For ESPs, process templates are part of their service industrialization strategy (see "BPM
Delivers Agility to Buyers and Provides Leverageable Service Delivery Models for Service
Providers"). Accenture, Cognizant, IBM Global Business Services, Infosys Technologies,
Mahindra Satyam and PwC Consulting are also sources of BPM-based process templates.
Usually, these process templates are part of a focused vertical industry go-to-market strategy.
For example, CSC has established alliances with BPMS vendors Cordys, DST Systems,
Pegasystems and Oracle. Capgemini will use Pegasystems' process templates (Solution
Frameworks) in its BPM consulting engagements in customer service, financial services,
insurance, healthcare and other markets.
Process templates accelerate the time to process change, which in turn provides high-impact
business benefits. For example, by using Vitria's Customer Care for Energy Providers solution, a
process template based on Vitria's M3O Operational Intelligence Platform, TXU Energy was able to
create and evolve a real-time process intelligence solution for customer onboarding and service
disconnects and reconnects (see "Case Study: Learn Some Lessons From TXU Energy's
Operational Intelligence System"). The end result for TXU was fewer errors in onboarding and
disconnects, as well as an expedited ability to reconnect customers within two hours of receiving
payment.
Sample Vendors: Accenture; Adeptia; Appian; AuraPortal; Bizagi; Capgemini; Cognizant; Cordys;
e-Builder; Genpact; HandySoft; HCL Technologies; iGATE; inubit; IBM; Infosys; ITC Infotech; Kofax;
Mahindra Satyam; Nimbus; OpenText; Pegasystems; PNMsoft; Questetra; Tata Consultancy
Services; Tibco Software; Ultimus; Virtusa; Wipro
Recommended Reading: "How to Use Pace Layering to Develop a Modern Application Strategy"
"Balance Process Agility and Process Integrity Choices Along the Application Continuum"
"What Types of Model-Driven Applications Are Most Appropriate for a High Pace of Process
Change?"
"Process Templates Emerging as Key Tools in SOA Projects and Applications Strategy"
"Magic Quadrant for CRM Customer Service Contact Centers"
"Who's Who in Cloud Services Brokerage"
"Who's Who in Business Process Management Consulting and System Integration"
"Who's Who in Business Process Management Consulting and System Integration, Volume 2"
"Selection Criteria Details for Intelligent Business Process Management Suites"
"Platform as a Service: Definition, Taxonomy and Vendor Landscape, 2012"
"Commercial Loan Origination Vendor Landscape"
"MarketScope for North American Property and Casualty Insurance Claims Management Modules"
Analysis By: Yefim V. Natis
Definition: A platform as a service (PaaS) offering, usually depicted in all-cloud diagrams between
the SaaS layer above it and the IaaS layer below, is a broad collection of application infrastructure
(middleware) services (including application platform, integration, business process management
and database services; see "Platform as a Service: Definition, Taxonomy and Vendor Landscape,
2012"). However, the hype surrounding the PaaS concept is focused mainly on application PaaS
(aPaaS) as the representative of the whole category.
Position and Adoption Speed Justification: In prior years, much of the attention in cloud
computing was focused on software as a service (SaaS; such as by salesforce.com CRM). More
recently, the emphasis has been on infrastructure as a service (IaaS; such as by Amazon Web
Services), including the private cloud rendition of IaaS. However, as leading software vendors adjust
their long-term strategies to reflect the emerging importance of cloud computing to their customer
and prospect bases, they are investing to establish a leadership position in the middle layer of
PaaS. Over 130 vendors (mostly small innovators) deliver some form of a PaaS service. By the end
of 2012, most leading application infrastructure (middleware) vendors will have production PaaS
offerings (all were at least in beta at the start of the year) in application platform, integration,
business process management and other middleware service areas.
Users turn to PaaS (instead of on-premises deployed middleware), with the expectation of greater
productivity, lower costs of operation and faster time to results, to access state-of-the-art data
center and middleware technologies (which small or midsize businesses [SMBs] and many large
organizations cannot afford or lack the talent to handle). Some turn to PaaS to establish an
independent service provider that avoids the internal and external political issue of trust (choosing
an independent third-party intermediary often helps overcome trust issues among parties). Users
also choose PaaS for its ability to support rapid and continuous unintrusive versioning of software,
simplified self-service management and administration, and the expected competitive pace of
innovation by PaaS providers.
The process of establishing the platform architecture and standards for PaaS is in its early stages.
Most leading vendors are still developing their insights into cloud computing while investing in
backward-compatibility with on-premises skills and programming models. IBM, Oracle, Red Hat,
VMware and Microsoft are in this category, and all except Microsoft are still in beta or limited
release as of the first half of 2012. As a result, available PaaS offerings are slow in coming
(prolonged betas), come from small providers with limited ability to execute, or are proprietary. Most
offerings are specialized in a relatively narrow middleware function, and consolidation of services
and vendors in the market is on the rise. Many users, having heard the promises of what's available,
are disappointed in the reality. The degree of cloudiness and standardization in available PaaS trails
behind users' expectations. Most options focus on a few areas of service, and are not functionally
complete enough to meet end-to-end project requirements. This pushes PaaS technology past the
Peak of Inflated Expectations, and down the slope toward the Trough of Disillusionment. With more
PaaS services becoming available from the largest software vendors, more users will enter the
space, and will begin to understand and adjust to the reality. As always, this reality will not match
the hype. Users will have to learn how PaaS fits into their overall IT strategy based on the real merits
of real products.
User Advice: Recognize that PaaS can provide application platform, integration, business process
management, portal, database management system (DBMS), messaging and other middleware
services, although few vendors currently offer all major options. Many users will combine the
services of multiple providers to meet their project objectives, or will combine the use of on-
premises middleware with cloud PaaS services.
PaaS offerings are at varying stages of development in maturity, functional completeness and
cloudiness. Select PaaS services for their projects, carefully matching the functionality and service
levels of PaaS offerings with the requirements of the organization. No provider offers a
comprehensive PaaS suite, so users should use services from multiple providers, and should
combine them with applications and platform technologies on-premises to form a hybrid computing
environment.
Build applications using PaaS to gain expertise in this important emerging area of technology. The
applications built using today's PaaS should be designed for ROI within the next two to three years
to allow organizations the flexibility to transition to more mature PaaS offerings as they emerge.
Massive projects that cannot deliver ROI in a limited time should either not be committed to PaaS at
this time or should be subdivided into smaller components, and some of those may be built on a
PaaS.
When engaged in long-term planning, give preference to vendors that are more likely to accumulate
comprehensive PaaS offerings. Unlike on-premises where users can take a best-of-breed
approach to selecting component technologies from different vendors in the cloud, the winning
scenario will be where many platform requirements of an application are provided from one data
center footprint of one cloud provider.
Business Impact: Historically, a prerequisite for leadership in software infrastructure markets has
been a vendor's ability to take a leading role in establishing the prevailing programming models and
architectures for software developers. This role enabled vendors to build ecosystems of partners,
and a leading ecosystem amounted to sustainable industry leadership. In cloud computing,
analogously, leadership in the PaaS market will require leadership in the evolution of standards,
architectures and best practices in cloud application platforms and application services. IT
megavendors such as Fujitsu, Google, IBM, Microsoft, Oracle, salesforce.com, SAP and VMware
are strategically invested in this market.
During the next five years, reliable and functionally rich PaaS offerings from industry-leading
providers will alter the business of engineering and delivering software to enterprises and
consumers. A mature, functional, always-on, high-productivity PaaS will form the foundation for a
wave of innovation in business application services, as independent software vendors turn their
engineering efforts to these platforms. New levels of agility, resource sharing, ubiquitous access,
quality of service and the productivity of software engineering will change the way IT organizations
plan and develop software, the kinds of skills they'll require and how they'll be managed, evaluated
and budgeted. With time, the cloud-native PaaS will lead to new cloud-native applications that
cannot be delivered at justifiable costs today.
Enterprise IT will refocus on its core, differentiated business to become more responsive; however,
the cost of IT will not decline. Instead, it will be rearranged, with more spending going to cloud
services providers and brokerages, and more internal IT spending on the composition of user-facing
business solutions, management and integration. Full-scale internal custom engineering will be
limited to highly differentiating specialized legacy application systems. All businesses will become
consumers and providers of cloud services, expanding their IT perspective from inward-looking
enterprise class to outward-facing global class.
Maturity: Emerging
Sample Vendors: Appistry; CloudBees; Cordys; Dell Boomi; Engine Yard; GigaSpaces; Gnubila;
Google; IBM; Informatica; LongJump; Microsoft; Oracle; Pegasystems; Red Hat; salesforce.com;
VMware; Wolf Frameworks; WSO2
Recommended Reading: "Platform as a Service: Definition, Taxonomy and Vendor Landscape,
2012"
"PaaS 2012: Tactical Risks and Strategic Rewards"
"Gartner Reference Model for PaaS"
"PaaS Road Map: A Continent Emerging"
"Hype Cycle for Cloud Application Infrastructure Services (PaaS), 2011"
Analysis By: Roxane Edjlali; Donald Feinberg
Definition: An in-memory database management system (IMDBMS) is a DBMS that stores the
entire database structure in memory and accesses all the data directly, without the use of input/
output instructions to store and retrieve data from disks, allowing applications to run completely in-
memory. This should not be confused with a caching mechanism, which stores and manages disk
blocks in memory cache for speed. IMDBMSs are available in both row-store and column-store
models.
Position and Adoption Speed Justification: IMDBMS has been around for many years (for
example, IBM solidDB and Oracle TimesTen), but many available now are new within the past two
or three years: VoltDB and SAP Sybase ASE were new in 2010, SAP Hana was released in
mid-2011, and new vendors such as ParStream continue to emerge While several IMDBMSs are
mature, many are new or have limited adoption, and so we have retained its position on the Hype
Cycle from last year. However, we expect adoption to accelerate in the next two years, based on
client interactions demonstrating a high level of interest and growing adoption of these
technologies.
Many use cases are supported by IMDBMS: solidDB, StreamBase and TimesTen were originally
developed for high-speed processing of streaming data for applications such as fraud detection,
with the data then written to a standard DBMS for further processing. Others such as Altibase, SAP
Sybase ASE and VoltDB focus on high-intensity transactional processing. Some IMDBMSs, such as
Exasol, ParStream or Kognitio are dedicated for in-memory analytical use cases. SAP Hana,
although primarily for analytics and data warehousing, has begun to support both online transaction
processing (OLTP) and analytics in the same database (with the general availability [GA] of
BusinessOne powered by Hana).
Given the different maturity levels across the various vendors, the level of support for high
availability and disaster recovery can vary. The perceived risk involved with memory failures and
lack of reliable high-availability disaster recovery, and sufficiently fast backup and recovery
techniques continue to be an issue when selecting an in-memory DBMS. As this functionality is
added often through a combined software and hardware offering including clustering, this inhibitor
will decrease in importance. The other limiting factor in terms of adoption is the availability of skills
and practices.
User Advice: Continue to use IMDBMS as a DBMS for temporary storage of streaming data where
real-time analysis is necessary, followed by persistence in a disk-based DBMS.
For the next several years, IMDBMS can be used for OLTP with the understanding that extra care
must be exercised to assure a high-performance environment and logging to a persistent store,
such as disk, solid-state drive and Flash.
IMDBMS for analytic acceleration is an effective means to achieve increased performance.
However, given the diverse level of maturity of the vendors, organizations should verify references
and run a thorough proof of concept to ensure the technology meets their expectations.
The single most important advancement will come as IMDBMS matures as a column-store,
combined OLTP and online analytical processing model as a basis for new, previously unavailable
applications; taking advantage of real-time data availability, with IMDBMS for increased
performance and reduced maintenance.
Organizations should evaluate the business innovation opportunities from new IMDBMSs as they
mature to address OLTP and real-time analytical use cases.
Organizations evaluating the IMDBMS should revisit data governance and data warehouse
practices and design in order to take advantage of the increased performance without losing in data
quality or data consistency.
Business Impact: Once these IMDBMSs become mature and proven especially for reliability and
fault tolerance and as the price of memory continues to decrease, the potential to the business is
transformational:
These systems utilize hardware systems that require far less power (as low as 1% of the power of
an equivalent disk-based system, according to several hardware vendors) and cooling leading to
huge cost savings.
The high performance implies that smaller systems will do the same work as much larger servers,
again with major cost savings.
Column-store IMDBMS has the potential for a combined OLTP and data warehouse (DW) single
database model that will enable an entire set of new applications that were not possible before
because of the latency of data moving from the OLTP system to the DW.
The speed of IMDBMS for analytics has the potential to simplify the DW model by removing
development, maintenance and testing of aggregates, summaries and cubes. This will lead to
saving in terms of administration and increased flexibility for meeting diverse workloads.
Sample Vendors: Exasol; IBM; Kognitio; McObject; Oracle; ParStream; QuartetFS; SAP; VoltDB
Recommended Reading:
"Cool Vendors in Advancing Data Management Maturity, 2012"
"What CIOs Need to Know About In-Memory Database Management Systems"
"SAP Throws Down the Next-Generation Architecture Gauntlet With HANA "
Analysis By: Jess Thompson; Benoit J. Lheureux
Definition: Packaged integration refers to any form of application integration solution licensed
software, open-source software (OSS), appliance-based solutions, software as a service (SaaS) or
integration brokerage that includes the technical artifacts (such as protocols, adapters,
transformation maps, routing rules, flow definitions and business object schemas) and metadata
needed to support a specific, well-defined and recurring integration scenario between two or more
application systems located within or external to an enterprise.
Position and Adoption Speed Justification: For years, integration vendors and system integrators
(SIs) used packaged integrating processes (PIPs) and packaged composite applications (PCAs) as
accelerators for custom projects, but did not offer them as packaged, licensed software products.
Vendors and SIs often used them to accelerate delivery of IT service-based projects; however, in
many cases, they did not see the value to productize them. In the past few years, IT vendors have
begun marketing and selling packaged integration including cloudstreams for internal and
multienterprise scenarios. Packaged integration products are available from a range of IT vendors.
Some vendors (such as eBridge Software, Extol, Pervasive Software and Traxian) offer PIPs
specifically for multienterprise scenarios.
Cloudstreams are a form of PIP that providers deliver in the cloud and involve at least one cloud
service. PIPs, cloudstreams and PCAs are interfaces, or prebuilt frameworks, which provide the
foundation for a solution to a typical problem, using an embedded combination of integration and
platform middleware.
Vendors use a wide range of labels for packaged integration, including:
Packaged integration
Process integration packs
Cloud application connectors (or cloud adapters)
Integrating applications (or integrating processes)
Industry solutions (or sometimes just solutions)
Integration accelerators (or sometimes just accelerators)
Process templates (or sometimes just templates)

