Applications—The Genesis and Future, Revisited
- April 5, 2004
Part Five: More on ERP Evolution
important area of enterprise resource planning (ERP) vendors' functional expansion
has been in the front-office and customer relationship management (CRM) arena,
since customers are demanding applications and tools that allow them to link
back-office ERP systems with front-office CRM systems. CRM has gone from a vast
field of point solutions to suites of customer care applications covering SFA,
field service, telesales, call center, marketing automation, etc. Today's enterprise
applications are required as a matter of course to address more than the processes
taking place within the walls of an enterprise. Almost all traditional ERP vendors
(small and big alike) experienced a "wake up call" and have long been trying
to expand their product offering in tune with the ever-changing trends and requirements
of the new collaborative economy.
that end, over the last few years, all significant enterprise applications players
have been actively partnering or finding other ways to provide solutions that
allow businesses to collaborate more effectively. Consequently, the boundaries
between ERP, CRM, e-commerce, and SCM have blurred so much that any attempt
to functionally separate them becomes ever more pointless. If the ultimate objective
is to win and retain customers, one must consider the entire chain, which includes
traditional ERP and SCM functions as well as the once-considered more remarkable
and supposedly more relevant CRM and e-commerce activity.
cycle begins with the attraction of the customer through sales and marketing.
This hopefully results in an order management and fulfillment process and ends
with customer service, which can involve anything from field installations through
to enquiry and complaint management. All of these steps have to be executed
well without exception. Otherwise, the prospective customer will end up on a
competitor's list of customers. Therefore, the relative importance of CRM versus
ERP, ERP versus SCM or of any other match-up is irrelevant. All of these functional
areas are critical, except for some esoteric or autistic businesses that can
get by with implementing islands of information.
"64,000-dollar" question is how all business processes work together. In the
electronic world, the degree of flexibility and efficiency of collaborative
processes relating to the customer life cycle, product life cycle, and so on,
to name but a few, will be a big determinant of losers and winners. As proof
of the above might be the fact that the traditional large ERP providers like
SAP, PeopleSoft, and Oracle
can claim bigger CRM-related revenues than every pure-CRM vendor except for
Siebel Systems that still clings to its CRM leadership position
of ERP and CRM Markets' Life Cycle Snapshots). Some demarcation line
here could be that ERP vendors are successfully selling into their manufacturing
install base, while CRM specialists stronghold remains the service sectors where
ERP as not gained much religion.
is Part Five of a six-part note.
One, Two, and Three covered developments from the 1960s through the 2000s.
Four began the discussion of ERP evolution.
Part Six will look at the future.
is a Glossary
for the terms italicized throughout this article.
software's scope has also recently gone beyond traditional transactional business
functions by enabling organizations to deliver real-time performance analysis
directly on the desktops of CFOs, CEOs, and other business managers. Major ERP
vendors have been shifting focus from routine users' transaction requirements
to the overall organization's business imperatives, thereby helping lines-of-business
(LOB) become more knowledgeable and proactive. Instead of requiring a collection
of processes, the system should appear to each user as a vast source of information.
While relational databases, currently used by ERP systems, are good
at retrieving a small number of records quickly, they are not good at retrieving
a large number of records and summarizing them on request. Most ERP products
have a rich database, but, translating the data stored within the database to
information useful for making enterprise decisions has proven difficult. With
the availability of software analytic solutions, several dozens of ERP providers
can supply their customers with a valuable tool for harvesting the business
value out of their database. Therefore, major ERP vendors have been increasingly
embracing OLAP (On-line Analytical Processing) tools that provide a
high-level aggregated view of data.
ERP and analytics have been inseparable ever since the idea of business automation
via IT way back in the 1960s, they have had different user experiences, evolutionary
paths, and so on. Namely, although ERP systems have positively transformed many
enterprises' business processes, many users have still been left feeling as
oversold to, due to the overwhelming notion that these systems inhibit access
to the vital information "jailed" in them. Often indeed, in most traditional
ERP systems a number of financial activities are grouped together to form artificially
created processes, which bear little resemblance to the actual business activities,
such as ERP systems' focus had often appeared to only be getting the correct
figures into the general ledger, which has a transactional glut as a result.
to traditional core ERP, business intelligence (BI)/analytics provides an environment
in which business users receive information that is reliable, consistent, understandable
and easily manipulated (i.e., flexible). Because C-level executives and middle
management have always had a need to understand their business' performance
regardless of good or bad economic times—while the output from BI might change,
the need is always there. Particularly since the recent massive demise of dot-com's,
the depressed economic times, and the stringent Sarbanes-Oxley Act (SOA) reporting
regulatory requirements following up the high-profile corporate fraud scandals
(such as Enron, Tyco, and WorldCom)
have additionally increased executives' focus on understanding and managing
disclosure rules are prompting companies to share information faster (for example,
accelerated filing of 10Q quarterly statements and 10K annual reports, report
sales of stock by executives (insider trading) within days of the transaction,
expanded list of "significant events" to include changes in debt ratings, inclusion
of financial results of partnerships in earnings reports, etc.), and sophisticated
data-collection and data-analysis applications come in handy in that regard.
Given that the BI tools have neither been terribly complex nor expensive to
deploy, but have still been helpful in facilitating the decision-making process,
they have lately become considered necessary rather than as a luxury. Also,
decisions are nowadays increasingly made at ever lower levels in organizations.
For more information, see Business
Intelligence Success, Lessons Learned.
that end, various enterprise business intelligence (BI) solutions enable organizations
to track, understand, and manage enterprise performance, and they leverage the
information that is stored in an array of corporate databases/data-warehouses,
legacy systems, and diverse enterprise applications. The latest evolutionary
step introduces the concept of corporate performance management (CPM)
(often interchangeably referred to as enterprise performance management [EPM]
or business performance management [BPM], too), which is an emerging portfolio
of applications and methodology with business intelligence (BI) architectures
and technologies at its core. Historically, BI applications have focused on
measuring sales, profit, quality, costs and many other indicators within an
enterprise, but CPM goes well beyond these by introducing the concepts of management
and feedback, i.e., by embracing processes such as planning and forecasting
as core tenets of a business strategy.
the above reasons, the vendor landscape remains diverse, with every vendor,
including many ERP aspirants, touting some (or nearly total) CPM capabilities.
Thus, the arms race to marshal the most complete CPM platform has lately intensified;
Market Consolidation Compared to ERP Market Consolidation.
concludes Part Five of a six-part note.
One, Two, and Three covered developments from the 1960s through the 2000s.
Four began the discussion of ERP Evolution.
Six will look at the future.
and Recommended Further Readings
Tools, Techniques, and Applications for Integrating the Supply Chain. Second
Carol A. Ptak, CFPIM, CIRM, and Eli Schragenheim; The St. Lucie Press/APICS
Series on Resource Management; 2nd Edition, 2003
Readings in ERP;
APICS Complex Industries SIG, 1999
Your ERP System: A Practical Guide for Managers;
Dr. Scott Hamilton; McGraw-Hill Trade, 2002