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Leveraging Technology to Maintain a Competitive Edge during Tough Economic Times --A Panel Discussion Analyzed Part One: Introduction

Written By: Predrag Jakovljevic
Published On: May 17 2004

Introduction

At the IFS Executive Forum, which took place on March 29 and 30 in Orlando, Florida (US), leading research analysts and industry experts discussed how companies can still leverage technology to maintain their competitive edge, even during tough economic times. The event was held in conjunction with IFS World Conference 2004, and it included six panel discussions, with each panel including top executives, analysts, and journalists. Some of the renowned panelists were Geoff Dodge, vice president, Business Week; Dave Caruso, SVP, AMR Research; Barry Wilderman, vice president, Meta Group; Leo Quinn, vice president of operations, Global Manufacturing Solutions, Rockwell Automation; Dave Brousell, editor-in-chief, Managing Automation; David Berger, Western Management Consultants; and Josh Greenbaum, principal, Enterprise Applications Consulting. Breakout sessions explored such topics as turning global competitive threats into opportunities, increasing the bottom line through operational efficiency, complying with the Sarbanes-Oxley Act of 2002, and using enterprise software to prepare for future challenges.

Technology Evaluation Centers (TEC) was represented at the executive panel titled "The Future of Enterprise Software and How It Impacts Your Profitability," which was aimed at helping companies find out where enterprise software is going in the next five years, and how it can make or break their profitability and market share. The panel, which was moderated by Josh Greenbaum, included the following participants: Barry Wilderman; Peggy Smedley, president and editorial director, Start Magazine; Dave Turbide; an independent consultant and renowned columnist for magazines such as The Manufacturing Systems; and Predrag Jakovljevic, research director at TEC. In preparation for the event, we polled the thoughts and opinions from our following experts and contributors Olin Thompson, Jim Brown, Joseph Strub, Kevin Ramesan, and Lou Talarico, given they were unable to attend the event in person.

Below are the questions and consolidated thoughts and answers that transpired from the panel discussion, but we also took the liberty to expand with a few pertinent questions and thoughts that were not discussed at the panel per se (due to the time limit), but which transpired from many other interactions and presentations at the conference. Also, pertinent articles that have been published earlier on our site, and which may shed more light on the respective topic are mentioned here as further recommended readings.

The questions are

Q1. What is the one piece of new software or technology that will be a must-have in the next five years? (see Part One)

Q2. Some pundits say the future of enterprise software lies in service-oriented architectures and component applications. True? False? (see Part One)

Q3. How does the development of new business processes and business process modeling fit in? (see Part Two)

Q4. What are applications hosting and other service models? (see Part Three)

Q5. Radio frequency identification (RFID) is on everyone's mind these days. Let's discuss the software issues around RFID and what kind of software solutions will be taking advantage of RFID. (see Part Four)

Q6. Technology aside for a moment, what can we say about its impact on profitability? (see Part Five)

Q7. With all this new technology, the question is what happens to existing applications and technology. Nobody wants to start over, but how much will existing IT systems have to change? (see Part Five)

Q8. Will the newest and greatest only come from packaged software? What about custom development? What is the build versus buy equation look like in the near future? (see Part Six)

Q9. How will the latest improvements in software flexibility and agility play in the single-vendor versus multi-vendor solution equation at multi-division corporations? (see Part Six)

This is Part One of a multipart trend note.

Each of the following parts covers questions and answers addressed by the panel.

Questions and Answers

Q1. What is the one piece of new software or technology that will be a must-have in the next five years?

A1: There is no technological magic bullet or panacea in our belief. Companies should constantly look to find their biggest opportunity for business improvement (incrementally, more likely than in a "quantum leap" manner) and then find software that presents a solution, whether it be something as simple as desktop applications or something as complex as global supply chain management (SCM) solutions. More feasible integration between disparate applications and more agile management of processes between enterprises will be increasingly important, though.

From a functional perspective, and based on the traffic and interest on TEC's web sites, the tangible return on investment (ROI) seen market-wide, and the relatively lower implementation risks compared to other enterprise applications, we could point out business intelligence (BI)/analytics/enterprise performance management (EPM); warehousing management systems (WMS); e-sourcing; lean manufacturing applications; and product lifecycle management (PLM) collaborative applications, of course, assuming the valid business case exists in the organization.

For more information, see the following recommended readings:

The Hidden Gems of the Enterprise Application Space,

The PLM Program An Incremental Approach to the Strategic Value of PLM,

Business Intelligence Success, Lessons Learned,

Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM,

Pull versus Push: a Discussion of Lean, JIT, Flow, and Traditional MRP and

Run your Business with no Software!

Q2. Some pundits say the future of enterprise software

Q2. Some pundits say the future of enterprise software lies in service-oriented architectures and component applications. True? False?

