The breadth of ERP
The enterprise backbone is still evolving, says George Schultz
Enterprise resource planning (ERP) has more than survived the constant evolution of manufacturing software. Its multi-integration pattern simply never abated, and many manufacturers now conveniently adopt ERP as a quasi-enterprise backbone across an ever broader set of functions. It’s all “in the mix” among software providers’ offerings.
For example, number-two ERP vendor Oracle offers what it calls a “complete” enterprise suite for manufacturers’ principal activity and support functions. Its four components are human resources (HR) applications, financials, customer relationship management (CRM), and supply chain management touching such major activities as supplier relationship management (SRM) and product lifecycle management (PLM) functions.
The even-larger global provider, SAP of Germany, also offers a broad array of applications suitable for the largest enterprises, and designed its NetWeaver platform for integration and portals technology.
SSA Global Technologies, now the third-largest ERP provider, gained its current breadth of enterprise applications by adding 12 other ERP software products through six acquisitions. SSA Global is now converging selected functions from all into two new extended ERP systems tailored to the discrete and process sectors, and still also supporting the acquired systems for those acquired customers opting to continue using them. Moreover, it leapt further into Web-enablement by partnering last year with IBM to use its WebSphere software to underpin all SSA software products.
Epicor Software, also focusing primarily on the mid-market, first grew its basic Vantage ERP system with PLM and CRM among integrated applications, and recently became the first ERP provider to deploy a totally re-architected product on 100-percent Service Oriented Architecture (SOA). Its technology incorporates a Microsoft .NET framework to take advantage of Web services, Epicor says, “to link virtually any process to any device.” And those represent only a few current configuration examples in ERP’s evolution.
Prime attention now is on the application suite level, where for many years ERP providers have been building out to more enhanced modules. The largest vendors and others, variously, are moving other software categories into traditional core ERP—financials, product data, procurement, manufacturing, inventory, and warehouse functions among them. One effect on the user side, observes Bill Swanton, vice president of research for business processes with AMR Research, is “a fairly reduced global landscape of systems.”
Companies that have committed to a particular ERP vendor tend to look to them first for new functional needs, Swanton explains. That means more companies moving “more toward a single global instance, or a limited few regional instances” of now-extended ERP systems. This is most evident, he says, among large companies “with tens of thousands of users, to keep all on the same configured system with common business practices.” Yet, he notes that manufacturers are still prepared to integrate mature third-party “best of breed” applications when warranted.
From another perspective, Gartner Consulting’s Billy Maynard, research director for ERP systems, cites “extremes in the industry.” On one end is big Oracle (bigger still recently after acquiring PeopleSoft, with already conjoined J. D. Edwards) “marketing a ‘complete’ integrated solution, offering ‘one-stop shopping’ for business applications, services, and so forth.” On the other end, he says, lie “truly ‘best of breed’ scenarios among some users, a collection of point solutions that have to be interfaced or integrated to deploy a business solution that addresses the enterprise’s requirements.”
“But what we see happening in reality among large, medium-size and small companies,” he quickly adds, “is that most are embracing one ERP vendor for the ‘backbone,’ which could comprise financials, human resources—payroll, or manufacturing, order management and distribution. And then, where they have unique requirements by industry, or detailed requirements for a specific department or function area, they acquire point solutions to fill those gaps. Really a combination of the two.”
Perhaps call it a “convergence.” That is the term used by SSA Global for its enterprise software strategy, one that is distinctly in play, for example, in Greif, a major industrial packaging manufacturer, based in Delaware, OH. Operating at some 160 locations in more than 40 countries, Greif is using both core and extended enterprise software applications from SSA to consolidate a disparate IT infrastructure that resulted from myriad acquisitions in recent years. And, through SSA’s strategic partnership with IBM, Greif could immediately build a framework for consolidating its data centers on IBM’s eServer i5 platform, aligning two SSA Global ERP systems to produce a leaner infrastructure that reduces IT complexity and costs.
“Following strategic acquisitions that doubled our size and gave us a worldwide presence,” notes Don Huml, Greif’s chief financial officer, “the consolidation to SSA Global ERP solutions in North America has already saved Greif more than $1 million a year in IT costs and makes us a more agile company.”