Some providers focus on cloudstreams and PCAs delivered as hosted services, often on top of an
integration platform as a service (iPaaS) for example, Appirio, Dell Boomi, Celigo, Crossgate,
Edicom, GXS, IBM, Informatica, Jitterbit, Pervasive Software, SPS Commerce, Sterling Commerce
and Tieto. Many vendors offer some form of prebuilt order-process-visibility PCA, as well as PIPs to
accelerate the integration of companies into networks running specific applications (to support e-
invoicing, for instance). Other providers primarily focus on cloudstreams supporting cloud service
integration requirements, such as salesforce.com to SAP or QuickBooks integration. Other
multienterprise PIPs and PCAs include offerings for data synchronization and order visibility in the
retail/consumer packaged goods business, PIPs for vendor-management inventory, and PCAs for
supply chain visibility in high-tech manufacturing. SaaS vendors (such as NetSuite and Workday)
also offer PIPs, typically as iPaaS-based solutions, but also as integration brokerage.
The adoption of packaged integration solutions (PIPs and PCAs) is proliferating. The solutions,
which require users to do work, are often 70% to 80% complete, but sometimes as little as 50%
complete. Even when packaged integration is available, inconsistent nomenclature confuses the IT
public or, worse, companies are unaware that a solution may exist to solve their integration
problems.
Regardless, packaged integration solutions will continue to proliferate because:
It's possible to develop packaged integration using almost any combination of platform and
integration middleware, as well as iPaaS offerings.
Many IT vendors (particularly SIs and providers of integration software) continue to discover
new recurring integration problems as they serve their customer bases.
Independent software vendors (ISVs) will use service-oriented architecture (SOA) composite
application frameworks from leading IT vendors (such as IBM, Microsoft, Oracle, SAP and
salesforce.com) and others (such as Boomi, Dell, iWay Software, Jitterbit and Pervasive
Software) to build more PIPs and PCAs.
The large software vendors use PIPs and PCAs to upsell to their installed base of packaged
applications, and/or use the availability of packaged integration to differentiate their application
integration middleware offerings.
Service providers that deliver integration brokerage are increasingly addressing emerging
customer demand for integration services bundlings that are preconfigured to solve specific
industry or process requirements (e.g., preconfigured integration for return logistics in e-
commerce or preconfigured integration to synchronize contacts between Gmail and
salesforce.com).
Particularly in cloud scenarios via cloudstreams, where the need to easily exchange messages and
data across cloud functionality fuels adoption, ISVs and the IT public will become increasingly
aware of this option, and packaged integration will increase in popularity. Companies will also
realize some of the inherent challenges associated with the approach. With the exception of
cloudstreams, the PIP and PCA approaches include the need for significant initial customization
work and constant maintenance, as associated applications change and evolve.
The position of this technology has changed little since 2011; however, the adoption is described as
early mainstream. The reason is that although packaged integration (PIPs and PCAs) is a
mainstream technology, cloudstreams are relatively new (most offerings are three years old or less).
The projected rapid adoption of cloudstreams accounts for the technology reaching the Plateau of
Productivity in two to five years.
User Advice: An example of packaged integration is a predefined process that links an order entry
and a fulfillment system, or that synchronizes customer data between an external sales automation
system (hosted by salesforce.com, for example) and an internal ERP system.
Organizations may implement packaged integration as a fully self-contained application or as a flow
module using services in an integration suite. Packaged integration comes in two forms:
PIPs and cloudstreams, which mainly provide integration logic
PCAs, which include business logic covering specific application needs