A2: In a nutshell, true. Componentized applications and assembled (composite) solutions have been the goal for some time now. An adaptable architecture is the least common denominator for a flexible and agile enterprise system. Although a component-based architecture is not an explicit requirement for enterprise applications' flexibility, component-based applications generally provide greater flexibility than their monolithic counterparts. Componentization refers to the act of breaking up large, monolithic enterprise systems into individual modules or components that would work together. It is the practical embodiment of object-oriented programming (OOP), which was developed to enhance software maintainability and to simplify the creation of advanced graphical user interfaces (GUIs). Object orientation means that design, linkages, and so on, use objects as their basic building blocks, which is a radical departure from traditional "procedural" design and coding methodologies. By maintaining processing logic with the data it works with, programmers have an easier time finding reusable pieces. Therefore, object-oriented systems can be significantly smaller and easier to maintain than classical procedural code in which procedures and data are separated.

By breaking up the large applications into components, vendors are able to more quickly fix or add functionality. A component can be something as simple as a supplier record, or a more complex business process or workflow. The accounts payable component, for example, could be enhanced without having to touch any other financial components or any of the other modules, such as planning or logistics. And once the vendor has established component architecture, it becomes easier and safer for IT departments to customize the systems. Componentization has proven to be crucial to enable traditional back-office systems to support e-business activity since the new e-commerce capabilities are being delivered as individual components. Componentization has also helped the vendors extend the core ERP back-office system with SCM, customer relationship management (CRM), and other ERP-adjacent solutions.

Componentization would not only make it easier for the ERP vendors to enhance their solutions but also make it easier for customers to upgrade the software. With componentization, a customer could incrementally upgrade only selected components without having to upgrade the entire ERP solution, which usually would entail a substantial effort. In summary, component-based architecture is beneficial for the following reasons:

  1. It allows a developer to create a composite application in which typically a web-based user interface accesses functionality in the packaged application.

  2. It can enable message-broker-based integration of several disparate packages or legacy systems.

  3. It allows a vendor to roll out new versions of the application in a modular, incremental fashion rather than all at once.

  4. It may drastically reduce the total application code.

Componentization is thus necessary for vendors to move their back-office systems into e-business and to provide other capabilities and therefore most vendors insist they remain fully committed to it, although progress has been moderate. The reason for this lays in the fact that componentization is enormously difficult to achieve even when the commitment is solid. With some honorable exceptions, most tier 1 vendors have mostly succeeded in creating large-grain proprietary components, which are simply large function modules. On the other hand, IFS leads the pack of more nimble, mid-market ERP vendors that have either entirely or to a significant degree componentized their products.

However, service oriented architectures (SOA) should help us further down that path. The closer we can make the software map to the business processes and adapt over time, the better the applications will support business objectives. A well constructed application that tightly integrates and yet loosely decouples a set of solid, yet customizable modules will certainly find customers in this market. SOA is an application architecture in which all functions, so called "services", are defined using a description language and have evocable interfaces that are called to perform business processes. Processes, transactions, and special functional components all have to be exposed as services allowing composite applications to be exposed. Each interaction is independent of each and every other interaction and the interconnect protocols of the communicating devices (i.e., the infrastructure components that determine the communication system do not affect the interfaces). Because interfaces are platform-independent, a client from any device using any operating system in any language can supposedly use the service.

Though built on similar principles, SOA is not the same as Web services, which indicates a certain collection of technologies, such as simple object access protocol (SOAP), universal description, discovery and integration (UDDI), web services description language (WSDL) and extensible markup language (XML). XML is used to tag the data; SOAP is used to transfer the data; WSDL is used for describing the services available; while UDDI is used for listing what services are available. Used primarily as a means for businesses to communicate with each other and with clients, Web services allow organizations to communicate data without intimate knowledge of each other's IT systems behind the firewall. Being web-based applications that dynamically interact with other web applications using open standards, Web services act analogically to electronic data interchange (EDI), with the difference of being an electronic process interchange instead. On the other hand, SOA entails much broader notion, given it is more than a set of technologies and runs independent of any specific technologies.

Thus, still emerging Web services technology is likely to increase the component applications concept's awareness and speed up its still fledgling adoption. Large vendors' endorsement of Web services technology might indeed help them make up for their latency of endorsing the component technology several years ago. Web services have a potential of becoming the latest evolution of application integration technology and a revolutionary new application design model by enabling developers to create or enhance applications by connecting granular components that are accessed via platform-independent Web protocols. While Web services leverage the aged concept of objects' reusability, they may finally offer that extra mile by adherence to standards that are taking hold. Further, they tend to be simpler in their nature, partly owing to the collaborative Internet standards, and they also tend to be higher-level abstractions, which implies more likely platform independence and "mixing and matching" opportunity by developers. Furthermore, the strategy will help the likes of SAP further open and/or componentize their products, as standards like XML and extensible stylesheet language (XSL) make it possible to share data and have a common look-and-feel across an application, without necessarily dreadfully digging in the source code.

For more information, see the following recommended readings: What's Wrong With Enterprise Applications, and What Are Vendors Doing About It? Part Two: A New Framework Strategy and The SOAP Opera Progresses - Helping XML to Rule the World.

This concludes Part One of a multipart note.

Each of the following parts covers questions and answers addressed by the panel.

 
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