Synovis Interventional Services, a medical device manufacturer headquartered in St. Paul, MN, is the first implementer of Epicor’s proclaimed “first-to-market” fully re-architected ERP system with SOA to employ Web services, in its Vantage 8.0 version ERP product. The company, a user of Epicor’s full Vantage ERP suite since 1996, was eager to pioneer the 8.0 technology for two main objectives, says Controller Alex Neutgens.
“First, being primarily an MTO [make-to-order] producer, was to customize software in an upgradeable fashion,” Neutgens says. “Previous customizations required a lot of testing. Now, customization of applications is done more within the software. The second reason was easier integration of external software through Web services and the Vantage extension applications,” he says. “We’re a medical device company needing to comply with FDA requirements. Through Web services we can integrate an external software package to make adjustments, sometimes for unique applications, like tracking our training needs or quality compliance to ISO standards.”
The SOA technology lets a company more easily share information with the systems of its customers, suppliers and business partners, says Paul Farrell, Epicor’s senior vice president for R&D. “While this may not be a requirement for doing business today,” he adds, “as more applications are developed on SOAs, more business partners will make electronic sharing a standard for doing business.”
Further regarding the infrastructure level and the application level, AMR’s Swanton cites the trend underway to an “applistructure”—a contraction of applications and structure. “Oracle and SAP are trying to define ERP to include that infrastructure,” he explains. “The idea is to combine those things into a more homogeneous ‘thing’ for one vendor, thereby reducing the cost of development, integration, and total cost of ownership of the overall application. The idea further is that they would like you to use them as the basis for all applications you run, whether bought from them, bought from a third-party, or written yourself, such as applications for business processes. It’s something that’s going to be developing over a long time. And people like Microsoft and IBM also want to control a lot of it. It’s one of the more interesting dynamics you’ll see here.”
Maynard of Gartner also takes note of “the ‘stack war’ that’s going on between the vendors,” citing the four while observing that “some of the smaller players in the ERP market align themselves with a third-party stack like IBM or Microsoft.” He mentions Intentia committed to IBM, IFS with Oracle, and MAPICS committed to both IBM’s WebSphere for its “i Series” software and Microsoft’s .NET for its SiteLine product.
The complete integrated enterprise suite represents a distinct advantage in a large heterogeneous company environment, counters Oracle, citing the lean manufacturing strategy developed by Iowa-based building materials supplier Pella. This strategy, Oracle says, leverages advanced technology—like the Oracle Information Architecture—with integrated applications and relevant business practices content.
Pella, which manufactures standard and customized windows and doors for a worldwide market, became convinced early while implementing Oracle’s E-Business Suite. “Going to one infrastructure via the Oracle E-Business Suite, from our multitude of legacy systems, increased the efficiency of our IT staff,” says Brad Postma, a technical team leader, “and the Oracle workflow tools allow us to efficiently manage and document our business processes.”
Point solutions, of course, are not fading away in the extended ERP world. An example of how a third-party vendor mixes into ERP implementations of even very large corporations is Procuri, in the pervasive SRM and procurement space. Procuri is not partnered with any ERP vendor, yet its SRM hosted solutions are deployed with enterprise systems by some major corporations, according to Rich Heller, vice president of sales.
He cites two CPG manufacturers. One is an $8 billion maker of products for the home improvement market, which adopted Procuri two years ago and has an SAP enterprise system currently in implementation. As that company’s operations expanded from North America to Europe and now Asia, its 120 internal buyers use Procuri in its business processes tied to strategic sourcing. In the other case, the nearly 800 buyers worldwide in a food and beverage manufacturer use Procuri for vendor master and item masters files synchronized to the company’s SAP database. Currently, he reports, Procuri is revising its entire core product from earlier Microsoft tools to the Microsoft .NET architecture “for leveraging a lot more of Web services and its great integration capabilities.”
The changed picture of enterprise software with extended functions, and Web operations increasingly, shows in more than subtle ways within the typical company. The days of big and complex implementations may be over. “More and more, a single copy of the software is linked over the network to everybody in the company who uses it, and in some cases even to suppliers and customers,” observes AMR Research’s Swanton.
Accordingly, he says, “the role of IT managers, if relevant at all to the business now, is primarily advising on software. The former role of being technical experts recedes into the background.” The trend is very much that the basic technical issues, in networking and desktop computing, are all being outsourced. Active CIOs now are “coming more out of the business side,” says Swanton, “and looking at everything in terms of business processes improvement or business transformation.”
28 Feb 2005 21:25