Beyond ERP 

Y2K is just about done and
streamlining the back office is not enough. Now is the time when organizations are looking beyond ERP implementations–prospects that will help them elicit more value from their enterprise application system, in sales, customer service and advanced business planning.

For more and more companies worldwide, using ERP software to improve internal efficiency is a ho-hum case of been there, done that. So now many users, especially the manufacturing sector that were the first ones to latch on to ERP, are moving ahead for ways to better capitalize on their investments. The new emerging business landscape is a mix of priorities that are shifting toward add-on projects that extend ERP beyond the back office to improve sales, increase customer satisfaction and business-decision making.

For some companies that means trying to use their ERP systems to support ecommerce applications. Others are moving to install customer relationship management and advanced planning software that will be fed with data by the ERP backbone they have already put in place. Overall, the business and technology transition that is taking place in the ERP industry is targeted at expanding and integrating the ERP backbone within an enterprise with the stakeholders’ systems such as suppliers, customers and distributors. This increased user focus on expanding ERP’s reach is coming at an interesting time when analysts are still questioning the software’s financial paybacks.

High publicity decisions to kill or postpone ERP rollouts also dot the landscape. With that as a backdrop more companies are recognizing that this is one project that never ends and the once short-lived project teams are being left to work with broadening and extending ERP systems.

With integration, extension and advanced supply chain management emerging as the key issues, almost all major ERP vendors are taking to offering ecommerce, decision support and SCM based applications along with several upgrades to the existing versions of their ERP software. However only time will tell as to how many vendors actually deliver their promises. The coming year will also see a more serious effort from several vendors to tailor their solutions better for different vertical industries. A recent US-based analyst report (June 1999) said that 76% of manufacturers already have an ERP system or are in the process of installing one. In India more than 65% of all ERP installations belong to the manufacturing sector. Only about 20% banking, finance and insurance companies are running or installing ERP applications now while this software has not penetrated other markets to the same degree.

Since extending the core ERP system is becoming a priority for users, the next step in ERP will revolve around integration with SCM, CRM or e-business applications. But there is a problem for enterprises. As the needs of
stakeholders keep changing, enterprises have to look for a corresponding fit in the existing packages or look for newer relevant packages
that could meet the altered needs. This would create instability and pose problems in identifying packages, vendors and
integrating them with their systems. 

Also as enterprises look for new IT models to identify new business models, current ERP systems will cease to be of much help.

Enterprises will look for early warning systems to enable them to make course corrections required. ERP solutions that cater to such requirements offering data for the present and future constraints on business processes, will be most hunted by users. Using this data effectively for recasting business will be the most significant ‘post ERP issue’. Many vendors are already offering new intelligent decision support systems (DSS) standing on ERP systems. This will continue to grow as more ERP vendors take to this area. According to Merill Lynch, the DSS market is about $500 m today and will grow to 

$8 b by 2002.

One important thing that both the users and ERP package developers need to keep in mind is that DSS packages will only provide information on the identified needs of stakeholders, while the question of identifying new stakeholders and associated business models is not completely addressed. The growing use of internet will increase degrees of freedom for stakeholders thereby introducing fluidity into business models. A responsive approach here would result in frequent changes and create difficulties in integration. ERP package developers would also face difficulties in integrating these new requirements with the existing systems. It would therefore be beneficial for ERP package developers to visualize the emergence of these stakeholders from a broader perspective and incorporate their requirements in the systems.

That means the analysis has to go beyond looking at the information models of the enterprise. In the coming years it would therefore be important to integrate the enterprise model with the enterprise informational model instead of basing ERP configuration on the enterprise information model alone.

Other technology trends that will complement the above trend, will be the increase in the sales of ecommerce and supply chain management
applications. A recent IDC report suggests that the year 2000 will see a shoot-up in the sales of mission critical applications such as
ERP, CRM and sales force automation. The next application category to benefit
next year are the web-enabled applications and ecommerce. A significant trend that will emerge would be that ERP will grow from being a transaction processing 

enterprise system to a larger picture encompassing extended enterprise boundaries, web-enablement and ebusiness transactions.

But before companies bet the house on ebusiness some analysts are forecasting that the ebusiness buzzword is ‘over-inflated hype’, which is ripe for ‘investor disillusionment’ and a series of ‘efailures’ in the near future. The Gartner Group has reported that ebusiness currently at the peak of its hype will lead to a sharp adjustment of expectations over the next four to five years before reality sets in. Between the years 2006 to 2008 the term ‘ebusiness’ itself will disappear and becoming absolutely irrelevant. This comes out as a grim picture for the next decade of ebusiness with the Gartner Group going on to predict a 75% failure rate of all ebusiness projects.

For corporations and vendors ripening to integrate ERP with ebusiness applications, it would therefore be required to separate the hype from reality and understand the need for both ‘brick and mortar’ and ‘click’ strategies.

One thing that can be agreed upon for sure is that the next three to four years will see a substantial rise in integrating ERP with customer relationship management, supply chain management and sales force automation applications.