The label "packaged integration" implies that the integration solution is complete analogous to
commercial off-the-shelf software. However, most solutions for packaged integration are not 100%
complete or fully deployable out of the box. The completeness of a packaged solution can be 100%
(which is relatively rare, although such solutions are proliferating quickly, particularly in cloud
services integration scenarios where application customization is less frequent). The most
widespread PIPs and PCAs are 50% to 99% complete. The part of the PIPs and PCAs that must be
developed is made up of the business logic and the data changes that must accommodate process
and data customization in the participating applications.
Vendors often position the latter category of packaged integration solutions as templates or starter
applications, for integration with extensively customized applications. Generally, we consider
anything less than 70% complete as falling short of the spirit of the concept of PIPs and PCAs. In
some cases, even less-complete solutions can substantially accelerate integration projects. To
meet the spirit of intent, cloudstreams should be even more complete than PIPs and PCAs,
preferably 100% between SaaS applications. Even at 100%, some configuration or customization
work may be required when extensions to the cloud offerings are assumed. SIs often deliver
packaged integration solutions that are less than 70% complete in the context of broader-scope
offerings or projects for example, as solution accelerators, rather than as products or services.
When you have projects involving cloud computing, new process integration or composite
applications, as well as all integration efforts, determine if packaged integration for a prebuilt
solution is available. If it is, consider it as an alternative to implementing a project from scratch. The
availability of packaged integration doesn't guarantee that it's the correct approach for any project.
In many cases, however, it can lower overall project costs, simplify deployment and reduce the time
to market for IT projects. Some pertinent issues to discuss with vendors are:
Licensing and maintenance costs.
The completeness of the packaged integration solution and the amount of customization work
required: 100% complete is ideal (and less common), whereas 70% to 99% is likely to be quite
helpful (and more common), and less than 70% complete tends to vary more in usefulness,
depending on the complexity and quality of the solution. This is often the case for solutions
from SIs.
The availability and the procedure for installing and configuring packaged integration upgrades
at the same time as upgrades for associated target applications. Ensure that you ask your
provider how quickly it will provide updates to its packaged integration solutions after the
applications vendors have upgraded the associated applications and middleware infrastructure
that are being integrated.
Ease of customization.
Complexity of the underlying middleware infrastructure required to deploy the specific PIP or
PCA. The infrastructure may be as simple as a couple of adapters connected through message-
oriented middleware or it may require a combination of adapters; enterprise service buses
(ESBs); business process management (BPM) technology; extraction, transformation and
loading (ETL); portal products; and other technologies.
Business Impact: Packaged integration will continue to proliferate, and will often reduce
implementation costs and times (especially when deployed in the cloud) for standardized integration
applications and composite applications. Although some customization is typically required, PIPs,
PCAs and cloudstreams can make process integration and composite applications more cost-
effective and acceptable to companies with specific projects (when buying versus building is an
option). PIPs, PCAs and cloudstreams will also encourage the adoption of modern application
integration, and the associated business benefits, by midsize enterprises that lack the skills to carry
out custom integration developments or that are simply seeking to plug in a solution that completes
a significant number of project tasks.
Sample Vendors: Appirio; Avankia; Boomi; Bridge-X Technologies; Celigo; Cordys; Dell; eBridge
Software; Edicom; Extol; GXS; Hubspan; iWay Software; IBM; Impress Software; Informatica;
Jitterbit; OpenText; Oracle; Passport; Pervasive Software; RedTail Solutions; SAP; SEEC; Sierra
Atlantic; SPS Commerce; Traxian; Vitria
Recommended Reading: "How to Identify the Right Basic Approach for Your Application
Integration Project"
"Gartner 2012 Research Outlook for Application Integration"
"Predicts 2012: Application Integration Will Increase in Scope and Complexity"
"Packaged Composite Applications: Applications That Integrate"
Analysis By: Denise Ganly; Claudio Da Rold
Definition: An IT infrastructure utility (IU) is a shared IT infrastructure provided through on-demand
services. Pricing is based on service use and reductions in the fixed baseline (or subscription fees)
and unit costs. The IU is open, flexible, predesigned and standardized, as well as virtualized, highly
automated, secure and reliable.
Position and Adoption Speed Justification: The most basic IU style is utility hosting, which has
evolved from traditional dedicated hosting via virtualization. The most developed IU offerings are
currently built on standard infrastructure blocks (such as virtualized computing, storage,
networking), to which elements designed to support a specific application landscape such as
ERP, communication, collaboration or CRM are added. The client is still in full control of the
customized applications, while the service provider controls and manages the operating platform up
to a level below the logic of the application. The provider tailors the architecture/performance/price
of the service to the application requirements.
Public cloud solutions do not give enough visibility into the structure, architecture, operations and
security of the global data centers or computing environments. This causes compliance issues for
many industries (such as banking, insurance and the public sector). IU solutions must close this
transparency gap and enable regulated industries to leverage solutions based on this approach,
which will happen through private/hybrid, hosted cloud computing. Early evidence from two Magic
Quadrants for 2012 (see "Magic Quadrant for Data Center Outsourcing and Utility Services, Europe"
and "Magic Quadrant for Data Center Outsourcing and Utility Services, North America") shows that
the IU services (IUS) business delivered by the main data center outsourcers is aligned with our
forecast (see "Forecast: Infrastructure Utility Services, Worldwide, 2009-2013"). It's currently
structured on three main areas of a similar size: compute utility services, storage as a service and
Infrastructure Utility for SAP (IU4SAP) services.
During 2011, IUS continued its impressive growth curve. Based on Gartner's worldwide IUS survey
in 2011, 39% of respondents confirmed that they were already using IUS, and an additional 22% of
the respondents planned adoption within the next 12 months (see "Survey Analysis: End-User
Trends in Infrastructure Utility Services and Infrastructure as a Service" and "User Survey Analysis:
Infrastructure Utility Services, 1Q11"). This growth is further driven by cost reduction opportunities,
quality improvement options and the increased flexibility that IUS brings to an organization. As more
vendors offer IUS, adoption and competition increase, driving the IU market to mature further. (CSC
announced its IU for SAP in early 2012, and Accenture launched its Private Cloud for SAP
Application in late 2011.) Although aggressive outsourcers are getting 15% to 30% of their data
center outsourcing (DCO) revenue from IUS, large, conservative players are still in the low single
digits, therefore delaying the achievement of the 20% market penetration mark.
In a challenging economic environment, the industrialization of the IT services industry accelerated.
The evolution from traditional outsourcing delivery models to cloud computing is driving innovation
at an increased pace, and is leading to significant investments at different service layers. Many of
these investments are being made in the infrastructure layer, because this is an area where
technology is mature, sharing is possible, willingness to outsource is high and knowledge is widely
available. Also, the ongoing discussion about cloud delivery models, ranging from private to hybrid
to public, and the mix of hype and fear, uncertainty and doubt (FUD) associated with cloud
computing, are fueling interest in IUS which is perceived as more secure and reliable than public
cloud (see "The Realities of Cloud Services Downtime: What You Must Know and Do"). Most
service providers have already incorporated, or are adding, IU solutions into their portfolios. They
are often rebranding on-demand and utility offerings as hybrid cloud computing. An increasing
number of telco providers are adding computing to their network and offer integration as a service
(IaaS) IUS as an alternative for co-location or hosting (see "Magic Quadrant for Managed Hosting"
and "Magic Quadrant for Public Cloud Infrastructure as a Service"). This not only creates plenty of
choices for buyers, but also adds to the confusion; the boundaries between various IUS and cloud
solutions are not always clear. Gartner has published a market map and compass to help clients to
develop their sourcing strategies (see "Data Center Outsourcing, Hosting or Cloud? Use Gartner's
Market Map and Compass to Decide").
On top of the market complexity from an offering and provider's perspective, there are regional
differences across major markets like North America and Europe, and emerging markets like South
America and Asia/Pacific (see "Data Center Services: Regional Differences in the Move Toward the
Cloud, 2012"). The main reason why organizations should understand the seven attributes that
define IUS is to create unique value for organizations of all sizes (see "The Seven Golden Rules for
Industrialized IU Services").
From a maturity perspective, we map the advancement of IU against our Infrastructure Utility
Maturity Model (IUMM; see "Gartner Introduces the Infrastructure Utility Maturity Model" Note:
This document has been archived; some of its content may not reflect current conditions). Leading
IU providers have implemented Level 3 maturity (virtualized) and are progressively implementing
Level 4, which is all about automation and will close the gap between IU and IaaS. What's stopping
many service providers from running full speed into Level 4 is that an increased level of automation
decreases the number of touchpoints with the client, something they currently rely on for upselling
and for their relationship-improvement efforts. Before automating IU, providers must define their
service approach in great detail, and this requires time and offerings maturity (see "Infrastructure
Utility for SAP Applications: T-Systems' Dynamic Services for SAP Solutions," "Infrastructure Utility
for SAP Applications: HP ECS-Utility for SAP Offering," "Infrastructure Utility for SAP: An Analysis of
HCL Technologies' Offerings" and "Capgemini Aims at Gaining Momentum With Its infrastructure
Utility for SAP Offering").
While some IUs, such as IU4SAP, are quite mature and still see double-digit growth rates, more
complex and complete IU architectures will emerge from leading IU providers. Basic IUS (such as
virtual server, storage and network) are modular. They can be grouped and combined with
managed services, standardization and automation to support more complex client requirements
that are aligned with a specific application landscape, or with broader vertical or segment-specific
requirements. Traditional providers must continue to invest in, and further industrialize, their IT
infrastructure service delivery, embedding new approaches based on cloud computing. New
providers will progressively threaten the existing status of every insourced or outsourced solution.
From 2009 to 2011, strong competition among IU4SAP offerings brought down the price of this
industrialized service significantly, showing that, in many cases, the next step in industrialization will
be low-cost services (see "Estimated Price Points for Industrialized Low-Cost IT Services"). During
the next five years, IUS will drive consolidation, and large providers will end up winning the market
share battle growing organically or by acquisition. Overall, this is likely to cause a price battle that
will force providers to implement and deliver industrialized low-cost services that, in turn, will cause
revenue cannibalization.
User Advice: IUS are infrastructure managed services delivered by an industrialized delivery model.
All clients should:
Gain an awareness and understanding of these new offerings to leverage the value for their
enterprise.
Include IUS in the set of service options under evaluation as part of a sourcing strategy and
enterprise architecture.
Investigate critical areas, including pricing mechanisms and demand management, architectural
specifications and limits, impact on application software licenses, transition in and out, contract
terms and conditions, security, compliance, auditing and risk management.
Use the Gartner IUMM as a road map to follow the evolution of infrastructure toward the real-
time infrastructure concept. This evolution will affect most organizations, regardless of their
decision to transform and run their infrastructure internally (insourced delivery) or externally
(outsourced delivery or IU).
Organizations delivering their IT infrastructure services in-house should:
Regularly check how IU offerings are advancing in the market. Increasingly, these offerings will
become the external benchmark for price, efficiency and flexibility (see "Riding the Wave of
Industrialized Low-Cost IT Services").
Organizations considering outsourcing deals or utility offerings should:
Concentrate on pricing units and pricing schema and on the related tools for service
requests, metering, billing, and financial and service reporting to understand the maturity of
offerings. The degree of flexibility must align with client requirements and the maturity of the
offerings.
Request references from other clients using these offerings and pricing units, and exercise due
diligence in actively checking those references.
Ask the provider to carefully describe the processes, automation tools and SLAs underpinning
service delivery quality and efficiency, because a focus on unit definition and pricing alone is
insufficient to achieve the best value for the money.
Request that providers communicate their service/architecture road map to explain how their
offerings have evolved and to judge the potential for lock-in to their architecture. Ask providers
how they will move from traditional to cloud-based IUS during the next few years.
Understand how their sourcing life cycle (sourcing strategy, vendor selection, contracting and
ongoing management) will change when embracing highly standardized solutions.
Start piloting or using IUS as part of their IT value chain.

Request proof regarding statements of regulatory compliance and verification of security and
location transparency of data stores.
Verify the impact of software licensing models when moving from dedicated to shared IU-based
hosting solutions.
Business Impact: IT IU can:
Optimize the cost-efficiency and service effectiveness of IT infrastructure.
Increase flexibility in response to business requirements.
Deliver an open, predefined and automated platform for innovation.

