Looking to the Future
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. While Web-enablement and collaborative e-business will continue to be a major direction, easier enterprise applications integration and interconnectivity; more flexible pricing; embracement of "plug-and-play" applications that support commonly accepted standards (reflecting a reduced need to heavily customize multi-vendor solutions), embedding analytical applications; knowledge management (KM); and workflow and business process management (BPM) are some of the best prospects among the ongoing wave of enterprise applications hot-buttons. It is needless to say that almost all traditional ERP vendors (small and big alike) had to experience 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. Multinational capabilities, product data management (PDM), APS, warehouse management, Web-based product configurators, and component (modularized) architecture might still be the order winners, but, we believe these functional and technological features are becoming demoted into commodities (order qualifiers).
The
still untapped ERP mid-market segments have also vicariously benefited by learning
from mistakes and failed ERP implementations in many commercial companies in
the past. Additionally, many enterprise systems are now also componentized,
which provides phased implementations in more manageable chunks (instead of
a traditional "big bang" approach) in addition to vendors' developed implementation
methodologies that are based on bypassing the usual traps of past failures.
Many ERP systems have meanwhile also been Internet-enabled, which also allows
for a quicker and simpler implementation, because client machines do not have
to be configured time and again. Consequently, a prospective customer also has
a choice of either installing software on its own intranet or renting it via
an application service provider (ASP).
It
is apparent that lately ERP has been redefined as a platform for enabling e-business
globally. Originally focused on automating the internal processes of an enterprise,
ERP systems have begun to include customer and supplier-centric processes as
well, having thereby become universal business applications that encompass front-office;
business intelligence; and e-commerce or supply chain management. Given the
mere "ERP" moniker is no longer an acronym sufficient enough to cover the above
scope, we would like to join in the above-mentioned buzzword frenzy with a new
acronym—iERP, standing for inter(net)-enterprise resource planning,
albeit we are full aware of the buzzwords' abundance in the market and its imperfection
of not fitting the TLA description (see BLM—Buzzword
Lifecycle Management).
This
is Part Six of a six-part note.
Parts
One, Two, and Three covered developments from the 1960s through the 2000s.
Parts
Four and Five discussed the ERP evolution.
There
is a Glossary
for the terms italicized throughout this article.
Summary
As mentioned earlier, knowing the history and evolution of enterprise software is essential to understand its current application and its future developments. ERP was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one.
It should be noted that the underpinning of the most sophisticated business applications systems today still remains the same mathematical model introduced in the first MRP systems. This model of "what do I need, what do I already have, and what do I need to get and when" will be the backbone of the integrated, Internet-enabled supply chain.
Technology can never totally replace an effective demand management process. Therefore we have always regarded some analysts' hasty predictions of ERP's demise at the end of the 1990s as frivolous. The fundamental shortcomings of ERP revealed by the advance of technology and increasing customer demands have been addressed by extended-ERP point solutions (bolt-ons), and ERP vendors are expected to continue their quest for delivering more complete solutions. As mentioned earlier, there has been a renewed recognition that ERP is imperative to managing and controlling internal materials movements and processes, and it forms the foundation for collaboration, e-business, CRM, SCM, and so forth. Therefore, while the traditional introspective mind-set of ERP becomes history, its functionality remains critical. The "new economy" of the late 1990s will not have caused the obsolescence of general ledger (GL) and accounts payable and receivable (AP/AR) for example. Quite the contrary, it will have only emphasized their importance.
Still,
one should ensure the transaction coherency that this extended scope of enterprise
applications might likely hinder. In other words, unless all the functional
modules have access to and use the same data in near real-time, unless all processes
are fully integrated (so that, for example, a mobile sales representative can
see the live inventory data for order promising), and unless users can seamlessly
move from one module to another, we are not talking about coherency but rather
about the hodgepodge of disconnected (or very loosely connected, in the best
scenario) islands of information. While there is a promise of new technologies
like portals, Web Services, layers of abstraction between application
components, and so on, all to contribute to seamlessly connecting people, data
and processes, that is still largely the most probable case within the context
of a homogenous offering from a single vendor, and only whose all applications
concurrently "look" at the same data.
Sources and Recommended Further Readings
- ERP:
Tools, Techniques, and Applications for Integrating the Supply Chain. Second
Edition;
Carol A. Ptak, CFPIM, CIRM, and Eli Schragenheim; The St. Lucie Press/APICS
Series on Resource Management; 2nd Edition, 2003
- Selected
Readings in ERP;
APICS Complex Industries SIG, 1999
- Maximizing
Your ERP System: A Practical Guide for Managers;
Dr. Scott Hamilton; McGraw-Hill Trade, 2002
- APICS
Dictionary;
10th Edition