Will That Wretched ERP Finally Die? Possibly, But Only the Acronym!
Jakovljevic - May 1st, 2000
"The traditional ERP model is dead and collaborative commerce (c-commerce)
is emerging to take its place." This was yet another ERP demise prediction,
this time given by a speaker at a symposium in Europe at the beginning
of April, which was hosted by a leading research house. He went on to
predict that Customer Relationship Management (CRM) and Supply Chain Management
(SCM) would become as important as ERP in the electronic economy by 2004.
A prediction was given that ERP systems will only host 40 percent of business
applications by 2004 due in part to the rise of collaborative commerce,
With traditional ERP systems, attention is placed on internal productivity.
What will happen to alter that model is the emergence of a more diverse
enterprise framework. From now until 2004, a more dynamic online marketplace
will emerge, where companies can collaborate with employees, customers,
stockholders, sales channels and suppliers through a multi-enterprise
framework. It was also predicted that due to a more dynamic marketplace,
ERP vendors would have to focus on either 1) creating functionally stronger
ERP components or 2) creating functional c-commerce frameworks.
There is nothing new in these statements that the market has not already
been aware of. The currently infamous 'ERP' acronym may face extinction,
but not its basic concept. All of the major ERP vendors realized the need
to shift from an internal to an external focus a long time ago. Over the
last few years, the main players have been actively partnering or finding
other ways to provide solutions that allow businesses to collaborate more
effectively. Also, the vast majority of vendors have recently stopped
using the term ERP in their marketing campaigns, or have at least been
downplaying it. Part of the reason for doing this lies in their attempts
not to be branded as outdated by market requirements.
However, the real reason lies in the fact that the boundaries between
ERP, CRM, e-commerce and SCM are blurred so much that this attempt to
functionally separate them becomes 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 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 a 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 customer
will end up on a competitor's list of customers.
the relative importance of CRM vs. ERP, ERP vs. SCM or of any other match-up
is irrelevant. All of these functional areas are critical, except for
some esoteric or autistic businesses. The 64,000-dollar question is how
all business processes work together. In the electronic world, the degree
of flexibility and efficiency of processes relating to the customer lifecycle,
product development, and so on, to name but a few, will be a big determinant
of losers and winners. Therefore, while the traditional introspective
mind-set of ERP becomes history, its functionality remains critical. The
'new economy' will not cause the obsolescence of general ledger and accounts
payable & receivable for example. Quite the contrary, it may only emphasize
The ERP system remains the backbone of the supply chain. It sets the structure
a company needs to do business and to communicate with other businesses.
Combined with a functional supply chain, an ERP system can successfully
extend into global business markets. However, some obstacles exist if
a company reaches out to a market that lacks the technology to communicate
with its own back-end system.
answer to doing business with incompatible systems lies in combining an
ERP system and a supply chain with Internet technology. In response to
this, many ERP vendors are starting to build interfaces to marketplaces.
The combination of ERP, supply chains, and the Internet, or collaborative
commerce, is an integration designed to offer faster and easier access
to business transactions as well as customer data. This combination does
not mean ERP systems become useless over night; it is just another step
in the evolution of back-end applications.
should to bear in mind a few facts about the customer lifecycle. Any step
can involve any channel of communication - the Web, the call center, field
staff, you name it. Furthermore, customers are entitled to inconsistency
in the channels they use. They might, for example, order through the Web
site and then expedite the order through the call center. The call center
operators then need everything at their fingertips, including order details,
fulfillment status, and billing information. Integration and interconnectivity
are therefore the name of the game, regardless of whether customer prefers
the "one stop shop" pitch from Oracle or SAP, or the EAI story from the
Users should be aware of the fact that they need a reliable back-office
system in place in order to conduct their e-commerce business or client
relationship management. Therefore, we encourage them to aggressively
inform themselves about vendors' latest product offerings and vigorously
negotiate contract terms. E-commerce is not merely electronic retailing
via a Web site. The ability to coordinate the entire supply chain, fulfill
orders, and service customers quickly and efficiently is what matters.