To benefit, clients must overcome significant cultural, financial and technical issues, such as
standardization acceptance, independent software vendor pricing strategies, application portability,
virtualization and policy-driven management for heterogeneous environments. Continuing economic
uncertainty and the further rise of cloud-enabled service solutions will accelerate the evolution
toward industrialized, low-cost IT services.
Sample Vendors: Amazon; Atos; AT&T; BT Global Services; Capgemini; CSC; Dell; Fujitsu; HCL
Technologies; HP; IBM; Logica; Rackspace; Savvis; T-Systems; Unisys; Verizon
Recommended Reading: "Infrastructure Utility Services: The Business Between Outsourcing and
the Cloud"
"Infrastructure Utility for SAP: Comparing Five Leading Offerings"
"Infrastructure Utility for SAP: Comparing Contract Terms and Service Levels"
"Keiper: Adopting an Infrastructure Utility for Flexibility and Efficiency"
"Case Study: Areva Gains IT Flexibility Through an Infrastructure Utility"
"Oxea Shows How Infrastructure Utility Can Deliver Speed and Efficiency"
"Case Study: How IT Utilities Support Rio Tinto's IT Dynamics and Company Moves"
"Case Study: Nampac Adopts the IBM Infrastructure Utility for SAP Applications"
"Comparing Cloud Computing and Infrastructure Utility"
"Cloud Sourcing Deals Anatomy: From Public to Private, From Services to Technology Lock-In"
"Gartner Updates Its Definition of IT Infrastructure Utility"
Sliding Into the Trough
Analysis By: Andrew White; John Radcliffe; Bill O'Kane
Definition: Master data management (MDM) is a technology-enabled discipline in which business
and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and
accountability of the enterprise's official shared master data assets. Master data is the consistent
and uniform set of identifiers and extended attributes that describes the core entities of the
enterprise including customers, prospects, citizens, suppliers, sites, hierarchies and chart of
accounts.
Position and Adoption Speed Justification: MDM that sustains and exploits a single version of
the truth for things like customers, products, assets and services remains a long term ambition for
many organizations since it enables many business goals and objectives. It is more of a journey
than a single project and can thus take many years to achieve, even though each phase of the
program may add to the scope (from customer national to customer global, for example). Given that
MDM is a technology-enabled discipline, we have to look at both the hype and maturity of the
discipline as well as the supporting technology. The discipline side is where the greater barriers to
success reside and this explains what holds MDM back. Technology, on the other hand, is more of
a challenge than a barrier. Change management, as well as an ability to adopt information
governance, keep MDM limited to a minority of organizations capable of mastering those skills. The
technology itself is also maturing along a different timeline since there is little really new to do with
MDM from a technical side that has not been done before, perhaps for some other purpose. What is
new is that the capabilities needed to support MDM have rarely been organized to govern specific
master data.
Throughout 2012 the market for technologies supporting MDM will continue to evolve along
different dimensions:
The first generation of single domain MDM technologies, characterized by those programs
focused on a single version of customer or (separately) a single version of product, are maturing
quickly in those industries that led the formation of the MDM market (banking, financial services
and insurance for customer data; manufacturing and retail for product data, for example).
Increasingly larger organizations will implement different hubs for each domain. We call this
"multidomain" MDM.
The second generation of MDM technologies referred to as multidomain MDM are still
relatively immature since the requirements for the most complex objects across domains,
industries and organizational structures are very complex indeed. There are a small number of
these implementations but they are, for the most part, not overly complex in many dimensions.
For every one of these implementations there are 10 or more that demonstrate enough
complexity that only single domain or best-of-breed MDM offerings are better suited.
The next generation of MDM technologies, yet to fully emerge, are called multivector MDM.
These are multidomain-capable MDM offerings that can support all of the implementation styles
and any number of variations between them, all with one technology solution. Some vendors
are spending several years to "converge" several offerings; others continue to pile new
developments on single solutions. The reality is that this generation will not even fully emerge
until the second generation has become much more mature.
Business drives differ by industry and span a number of areas: growth (revenue, service),
optimization (efficiency), agility (service-oriented architecture), improved decision making (business
intelligence [BI]), risk management, compliance, and supporting merger and acquisition activity.
Organizations have multiple and differing, MDM requirements depending on their situation. MDM
scenarios vary in terms of:
Use case (design, construction, operational and analytical)
Data domain (customer, supplier, partner [party], product, item, material [thing], ledger, account
[hierarchy], asset, person and employee)
Vertical industry (financial services, government, communications, manufacturing, oil and gas,
retail)
Organizational structure (form and nature of organization that adopts the discipline)
Implementation style (consolidation, registry, centralized and coexistence, or hybrids spanning

multiple styles)
New trends in 2012 span the visionary (links to cloud, social/big data) as well as more practical (how
to make data stewardship work like it should). Despite the hype that comes and goes within any
one year, the overall level of interest in MDM continues to evolve. The ongoing hype continues to
grow, and the scope, breadth and complexity of MDM explain why this technology-enabled
discipline will take many years to reach maturity.
User Advice: Organizations with complex and/or heterogeneous application and information
landscapes will likely suffer from inconsistent master data. Sometimes the costs to use this data to
improve business outcomes becomes too high, at which point an MDM program may be more
practical. This may span any number of business applications including customer-facing, supplier-
facing, enterprisewide, or value chain. More strategically, if your business strategy is dependent on
the consistency of the data within your organization, MDM may be adopted for strategic reasons.
Type As and innovators have already started to adopt MDM in some fashion. Type Bs and fast
followers are now beginning this journey too. Companies investigating the use of MDM should:
Ensure a clear line of sight to business benefits and business sponsorship.
Identify specific solutions for the most important master data in your organizations, such as
customer, product and (potentially) financial data, paying particular attention to vertical industry
experience provided by the tools. Plan on using them for the next two to three years as the
second generation of MDM products matures.
Identify the architectural role that each implemented MDM solution will play in your enterprise
information management approach, relative to the information architecture.
Leverage previous experiences in dimensional data development for BI initiatives to identify the
most fragmented but reused data domains in the organization. Begin your MDM efforts with
those domains.
Business Impact: Leading organizations that create an MDM strategy (to implement MDM and its
supporting technology) that is well thought out, holistic and business-driven, will be able to deliver
significant business value in terms of enabling competitive differentiation and business growth,
improved customer services, reduced time to market and delivering on operational efficiency as well
as meeting governance, risk management and compliance requirements.
Sample Vendors: IBM; Informatica; Kalido; Oracle; Orchestra Networks; Riversand Technologies;
SAP; Software AG; Teradata; Tibco Software
Recommended Reading: "Mastering Master Data Management"
"Toolkit: Program Manager's Guide to MDM"
"Research Library for the Seven Building Blocks of MDM"
"Roundup of Master Data Management and Related Research, 4Q11"
"Forecast: Master Data Management, Worldwide, 2010-2015"
ERP-Specific Cloud Add-Ons
Definition: As their name suggests, ERP-specific cloud add-ons are cloud-based applications that
augment (extend, replace components or add value to) the core functionality resident in a particular
ERP suite by being preintegrated with on-premises or cloud-based ERP suites.
Position and Adoption Speed Justification: ERP-specific cloud add-ons emerged as the result of
advances in application development enablers, including Web services, cloud infrastructure and
software as a service (SaaS) licensing models, plus the changing business pressures associated
with accelerated business growth, competitive pressures and tightening IT budgets.
Cloud add-ons focused on ERP provide greater business flexibility, broaden existing applications,
deepen existing functionality and provide increased information visibility or control for established
business areas, while keeping the core ERP applications intact. They cover a broad range of
functional areas from industry-specific functionality to social capabilities. They can also be specific
mobile or simplified rich user interfaces for existing functionality. A key aspect of ERP-specific cloud
add-ons is rapid deployment, a subscription-based licensing model and packaged connectivity to
existing ERP functions. Some ERP-specific cloud add-ons do not require centralized provisioning
coordination in the enterprise, and are user-downloadable from vendors' app stores (marketplaces).
However, many such as SAP's Sales OnDemand or Oracle's Fusion Apps, Concur, Taleo or
RightNow Technologies are comprehensive solutions in their own right and incorporate complex
functionality that requires some configuration and integration. Although potentially downloadable,
they are not provisioned by individual users.
Vendors of ERP-specific cloud add-ons understand that they must offer an expected ease of use,
rapid implementation and innovation, while creating a compelling reason for customers to buy their
on-demand applications. Additional modules/products must be competitive with best-of-breed
solutions, while delivering coherence or the ability to act like a logical extension of the broader ERP
suite.
ERP-specific cloud add-ons are changing the way companies and vendors consider adding
capabilities to the ERP suite, as part of the overall devolution of monolithic ERP solutions. Because
most are "bite-size" (i.e., they don't require extensive implementation projects, prohibitive ongoing
support or challenging upfront licensing costs), companies are able to absorb them under current IT
budget restrictions. In many cases, these applications can be licensed independently of the IT
department; providing line of business (LOB) managers with more control of the breadth of
functionality adopted. There are pros and cons to this change in provisioning. Previously, LOBs
relied on IT to deliver new functionality based on budgets and formal rollout plans. Cloud add-ons
can be obtained without overt referral to IT, sometimes bypassing the IT department altogether.
Companies seek to manage provisioning through managed app stores.
There are not many ERP-specific cloud add-ons created and provided by ERP vendors. In addition,
many of those released have yet to find significant uptake. Best-of-breed, vendor-developed, ERP-
specific cloud add-ons are finding much stronger uptake and are now established in the market. To
date, few applications have been released that fit the criteria of being LOB-provisioned without
oversight from IT. ERP-specific cloud add-ons will continue to grow in number and impact as more-
concise, modular and digestible system approaches become part of the overall devolution of
monolithic ERP systems. Vendors offering solutions include:
SAP's OnDemand solutions built on its Business ByDesign platform, with solutions that
include Sales OnDemand, Career OnDemand and Travel OnDemand.
Oracle is selling some modules of Oracle Fusion Applications, such as talent management,
incentive compensation and distributed order orchestration, to augment on-premises
implementations of other Oracle ERP suites, although some require extensive implementation
and integration services.
In March 2012, Infor released Inforce Everywhere, its customer information solution, which is
powered by Force.com through its relationship with salesforce.com.
In June 2012, UNIT4 released a range of cloud-based, packaged analytic applications that are
preintegrated with its Agresso and Coda Financials applications.
NetSuite's augmentation applications on Google Apps Marketplace are examples of ERP-

