Three major business-application vendors are in the midst of development projects to rewrite their software suites. Given the problems of the past, the improvements need to be more than skin deep.
But anyone expecting a one-button install will be disappointed. The new-generation ERP apps will include gobs of new technology--Web services, integrated analytics, business-activity monitoring, portals, data hubs, and repositories--all of which must be mastered to be used effectively. Joshua Greenbaum, a principal at Enterprise Applications Consulting, says the hassle of integrating new ERP apps with older ERP apps and legacy systems "won't go away for a long time."
Change management can whip up a batch of pain, Tasty Baking's CIO Autumn Bayles says
Photo by Bill Cramer
Because ERP systems can touch practically every employee and process at a company, there's no escaping the fact that implementing or upgrading those systems means having to change business processes and retrain employees. "It's the change management that causes all the pain and agony," says Autumn Bayles, CIO at Tasty Baking, an SAP software user. "That's what costs all the time and money." Nonsoftware costs--labor, consultants, systems integration, and training--can run four or more times the price of the software license.
ERP projects aren't as difficult as they used to be, partly because the software already has gotten better, some CIOs say. Ingersoll-Rand's Libenson still compares an ERP rollout to a minor root canal: The operation isn't so severe, but unpleasant nonetheless.
Vendors Knee Deep Of the big three, SAP is furthest along in its ERP overhaul. It completed a milestone in its Enterprise Service-Oriented Architecture project in May when it released mySAP ERP 2005. Oracle plans to debut its Fusion applications in 2008 while continuing to update its existing apps. Microsoft's Dynamics project, previously called Project Green, will give the Axapta, Great Plains, Navision, and Solomon applications a common interface, links to Microsoft Office apps, and a Web services layer this year and next before ultimately merging the four suites into one several years from now.
IT managers aren't exactly clamoring for these new software packages. While some components of next-gen ERP are available now, and more are due over the next two years, most customers aren't likely to upgrade until 2009 or 2010. Some analysts think it will be late in the decade before the new applications are stable, with all the bugs worked out.
Many businesses just don't need to move up for a while, says Forrester Research analyst Ray Wang, noting that many SAP customers upgraded to R/3 4.6 and 4.7 in recent years, and lots of PeopleSoft and JD Edwards customers took advantage of upgrade deals those vendors offered in 2003 and 2004 while fighting--unsuccessfully--Oracle's takeover. Oracle's April announcement of an Applications Unlimited plan, under which it will indefinitely maintain, enhance, and support PeopleSoft, JD Edwards, and Siebel applications, as well as its own E-Business Suite, means there's less pressure on customers to jump to Fusion. "We're not going to force people to move to a next-generation technology," says John Wookey, Oracle's senior VP of application development, who oversees Fusion.
California State University has "every intention to move to Fusion as it's currently described," says CIO Ernst, but since Oracle has said it will support PeopleSoft apps beyond 2013, the university can wait several years. Ditto for Ingersoll-Rand's Libenson, one of Oracle's biggest customers and a user of Siebel CRM applications. Upgrading next year to Oracle E-Business Suite 12, the next major release, is his more immediate plan. "Then we'll think about Fusion," Libenson says.
Some have questioned Oracle's ability to deliver Fusion in 2008, especially since the acquisition of Siebel Systems, completed in January, gives it yet another set of applications to incorporate. But Libenson spent several hours in May meeting with Wookey and Oracle CEO Larry Ellison and came away convinced the company is on the right track. "They have mustered the resources and are intent on getting this done," Libenson says. Yet he's quick to add: "It's still early in the game."
No Revolution The new ERP systems will be more evolutionary than revolutionary, some analysts think. Unlike the move to client-server computing, businesses won't have to rip out their installed IT systems. SAP, Oracle, and Microsoft promise to usher customers along with incremental steps to their next-generation apps.
At the heart of all three vendors' ERP redevelopment efforts is the adoption of service-oriented architectures, Web services standards, and business process management technology. SOA and BPM, the vendors say, are critical to making their applications more modular and easier to adapt as needed--say, when two companies merge--something that's been sorely lacking in ERP software.
In May, SAP debuted mySAP ERP 2005, which company officials describe as a stepping stone to Enterprise Service-Oriented Architecture because of the 500 Web services that are now available. SAP has built core functions such as finance, HR management, logistics, and procurement--previously offered as separate applications--into the core of mySAP ERP 2005. Using Solution Manager, a tool within its NetWeaver integration platform, the core applications are linked with function-specific Web services such as employee recruiting and collections management. While the 500 services SAP announced in May are available online, a new version of NetWeaver called the Business Process Platform, due next year, will include a repository with Web services built in. SAP also will incrementally add the Business Process Execution Language (BPEL) to its apps for defining business pro- cesses. Together, the changes will give SAP applications a kind of do-it-yourself flexibility that ERP systems have lacked, says SAP marketing VP Jeff Stiles.
Version 12 of Oracle's E-Business Suite will include Web services and XML reporting capabilities, technology that will become part of Fusion, making it easier for customers eventually to jump to those applications. While Fusion applications are still far down the road, Oracle has been laying the foundation by building up the SOA and business process management capabilities of its Fusion middleware products. In January, it debuted the Oracle SOA Suite with tools for deploying and managing SOA systems, including BPEL Process Manager for defining and executing business processes, the Web Services Manager console for defining and managing Web services, a business rules engine and business activity monitoring software, plus Oracle's JDeveloper 10g toolset. Businesses can use the BPEL tools to customize Oracle's applications or isolate application components and make changes without breaking the entire application, Wookey says.
Microsoft is adding Web services capabilities to its Dynamics applications as it updates them. Dynamics GP 9.0 and Dynamics AX 4.0 have been released as part of the first wave of Microsoft's ERP overhaul. Dynamics GP, for example, has a new Web services engine and XML programming interfaces with Web services access points supporting 20 business processes.
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