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March 29, 1999

Enterprise Resource Planning:
The Customer Really Is King

Bob Evans

ell, it's official now: The Acronym Specialists Society has formally changed the designation of the back-office and supply-chain software market formerly known as ERP to BURP. The society's official stance is that the new acronym, which stands for Beyond Utilitarian Resource Planning, is more accurate than stuffy old Enterprise Resource Planning, and that the acronym ERP was about to be obscured and perhaps eaten--not to mention alphabetically superseded--by the too-similar ERM (Enterprise Relationship Management). However, uninformed sources not terribly close to the situation insist the move was made due to the thrashing that many ERP players have taken lately in the stock market. So BURP it is: indigestion, tough to swallow, heartburn, that unsettled feeling, all that stuff. And the new acronym reflects the never-ending battle for equilibrium waged by both the human body and large software vendors: Where to go and what to do when the market reels and shifts right under your feet?

Investors, who in the past couple of years had bid the stocks of these software companies to all-time highs and made them among the darlings of the high-tech boom, have gotten queasy over the sector's growth potential and taken their money elsewhere. High-level management changes have been the order of the day at Baan, PeopleSoft, SAP, and others, as these companies have looked for some new energy to help them regain their earlier celebrity status.

As InformationWeek reported in last week's issue, PeopleSoft is the latest enterprise software vendor to feel the impact of the swarming changes within that vital sector ("PeopleSoft's Brain Drain," March 22, p. 26). The results include not only some fairly extensive shifts in senior management at the billion-dollar company, but also various efforts by the company to define and solidify an enduring market position during a time of high change in the overall ERP sector as well as within the company itself. Baan, perhaps the hardest-hit of all the major vendors, has completely remade its management team in the past several months, while market leader SAP recently lost president Jeremy Coote and last year said farewell to North American head Paul Wahl.

All of those executives, with the benefit of the hindsight of which columnists so freely make use, would love to go back and change various decisions they'd made. But I strongly suspect the core issue was their relatively slow recognition that the major action was rapidly expanding from the back office and central operations out to the customer. This explosive new area, encompassing everything from sales-force automation to customer-relationship management--not to mention the smokin' new buzzword from above, enterprise relationship management--is bringing to bear some of the richest and most enduring promise of IT in the extended enterprise as it completes the circle from back office through manufacturing and distribution, accounting, HR, customer service, etc., and on out to the customer. In this way, the true promise of electronic business can be seen as organizations build the cultural and technological links and interconnections that let them focus on what their customers want and need, rather than on some internally driven processes that might or might not bring new value to customers.

This move outward has inspired what we at InformationWeek call the new age of customer-centric computing. While the other landmark epochs in this industry--all 40 years or so of it--have been defined by technology platforms such as mainframes, minicomputers, client-server, PCs, and the Internet, this new age of customer-centric computing moves the focus from platforms to people; and very specifically to the new drivers of change in the 21st century: customers. As information technology has created dazzling new marketing channels and purchasing patterns, customers have been given more choices than ever before and greater freedom in determining exactly when and how and from whom they will buy. It's hard to imagine any market forces that will alter that new power structure, so we should expect that the era of customer-centric computing will be a long one (even by the standards of this temporally foreshortened industry). The customer is not just king, but also queen, duke, princess, and sergeant-at-arms.

For ERP--sorry, BURP--vendors, the game is far from over, and the best will integrate powerful but simple customer-relationship management products and services into their offerings. But if SAP and others rose to prominence and stunning success on the shoulders of brilliant software engineering, they and others will need to recognize with great clarity that there's somebody new at the top: the customer.

Bob Evans
Editor-in-Chief
bevans@cmp.com