specific, cloud add-on applications.
Concur has an integrated travel and expense solution.
Taleo (Talent Management) and RightNow (Customer Service), are now part of Oracle's ERP-
specific, cloud add-on/augmentation solutions.
User Advice:
Pace layering your application portfolio and process models, then matching the resulting
segmentation with cloud add-on offerings from vendors, will expose which applications will
enhance business innovation and/or competitive differentiation. Approach these first, and
measure the before-and-after, business-level key performance indicators (KPIs) for business
improvements. Savings or benefits will then fund other add-on/augmentation projects.
Beware hidden costs, such as those resulting from integration with other systems or because
you are running on a customized or older version of the ERP system that the apps may not
support.
Augmentation apps can expose or accentuate errors. Before launching ERP-specific

augmentation applications, companies should resolve master data issues through a formal
master data management (MDM) program.
All ERP vendors require customers to be under a support contract to adopt ERP-specific
augmentation applications. Most augmentation apps also only run against the latest versions of
the incumbent ERP suite. Ensure that you check applicability before expending energy on
evaluation.
Business Impact: Because ERP-specific cloud add-ons applications can target any area of the
business, these applications can be far-reaching and highly impactful, while capable of being
applied within manageable budgetary constraints.
Maturity: Emerging
Sample Vendors: Concur; Infor; Oracle; RightNow; SAP; Taleo
Recommended Reading: "Oracle Fusion Applications: A Mystery Resolved"
"Price, Integration and Reliability Will Decide Sales OnDemand's Success"
"SAP ERP Human Capital Management Product Update, 2012"
"SAP Financials Users Must Understand the Impact of SAP Product Road Maps"
Embedded Analytics
Definition: Embedded analytics is the use of reporting and analytic capabilities in transactional
business applications. These capabilities can reside outside the application, reusing the analytic
infrastructure built by many enterprises, but must be easily accessible from inside the application,
without forcing users to switch between systems. The integration of a business intelligence (BI)
platform with the application architecture will enable users to choose where in the business process
the analytics should be embedded.
Position and Adoption Speed Justification: Investment in embedded analytics by business
application vendors continues to increase. New releases of applications continue to add more
embedded analytics for example, Oracle has coupled new analytics applications with release
12.1 of E-Business Suite, and its Fusion Applications have the Essbase multidimensional database
embedded as part of the application stack. SAP is driving its in-memory analytics offering Hana (see
"Magic Quadrant for Business Intelligence Platforms" and "SAP Throws Down the Next-Generation
Architecture Gauntlet With HANA").
Although business application vendors continue to deliver more embedded analytics with their
applications, adoption and usage are only slowly increasing. This is because the adoption of
embedded analytics depends on users upgrading to the latest versions of business applications
and implementing new analytic capabilities, which will take time to penetrate the majority of the
installed base for most applications. Also, the delivery of analytics embedded in business processes
is complex and will require more flexible architectures, such as model-driven ERP and in memory-
based ERP, and these are in the early stages of adoption (see "IT Market Clock for ERP Platform
Technology, 2011"). Nevertheless, Gartner thinks that by 2015 at least 25% of analytic capabilities
implemented will be embedded in business applications, up from fewer than 5% (see "Embedded
Analytics Will Impact Business Application and BI Strategy," "A Business Analytics Framework for
Finance Business and Decision Processes" and "Emerging Information Use Cases Challenge
Traditional Information Environments").
User Advice: Users of business applications have been frustrated for years by the lack of powerful
reporting and analytic capabilities delivered out of the box with these applications. This gap has
been filled, in many cases, by vendors of BI platforms, or by specialist vendors of analytic
application point solutions attached to transactional business applications. Business application
vendors have reacted to this trend by developing their own embedded analytics offered as extra-
cost add-ons, or included in specific releases of their business applications. The goal is to either
win back lost license revenue, or to show value in upgrading their business applications.
Gartner has identified three distinct types of embedded analytic applications (see "Embedded
Analytics Will Impact Business Application and BI Strategy"):
Embedded at the point of inquiry (incidental to process): These are generic analytics not
specific to any business process. They require a user to initiate an analytic activity and to
decide what, if any, action needs to be taken. The analytic activity is not part of a specific
business process; it is typically an ad hoc or time-driven activity (for example, a sales manager
might review key customer information on a daily basis). Embedding is simple, for example,
when it is presented through a portal. For instance, a salesperson views customer master data
from a CRM system and payment history from a finance system in one inquiry view. Role-based
portals are a common way of delivering this type of embedded analytic capability. Deeper
integration delivers context-sensitive data; i.e., the salesperson does not have to key in the
customer he or she is serving, but the portal automatically displays the payment history of the
customer in the CRM part of the view.
Embedded at the point of decision (human intervention in process): These analytics are
specific to a business process, and the context is derived from a specific decision point in the
process. Human intervention is still required to interpret and trigger the appropriate action. For
example, a user is processing a sales order, and analytics provided within the context of the
transaction processing screen show the customer's payment history and other derived data.
The user can decide to place the order on hold (for example, if the customer has a large amount
of previously unpaid orders), or to fulfill the order if there are no issues. In the past, business
application vendors built process-specific inquiries to address this need, but now they are
increasingly embedding analytic capabilities from their own (or third-party) BI platforms. These
solutions give a much richer analytic experience, and offer greater flexibility than fixed inquiries
programmed in the application development language. Many ERP vendors have incorporated
data visualizations and dashboards into a number of transactional screens, often in a context-
specific way, to graphically display trends over time, revenue distribution and any other data
along with the business object that the user currently processes. These dashboards sometimes
allow users to drill down to see more details.
Embedded in the process (automated processing): These analytics are specific to a decision
point within the process. The analytics are embedded in the process execution application, and
the system automatically recommends the next best action so that minimal user input is
required to make the optimal decision. For example, an organization's sales process requires
deals to be reviewed by a specialist team, but at year end they are overloaded with deals to
review. An automated system identifies the deals that are most likely to be noncompliant, and
flags these for priority review by the team, along with a summary of which aspects of the deal
should be reviewed. Ultimately, these analytics will have the ability to optimize the decision
automatically based on organizational goals, and will not require human intervention.
The major ERP vendors have purchased large analytics software toolsets, and are incorporating
some of this functionality in the core of their ERP designs. However, embedded analytics will not
entirely replace the analytics infrastructure built by enterprises. Rather, by making this infrastructure
easily accessible from inside the applications, the value of the investments will increase
significantly. Users will see more specific embedded analytics in business applications; and, in the
long term, the integration of a BI platform with the application architecture will enable users to
choose more dynamically where in the business process the analytics need to be embedded.
Technically, embedded analytics will require the presence of an analytics artifacts layer, which
defines services, data access mechanisms, visualization components and content (such as
predefined key performance indicators [KPIs]) throughout the application. It also requires a
fundamental rearchitecting of the solution to make full use of this analytics layer, which is typically
done using service-oriented architecture (SOA). This will enable business users to adapt the
analysis to their specific needs. Some vendors deliver predefined KPIs to enable easier definition
and adoption; they are often industry-specific.
Users need to build a heat map to identify the functional areas in business applications where the
different types of embedded analytics provide the most value. They need to plan for increased
adoption of embedded analytics, and build these into their application life cycle management.
Identify which key business application vendors will deliver embedded analytics, and how and when
they will be delivered (i.e., as add-on modules, or as part of an upgrade). Do an annual review with
the BI competency center of the vendor's product road map, plus a funded project road map, to
understand where new opportunities for embedded analytics arise.
Prepare for increased pressure from megavendors (particularly SAP, Oracle and Microsoft) to buy
more of their stack. Although there will be value in what they offer, do not assume they will meet all
your analytic requirements. Continue to evaluate other vendors against the megavendors, especially
for corporate-level analytics interfacing with embedded analytics applications. The enhancement of
transactional applications by embedded analytics means most organizations will need to manage a
multivendor analytic environment, so creating a shared governance model in which key business
application users from the business application competency center work with the BI competency
center will be key.
Embedded analytics must be included as a complementary part of a BI, analytics and performance
management strategy. IT staff and business users need to receive training to identify relevant
scenarios and processes, and to leverage the additional capabilities.
Business Impact: Embedded analytics support faster and better decision making by putting
analytics relevant to the business process directly in the hands of the user. This enables more
effective business process execution. Offering embedded analytics makes ERP systems (and other
business applications) more usable and actionable to more types of users, and can increase the
ROI in these applications. While adopting embedded analytics may require additional spending for
upgrades and new modules, in most cases, this will be less than the opportunity costs of not
embracing embedded analytics, especially when used as part of a wider user-centric ERP strategy.
Sample Vendors: Epicor; IFS; Lawson; Microsoft; Oracle; SAP
Recommended Reading: "SAP Launches BusinessObjects 4.0"
"SAP Hana 1.0 Could Help Enterprises Realize Promise of In-Memory Technology"
"Embedded Analytics Will Impact Business Application and BI Strategy"
Templated Implementation Methodologies
Analysis By: Denise Ganly
Definition: ERP implementations are notoriously difficult, and organizations continue to seek ways
to minimize the difficulties and risks involved, to streamline their ERP implementations to drive
better results, and to lessen the time required to achieve the promised benefits. Templated
implementation methodologies provide frameworks, such as quality management, process and
business best-practice frameworks in a templated form to speed implementation and bolster
success.
Position and Adoption Speed Justification: The large ERP vendors have created their own
methodology frameworks and related industry templates to optimize the implementation of their
software. For example, SAP's implementation framework is AcceleratedSAP (ASAP), Oracle has
Application Implementation Methodology (AIM) for its applications and Microsoft has Sure Step for
Dynamics AX implementations. Implementation frameworks build on proper program and project
management best practices, but adapt these to the specifics of the respective packaged
application. They aim to draw out the inherent best practices of the software solution, as well as
provide guidelines for employing key milestones in solution implementations.
System integrators (SIs) have also developed configuration templates, tools and methods
incorporating industry-based, best-practice processes for ERP implementations. The use of
repeatable methods, quality management frameworks and related enterprise application
blueprinting has evolved significantly, during the past decade, as SIs have tried to speed up
package implementations, while reducing risk and cutting implementation costs, so they can reduce
financial implementation risks and improve competitiveness. Many SIs base their templates on
vendor frameworks and enhance them based on real-life implementation experiences. For example,
government, retail, and oil and gas have specialized industry templates that reflect quite different
best-practice processes, as well as the varying complexity of different industries.
User Advice: Organizations should consider whether there is a best-practice framework for the
implementation of the proposed ERP available from the vendor or from the prospective SI. If there is
such a framework suitable for the implementation, then organizations should investigate whether
the template is applicable to their industry and organizational needs, and validate the vendor's
and/or the SI's referenced experience in implementations using the proposed template.
When evaluating candidate service providers, exclude those that do not have well-documented
methods and generic best-practice processing templates, as well as a track record of using them
successfully in clients' scenarios that are similar to your business requirements. With respect to
program and project management capabilities, mature service providers should have well-
established quality management frameworks that include using mature statements of work, well-
defined deliverables, roles and responsibilities, and change, risk and issue management processes.
Typically, organizations can expect SIs to have industry-specific configuration templates, tools and
methods with a range of predefined industry-based best-practice processes that can be tailored to
the enterprise. The more experienced the SI is, the more sophisticated its templates are expected to
be (including use cases and test cases), and the more skilled resources, adapted processes and
tools it will have to simplify and further shorten the implementation. Overall, these should be
incorporated into a mature knowledge management system that the service provider treats as an
evergreen capital investment. Require your service provider to guarantee an implementation team
