The Technology Landscape
Many ERP vendors are adding industry-specific functionality to their software as well as Web 2.0 functionality and GUIs.
Prior to ERP, software was developed to fit the individual processes of each business. Due to the complexities of most erp systems (and the negative consequences of failed erp implementations), most vendors now include “best practices” in their ERP software. Best practices are what the ERP vendor deems as the most efficient way to carry out a particular business process in an integrated enterprise-wide system.5
A study conducted by Ludwigshafen University of Applied Science surveyed 192 companies; it concluded that companies that implemented industry best practices streamlined mission-critical project tasks such as configuration, documentation, testing, and training. In addition, the use of best practices reduced overall risk by 71% when compared to other software implementations.6 The use of best practices can also make complying with requirements such as the Sarbanes-Oxley Act easier. In addition, many ERP vendors are adding industry-specific functionality to their ERP software as well as Web 2.0 functionality and easier-to-use graphical user interfaces (GUIs).
Implementing an ERP System
Though traditional ERP packages have been on-premises installations, ERP systems are also available on what is known as a Software–as-a-Service (SaaS) basis, generally meaning the software is delivered over the Web rather than installed on a customer’s premises. An example of this trend is SAP’s Business ByDesign. First introduced to the marketplace in September 2007, SAP Business ByDesign is an SaaS solution designed to address the business needs of fast-growing midsize companies.
As one essential constituent of the solution portfolio for these companies, it is the vehicle for delivering business process innovations in an on-demand model to midsize companies for managing their business growth. Supporting the complete array of core business processes, SAP Business ByDesign is claimed to lower total cost of ownership by bundling software, e-learning, services, and support for easy configuration, adaptation, and ongoing operation without requiring extensive IT infrastructure and resources.7
Other ERP vendors, such as Plex Systems, have eschewed the traditional, on-premises approach in favor of the SaaS delivery model (a.k.a. cloud-based ERP). The company’s flagship product, Web-hosted Plex Online, is a flexible platform for supporting lean manufacturing principles within manufacturing organizations. More than 350 functional modules are available using a Web browser.
Plex Online includes shop floor control, traceability, quality management, EDI, and accounting, configured as a fully integrated system or as a point solution. Plex is also at the forefront of another ERP trend: providing Web 2.0 features. The company provides a variety of online community forums that the vendor of cloud-based ERP services has launched for customers.
The collection of interactive forums and wikis allows Plex and its customers to share best practices, and customers can vote on the innovations they’d most like to see in Plex’s next release. But the forums also let Plex customers collaborate to find like-minded users who may want the same enhancements made to Plex Online, and even to indicate whether they’d be willing to chip in to pay for a specific enhancement. The idea is for customers with similar needs to come together, help finance the enhancements they need, and get them implemented quickly.8 ERP experts such as Paul Hamerman, vice president for enterprise applications at Forrester Research, see Web 2.0 features as a major trend. Web 2.0 features enable collaboration and connection to the outside world via methods such as Web services. Also, vendors such as Microsoft are engineering roles into software for specific personas. This gives ERP applications resonance for various types of uses.9
Beyond Web 2.0, Hamerman has also identified several other significant trends in ERP functionality:10
- Business Process Flexibility: This is a middleware capability where business processes are configurable and presented graphically within the ERP application.
- Embedded Business Intelligence: ERP vendors are making the analytics in applications visible in real time, thereby eliminating queries.
- Mobility: SAP’s chief technology officer, Vishal Sikka, predicted that within 10 years, there will be 5 million different screens running on iPhones, BlackBerrys, Droids, and other mobile devices that interact with SAP’s ERP product offering.11
When it comes to ERP planning, aim for a plan that is optimized for real conditions now.
Systems of Systems
A major discussion point at IBM’s recent Innovate 2010 conference was the emergence of “systems of systems.” Systems of systems is a collection of task-oriented or dedicated systems that pool their resources and capabilities to obtain a new, more complex “meta-system” that offers more functionality and performance than simply the sum of the constituent systems.
Potential buyers of ERP systems need to be aware of this emerging trend. ERP developers and users have to get ready for the apparent complexity and difficulty of these systems of systems. Of course, the service oriented architectures (SOAs) provided by many ERP vendors offer a starting point for implementing and managing this complexity. But the more difficult step will be when ERP must interact not only with traditional applications that work with messages and transactions, but also with applications that sense and respond to the real world. This latter group is generally built in a very different way, managing events by stepping between states of a finite state model, where not only the sequence but also the timing of events can affect the response.
When it comes to ERP planning, aim for a plan that is optimized for real conditions now.12 It is desirable, for example, to have the ability to respond to actual yield achieved this morning. However, move too far in this direction, and the ERP system turns into a control system — updating the plan in real time in response to demand signals from customers and supplier deliveries.