that is experienced in the use of its methods and templated toolsets; otherwise, you will experience
typically problematic project implementations.
Finally, it is critical for users to understand that a vendor's implementation template is not a solution
targeted at solving your enterprisewide business application complexities or issues. Even if ERP is a
major part of your application landscape, master data (as an example) might be authored before
ERP or during ERP, and very often used after ERP. Although these templates may help you ensure
the consistency and integrity of data in ERP, they really don't do anything for the rest of the
enterprise or, more importantly, for the dependencies between ERP and the rest of the enterprise.
Don't let the vendors off the hook; push them to develop their templates to be more
accommodating of the dependencies and interdependencies between the applications in question
and other applications in your portfolio.
Business Impact: The use of templated implementation methodologies can speed implementation
times and instill best-practice processes in the organization through the use of proven frameworks
and templates. This is likely to reduce risks through the use of proven, repeatable methods from the
respective service providers, particularly for industries with complex processing nuances. Overall,
the use of such best practices can result in more cost-effective and reliable implementations, which
will enable business processes to be streamlined and enterprises to bring new offerings to market
more quickly.
Sample Vendors: Accenture; Atos; Capgemini; CSC; Fujitsu; HCL Infosystems; IBM; Infosys;
Microsoft; Oracle; PwC; SAP; TCS
Recommended Reading: "Package Implementation Using SIs: Critical Success Factors for
Program and Project Management Capabilities"
"Q&A: What Are Your Options for Evaluating and Selecting System Integrators to Implement
Application Packages?"
"Frameworks and Standards to Consider When Evaluating Providers' Delivery Methods"
"Q&A: How Much Project Management Methodology Is Too Much?"
"Understand How Methodologies Evolve Into Standards to Achieve Service Excellence"
"How to Choose SIs for ERP/Business Application Initiatives"
Analysis By: Nikos Drakos
Definition: Social software suites encompass a broad set of capabilities such as user profiles,
groups, content authoring and sharing, discussions, wikis, blogs, microblogs, activity streams,
social tags, social bookmarks, content rating and social analytics. Social software suites facilitate,
capture and organize free and open interactions among individual users.
Position and Adoption Speed Justification: Because of the popularity of related consumer social
software and the "socialization" of the Web, the awareness of socializing technology is high. Within
businesses, there is growing evidence of production deployments as well as increased vendor
activity. We see pent-up demand from workers who use consumer products for work activities and
enthusiasm from business managers who expect these tools to help them boost the performance of
their workers. However, we also see some apprehension from those responsible for security,
compliance, enterprise architecture and risk management in general.
On the supply side, options available for business use are maturing rapidly as new vendors
establish themselves in the market, and as every enterprise vendor delivers a social software suite.
The movement from point tools to integrated suites has brought relief, as well as high expectations.
We still see many organizations paying too little attention to the work that needs to be done
beyond technology deployment to achieve the expected business results.
Some products focus more on internal users, with an emphasis on integration with existing
infrastructure, business applications and other enterprise requirements (such as auditability and
compliance). Others place more emphasis on extranets, with support for secure information transfer
between organizations. Some target closed or open external customers or user communities, with
good support for large-scale deployments, consumer engagement and management of untrusted
content (such as moderation and spam filtering). Some vendors provide a technology platform,
while others provide a full-service approach, including strategy, implementation, administration and
content moderation services.
User Advice: Early implementations should focus on the usability of the technology and on "low-
hanging fruit" in terms of business value and relevance. In later stages, the focus should shift to
dealing with volume (for example, in terms of information handling or participant interactions), on
spreading awareness of what has worked and what has not, and on linking the social interactions
and social context captured in social software suites with relevant business activities. IT managers
should resist user demands to simply install social software tools without thinking through how
they'll be used. Given the broad range of use cases and activities that can be supported by social
software suites, prioritize them with respect to business value when it comes to deployment.
Many early deployments have failed, been ignored or slowly withered, because they lacked a clearly
defined and appropriate purpose. Deployments should incorporate several elements, including ease
of use, identification of the right context, exposure of connections, appeals to self-interest and the
achievement of management recognition. Before investing in social software suites, IT and business
managers should understand where this will fit in the context of existing workplace applications and
practices: for example, in creating documentation, classifying information, improving search
relevancy, exploring ideas, or making decisions.
Business Impact: Social software adds persistence to otherwise transient informal interactions
among participants. Valuable information is created, shared and refined through self-selection,
social incentives and decentralized control, rather than by top-down resource allocation and
mandates. We expect social software to be relevant in connecting individuals to communities of
interest and practice, as well as stimulating multidisciplinary collaboration that involves
communication, exploration, innovation, creativity, discovery, knowledge capture and training.
The benefits are likely to come from behavioral changes (for example, information sharing,
discovery and capturing informal ideas). Thus, success depends on an outcome-oriented change
management program. Evidence of successful social software deployments is growing, but not yet
widespread. The risk of organizational culture clashes, privacy issues and questions about worker
productivity and content quality highlight the need for caution.
Sample Vendors: Acquia; Atlassian; Cisco; EPiServer; IBM; Igloo Software; Jive; Microsoft;
Microsoft (Yammer); MindTouch; Moxie Software; NewsGator; Novell; OpenRoad (ThoughtFarmer);
OpenText; Qontext; salesforce.com; Saba; Socialtext; SuccessFactors; Telligent; Tibco Software;
Traction Software; TWiki; VMware; VMware (Socialcast); XWiki
Recommended Reading: "Magic Quadrant for Social Software in the Workplace"
"Maturity Model for Enterprise Collaboration and Social Software"
Contract Life Cycle Management
Definition: Contract life cycle management (CLM) is a solution and process for managing the life
cycle of contracts created and/or administered by or impacting the company. These include third-
party contracts, such as outsourcing, procurement, sales, nondisclosure, intellectual property,
leasing, facilities management and other licensing, and agreements containing contractual
obligations now and in the future.
Position and Adoption Speed Justification: CLM spans all processes, from initial request through
to contract discovery, authoring, redlining/negotiations, approval, execution, order tracking/
matching, compliance/obligation management, amendments, dispute management, auditing,
reporting/fine-tuning and archiving. CLM usually encompasses repository and clause library
construction and management, integration with other systems, and the organizational structures
required to enable optimal contract management. Capabilities can include a searchable document
repository for contracts, authoring support and approval workflows, a clause library (terms and
conditions), negotiation workflow and versioning, contract change management, obligation/
compliance/execution management, configurable monitors and alerts, e-signature support, and risk
and penalty (liability) management through disposal management and reporting.
CLM has emerged slowly as a packaged solution market. Many organizations see contract
management as an administrative function, often confining it to operational levels, such as the legal
department. Companies poorly fund investment in systems to coordinate and automate contract life
cycle processes, and often maintain only spreadsheet-based records. In more advanced cases,
companies utilize document management tools as the means to manage contract versioning during
negotiations, and for reference by ERP and other enterprise systems. Only now, as economic
challenges make a greater impact, are companies recognizing the importance of a formal CLM
solution to enable them to leverage every contract term, reducing the risk of exposure to poorly
written or constricting terms on the sell side, and maximizing the value derived from the inclusion
and revision of contract clauses on the buy side. CLM is seen as something of an insurance policy
the ability to minimize future risk, or as an extension of content management and business
intelligence (BI). It is rare for companies to recognize its extended value as a profit maximizer.
CLM solutions are moving out of the Trough of Disillusionment, and adoption rates are increasing as
more companies recognize the importance of contracts and seek enhanced functionality, such as
redlining, e-signature, automatic order price verification and sales contract fulfillment monitoring, to
enhance their abilities. Yet, the pace of progress toward the Slope of Enlightenment remains slow,
because CLM often is led from an operational/departmental level, with limited budgetary or
executive support. As long as contract processes pass auditor scrutiny, chief executive levels rarely
recognize CLM's value that is, until something goes wrong, and the company is exposed to
corporate risk or committed revenue. Then the ramifications easily reach C-level executives or the
board of directors. Effective CLM means preventing issues from reaching this point; in a way,
successful contract management keeps CLM invisible as an enterprise-level solution requirement.
As with many areas requiring attention in a business, the power of hindsight often drives
investment.
CLM's lack of visibility as a line item on IT budgets is exacerbated by the plethora of diverse
solution approaches available in the market and their abilities. The quality and maturity of
functionality delivered varies widely. CLM solutions can be delivered as add-ons to document
management systems, elements of broader procurement and ERP suites, add-ons to CRM
solutions and stand-alone tools.
The absence of a downward executive push has resulted in a self-perpetuating market of vendors
selling at the departmental level, rather than presenting a value proposition to alert executive
management to the importance of CLM. Until this bottom-up sales model is broken, CLM will not
reach its full potential. What could accelerate its adoption is the global economic situation. While
the worldwide economy remains challenging, companies are increasing their focus on costs, and on
extracting the most value from every contract, tightening contract terms, enforcing stricter SLAs
and squeezing supply networks. The requirement for precise contractual visibility will arise in board
meetings, and will ultimately drive movement in the CLM market. Large ERP vendors are
recognizing this issue, and are extending the functionality of their portfolios. This will eventually
consolidate the market, and will raise CLM's profile in the IT budget. Another market driver is the
burgeoning presence of cloud-enabled outsourced business services, similar to how human capital
management (HCM) is evolving.
User Advice: Prioritize financial viability when selecting and/or renewing contracts with specialty
CLM vendors. The large number of vendors and slow pace of CLM acceptance have negatively
impacted the market, putting pressure on licensing prices and financially stressing vendors.
Consider investing in a formal CLM solution when manual methods of requesting, reviewing,
approving and managing contracts are insufficient, or when they create too much overhead or risk.
If you are unsure whether you have contractual risk, you're likely to need a CLM system.
Before seeking external solutions, conduct an inventory of the enterprise systems to identify
whether they contain the core components required, and if the vendor can provide add-on
functionality. Unlike many solution areas aligned with ERP, stand-alone (so-called best-of-breed)
solutions can provide tangible returns over using large suites, so do not rule those solutions out in
your search for CLM maturity.
Business Impact:
The risks associated with poor contract management include overlooked penalties, lost revenue
through ineffectual terms, a damaged brand due to poorly constructed or missed terms, lost
savings and opportunities through poor administration and lost contracts, unexpected renewals and
expirations, and hidden clauses that leave the company open to liabilities and other disadvantages.
The benefits of mature CLM processes include increased governance and control over what is
signed, when and by whom, and the resulting ramifications of contract inclusions. Other benefits
are the ability to recognize changing supply network contract trends, and to maximize revenue from
the buy-side negotiations that result, as well as legal risk mitigation, and the ability to enforce
contract compliance and streamline contractual processes.
Sample Vendors: Apttus; Ariba; CLM Matrix; CobbleStone Systems; Dolphin Software; Ecteon;
Emptoris; Novatus; Oracle; Prodagio Software; SAP; Upside Software
Recommended Reading: "Enterprise Contract Management Solutions Vendor Guide, 2010"
"Exploiting a Single Contract Life cycle Management Solution Across the Enterprise"
Climbing the Slope
Definition: Two-tier ERP is the use of different ERP systems at different layers of the organization.
One system serves as the global backbone (the hub), often for such processes as financials, HR
and procurement, which can be harmonized across all divisions. In addition to a global backbone,
other ERP solutions support geographical or divisional needs (spokes), such as smaller operations,
for example, sales, field service and local manufacturing.
Position and Adoption Speed Justification: Two-tier ERP approaches should not be confused
with best-of-breed approaches. The main difference is that best-of-breed approaches combine
modules from various vendors in an overall solution, whereas two-tier ERP is the combination of full
ERP suites, possibly from different vendors, at the hub and spokes.
Companies consciously adopt a two-tier ERP strategy to benefit from the fast implementation of
appropriately specialized solutions at a lower total cost of ownership (TCO) for smaller operations.
Leading vendors are beginning to package offerings to support the formal strategy, which will
accelerate adoption among potential candidates. However, these solutions are slow to emerge.
Although the need for ERP consolidation is discernible, a clear vendor pipeline for two-tier ERP is
harder to define, because it often is the result of seeking consolidation. A desire for a two-tier
strategy may not be the starting point. Time to plateau is extended as companies begin to realize
that, although a strategic approach to two-tier is most beneficial, it requires focus and effort beyond
their expectations or authority.
In the past year, vendors have begun to corporately formalize their offerings. But most have failed to
develop the necessary tools to assist customers through the business change. Customers are still
dealt with on a one-to-one basis, with a heavy bias on consulting services. Even vendors that have
significantly moved their deliverables to assist clients still have to create a consistent field
operations approach. This reality has not altered since the last Hype Cycle. Although recognition of
two-tier ERP as a valid, tangible ERP approach is crystallizing and interest continues to grow,
uptake remains slower than expected, mainly because customers are having to navigate the issue
with little discernable, repeatable assistance.
Movement also has been slowed by concerns about the impact of not using a single instance or
system to effectively manage governance. For example, in end-to-end analytics, it is a more
accepted practice that one instance enables stronger visibility across the whole organization.
Examples include the visibility of inventory to more effectively identify and plan demand for and
allocate raw materials, or the ability to operate a shared service-based procurement model. What
prevents effective information sharing/control in a two-tier scenario is rarely the software. More
often, it is data inconsistencies, poor processes or organizational misalignment.
One advancement since the last Hype Cycle is the emergence of pace layering to identify areas
where ERP differentiates, or is overfunded/underfunded, with the aim of ascertaining the best
deployment approach.
User Advice: Where possible, organizations using a two-tier ERP strategy should mandate the
second-tier solution options. The benefits of restricting the number of alternative solutions include
better prices through higher volumes, a more standardized process and workflow approach with
rollout patterns that make implementations at additional sites easier, and a stronger relationship
with the second-tier vendor, if different from the core system vendor. A two-tier ERP strategy helps
focus skills on a smaller number of systems, which decreases costs, makes support and upgrades
easier, and can create tighter integration with the core global ERP system. It also increases
negotiation strength with vendors. In all instances, a concise governance policy should ensure that
all systems are selected, configured and used accordingly. The policy should define when deviation
from the global backbone is acceptable or, more importantly, when the global template must
persist.
To find increasing benefits, shared services should be sought wherever possible, either among the
businesses using the second tier or, consolidating to a global, shared-service model for functional
areas such as HR, payroll, procurement and financials.
Concise master data management is paramount to any successful two-tier deployment. Product
master data should be managed in the backbone system, as should created-once definitions.
Customer data often is created and maintained in local subsidiaries, but is cross-referenced to and
consolidated in a central repository to ensure consistency.
A cross-business change management project team should be formed at the outset of the strategy
to ensure conformity to governance rules, and to inhibit unnecessary localization. This team also
acts as a proponent of the approach to the business units before, during and after rollout.
When considering a two-tier strategy, ask prospective vendors how their solutions integrate with the
organization's first-tier backbone environment, and what deliverables such as modified
implementation methodologies, integration templates, process best practices, etc. are available.
Lack of these deliverables suggests the vendor's strategy and experience are immature. (Most
vendors are immature.) Also, do not assume that because there is a corporate story to tell field
operations (e.g., partners) will understand or conform to the story. Ask for references to confirm that
the vendor and/or partners have experience in this area.
Business Impact: A governed, two-tier ERP strategy can provide significant business benefits
through process standardization, better support of divisional needs, and improvements in data
quality and reporting from smaller business units, while lowering the operational costs of the
combined systems.
Sample Vendors: Cincom Systems; Deltek; Epicor; Exact; Fujitsu; IFS; Infor; Microsoft Dynamics;
NetSuite; Oracle; Plex Systems; QAD; Sage; SAP; Syspro; Unit4
Recommended Reading: "A Two-Tier ERP Suite Strategy: Is It Right for You?"
"Two-Tier ERP Suite Strategy: Considering Your Options"
"Applying Pace Layering to ERP Strategy"
"ERP Consolidation: Convincing Others Requires 'the Art of War'"
Idea Management
Analysis By: Carol Rozwell
Definition: Idea management is a structured process of generating, capturing, discussing,
improving, organizing, evaluating and prioritizing valuable insight or alternative thinking that would
otherwise not have emerged through normal processes. Idea management tools are typically used
for focused innovation campaigns or events, but most also enable continuous idea generation.
Position and Adoption Speed Justification: Idea management tools provide: support for
communities (in originating and fleshing out promising ideas); administrative support (for capturing
ideas and enabling innovation leaders to organize and track ideas); and analytical support (for
aggregating, refining, scoring, voting, prioritizing and measuring) for the leaders and participants of
innovation or ideation programs. These tools offer a wide array of approaches to idea management,
such as running innovation events or campaigns, crowdsourcing initiatives (also known as idea
marketplaces) and creating prediction markets. Most tools enable participation by internal and
external participants and support multiple administrators. Vendors offer owned, hosted and
software as a service (SaaS) versions of their tools and often implementation support and
consulting services.
Companies in a wide variety of industries use idea management as a way to bolster innovation that
drives sales of existing products, creates new opportunities to increase revenue, or radically
changes process or cost structure. Industries that emphasize new product development were the
earliest adopters of idea management tools. In addition to tools from vendors specifically designed
to support innovation management, collaboration platform vendors provide ideation modules for
their offerings. The growth in vendors and success stories for idea management drives interest in
innovation and confidence in engaging employees, customers and others in idea generation and
evaluation. The market landscape is studded with vendors that offer a common set of functions and
features. The Web seems tailor-made to enable idea management marketplaces across enterprise
ecosystems, and continually provides access to new sources of ideas and innovations.
User Advice: Organizations generally establish innovation programs with a great fanfare, succeed
at generating ample ideas, and then have difficulty sustaining the momentum through
implementation. Leaders of innovation initiatives should address the organizational and cultural
issues of innovation management. They should also identify the scope, participants and processes
envisioned for idea generation programs before attempting to select an idea management tool.
Teams that plan to use idea management tools as a front end to new product or service
development should also ensure that these tools can be integrated with community, product life
cycle and project management tools. Additionally, they should ensure integration with directory
services and other technical and functional features of collaboration.
With the growth and rapid evolution of idea management approaches and technology, buyers
should evaluate whether these tools should be internally owned and managed, or whether hosted or
SaaS versions are viable options.
Buyers of idea management tools should remember that buying a tool does not on its own lead to a
culture of innovation.
Business Impact: Idea management tools were initially used to facilitate an online "suggestion box"
(adding the advanced synergy, features and functions made possible by the Web), plus events or
campaigns implemented under the auspices of innovation programs. Today, these tools are used in
broad organizational programs that include internal and external users; full enterprises or individual
departments; and organizations looking for product, process or service innovation.
Idea management tools can also enable organizations to segregate sources of ideas (such as
employee versus customer ideas); separate types of ideas (such as product versus process ideas);
and even aggregate multiple ideas into one. The proper handling of ideas is one of the most critical
aspects of successful innovation programs; users have a large number of choices and therefore
need to plan and execute well. Idea management tools also facilitate the process of publicizing
campaigns and events (so they get a wide range of participants and input), evaluating and building
on the ideas submitted, acknowledging the submissions and archiving valuable information.
Sample Vendors: BrainBank; Brightidea; CorasWorks; Hype; Idea Champions; Imaginatik; Induct;
InnoCentive; Inova Software; Jive Software; Kindling; MindMatters; NewsGator; Qmarkets;
salesforce.com; Sopheon; Spigit
Recommended Reading: "Revisiting Three Business Approaches to Radical Innovation"
"CEO Survey 2012: CEOs' Views on Innovation Management"
"Who's Who In Innovation Management Technology"
Entering the Plateau
Analysis By: James Richardson
Definition: Business intelligence (BI) platforms enable enterprises to build BI applications by
providing capabilities in three categories: analysis, such as online analytical processing (OLAP);
information delivery, such as reports and dashboards; and platform integration, such as BI
metadata management and a development environment.
Position and Adoption Speed Justification: BI platforms are widely used by enterprises to build
custom analytical applications and to service information delivery requests. The BI platform market
is well defined with many established vendors. The most commonly used BI platform capabilities
such as reports, ad hoc queries and OLAP are mature, and there is less and less significant
differentiation between the vendors' core offerings. However, the market is still dynamic because
technologies such as in-memory analytics, interactive visualization and mobility are having an effect
on how BI platforms are deployed, used and bought. In addition, as organizations climb the BI
maturity curve, they are beginning to use the less widely deployed, but arguably more valuable, BI
platform capabilities, such as predictive modelling and data mining. In revenue share terms, the BI
platforms market is dominated by the megavendors and many organizations are currently deploying
or planning to deploy the last major releases of their platforms (Oracle BI 11g, IBM Cognos 10, SAP
Business Objects 4.0 and Microsoft SQL Server 2012).
User Advice: Organizations should deploy BI platforms to describe the dimensions and measures
that run the business, using reporting and flexible querying to meet the majority of users'
information delivery needs, while applying the more sophisticated analysis capabilities for the few in
the user community that need them. BI platforms are a "build" technology, so successful usage
and, therefore, ROI, depends on the skills of the IT departments and service providers in
understanding users' requirements and implementing a solution that meets them. Organizations
need to be careful that their use of a BI platform does not lead to the over-centralization that either
misses out on requirements by having too broad a view, or becomes too unwieldy to respond fast
enough to business changes and instantiate them in their BI platform definitions.
Business Impact: BI platforms enable users, typically managers and analysts, to learn about and
understand their business. Increasingly though, BI platforms are being used more pervasively by a
wider community inside and outside organizations. When used to their fullest, BI platforms can have
a dramatic effect on the business by changing the focus from primarily reporting to process
optimization and strategic alignment.
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: IBM (Cognos); Information Builders; Microsoft; MicroStrategy; Oracle; SAP
BusinessObjects; SAS
Recommended Reading: "Magic Quadrant for Business Intelligence Platforms"
Appendixes
Figure 3. Hype Cycle for ERP, 2011
Technology
Trigger
Peak of
Inflated
Expectations
Trough of
Disillusionment
Slope of Enlightenment
Plateau of
Productivity
time
expectations
Years to mainstream adoption:
obsolete
before plateau
As of July 2011
Pace Layering and ERP
User-Centric ERP Suites
ERP-Specific Cloud Augmentation Applications
ERP Mobility
Process Templates
Cloud ERP for Small and Mid-sized Businesses
(PaaS)
"Big Data" and Extreme Information
Processing and Management
Embedded Analytics
Templated Implementation Tools
Single-Instance ERP Backbone
Controller-Free Gesture-Driven
Applications for ERP
Application-Specific Data Stewardship
Hype Cycle Phases, Benefit Ratings and Maturity Levels
Table 1. Hype Cycle Phases
Phase Definition
Technology Trigger A breakthrough, public demonstration, product launch or other event generates
significant press and industry interest.
Peak of Inflated
Expectations
During this phase of overenthusiasm and unrealistic projections, a flurry of well-
publicized activity by technology leaders results in some successes, but more
failures, as the technology is pushed to its limits. The only enterprises making
money are conference organizers and magazine publishers.
Trough of
Disillusionment
Because the technology does not live up to its overinflated expectations, it rapidly
becomes unfashionable. Media interest wanes, except for a few cautionary tales.
Slope of
Enlightenment
Focused experimentation and solid hard work by an increasingly diverse range of
organizations lead to a true understanding of the technology's applicability, risks
and benefits. Commercial off-the-shelf methodologies and tools ease the
development process.
Plateau of
Productivity
The real-world benefits of the technology are demonstrated and accepted. Tools
and methodologies are increasingly stable as they enter their second and third
generations. Growing numbers of organizations feel comfortable with the reduced
level of risk; the rapid growth phase of adoption begins. Approximately 20% of
the technology's target audience has adopted or is adopting the technology as it
enters this phase.
Years to Mainstream
Adoption
The time required for the technology to reach the Plateau of Productivity.
Table 2. Benefit Ratings
Benefit Rating Definition
Transformational Enables new ways of doing business across industries that will result in major shifts in
industry dynamics
High Enables new ways of performing horizontal or vertical processes that will result in
significantly increased revenue or cost savings for an enterprise
Moderate Provides incremental improvements to established processes that will result in
increased revenue or cost savings for an enterprise
Low Slightly improves processes (for example, improved user experience) that will be
difficult to translate into increased revenue or cost savings
Table 3. Maturity Levels
Maturity Level Status Products/Vendors
Embryonic

In labs

None
Emerging

Commercialization by vendors
Pilots and deployments by industry leaders
First generation
High price
Much customization
Adolescent

Maturing technology capabilities and process
understanding
Uptake beyond early adopters
Second generation
Less customization
Early mainstream

Proven technology
Vendors, technology and adoption rapidly
evolving
Third generation
More out of box
Methodologies
Mature
mainstream
Robust technology
Not much evolution in vendors or technology
Several dominant vendors

Legacy

Not appropriate for new developments
Cost of migration constrains replacement
Maintenance revenue focus

Obsolete

Rarely used

Used/resale market only
Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"Understanding Gartner's Hype Cycles, 2012"
"ERP Strategy: Why You Need One, and Key Considerations for Defining One"
"Q&A: What ERP Is and What the Associated Terms Really Mean"
"Modernizing ERP: How to Make Users Fall in Love With ERP All Over Again"
"Social and the Nexus of Forces: Supporting People's Interactions"
"Mobile and the Nexus of Forces: Creating the New Experience"
"Cloud and the Nexus of Forces: A Foundation for Global-Class Deployment" (forthcoming)
"Information and the Nexus of Forces: Delivering and Analyzing Data"
This is part of a set of related research. See the following for an overview:
Gartner's Hype Cycle Special Report for 2012

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This research note is restricted to the personal use of mark.robichaux@itc.hctx.

"Hype Cycle for Analytic Applications, 2012"

"Hype Cycle for Cloud Application Infrastructure Services (PaaS), 2012"

"Hype Cycle for Application Services and Outsourcing, 2012"

"Hype Cycle for Business Process Management, 2012"

"Hype Cycle for Business Use of Social Software, 2012"

"Hype Cycle for Cloud Computing, 2012"

"Hype Cycle for Cloud Security, 2012"

"Hype Cycle for CRM Customer Service and Support, 2012"

"Hype Cycle for CRM Marketing Applications, 2012"

"Hype Cycle for CRM Sales, 2012"

"Hype Cycle for Governance, Risk and Compliance Technologies, 2012"

"Hype Cycle for Human Capital Management, 2012"

"Hype Cycle for Master Data Management, 2012"

"Hype Cycle for Social Software, 2012"

"Hype Cycle for Software as a Service, 2012"

"Hype Cycle for Virtualization, 2012"

"Hype Cycle for Web and User Interaction Technologies, 2012"

Business intelligence platform

In-memory database management systems

Templated implementation methodologies

Contract life cycle management

Social software suites

Collaborative decision making

Big data and ERP

Collaborative decision making

Monolithic ERP devolution

In hostile environments For companies that must adhere to regulatory requirements

Focus initially on definable departmental, line-of-business or process-specific decision

Providing decision tools, engines and methodologies to optimize decisions.

Simplifying the casual user experience

Ensuring that the ERP architecture is model-driven

Executives are skeptical of the business cases presented.

A process registry/repository to handle the modeling metadata

A process execution and state management engine and/or a rule engine

A metadata-driven, model-driven approach to influence solution behavior

Evaluate process templates from software vendors and ESPs.

Balance your need for process agility with process integrity.

Process integration packs

Cloud application connectors (or cloud adapters)

Integrating applications (or integrating processes)

Industry solutions (or sometimes just solutions)

Integration accelerators (or sometimes just accelerators)

Process templates (or sometimes just templates)

PIPs and cloudstreams, which mainly provide integration logic

PCAs, which include business logic covering specific application needs

Licensing and maintenance costs.

Start piloting or using IUS as part of their IT value chain.

Optimize the cost-efficiency and service effectiveness of IT infrastructure.

Increase flexibility in response to business requirements.

Deliver an open, predefined and automated platform for innovation.

Use case (design, construction, operational and analytical)

Implementation style (consolidation, registry, centralized and coexistence, or hybrids spanning

Ensure a clear line of sight to business benefits and business sponsorship.

NetSuite's augmentation applications on Google Apps Marketplace are examples of ERP-

Concur has an integrated travel and expense solution.

Augmentation apps can expose or accentuate errors. Before launching ERP-specific

Several dominant vendors

Maintenance revenue focus

Gartner's Hype Cycle Special Report for 2012

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