The Business Applications Scenario: ERP for the 21st century.


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The Business Applications Scenario: ERP for the 21st century.

  1. 1. The Business Applications Scenario: ERP for the 21st century. Kristian Steenstrup otes accompany this presentation. Please select Notes Page view. hese materials can be reproduced only with Gartner's official approval.
  2. 2. ERP Business Applications: Fact vs. Fiction ERP Orthodoxy ERP Reality Best of Breed HCM SCM NBT NBT HR SCM NBT SCM NBT NBT MRP Fin. NBT NBT ERP NBT NBT Fin. NBT NBT Ord. IM PLM NBT CRM Pur. PLM CRM Mgmt. CRM SRM NBT All enterprise Extend the enterprise Customize based application needs application to include on a combination of are fulfilled from a some integrated and best-of-breed and in- single vendor. some best-of-breed house development. components. After 13 years, ERP remains the primary enabler of enterprise- specific business application requirements. Enterprises continue to place heavy emphasis on their incumbent ERP vendor when making business applications decisions that extend outside of the enterprise (CRM, SCM).
  3. 3. Client Issues What is the current state of the business applications vendor market? Who are the primary business applications vendors and where are they positioned in the market? What are the characteristics of future business applications leaders and how will they impact users?
  4. 4. ERP Drivers and Inhibitors Drivers Operational efficiency Transparency Best of Integration (lower risk) Breed Enterprise business- process-enabler ERP Inhibitors Vendor dependency In the current economic climate, Market consolidation lower cost drives enterprises to Functional shortcomings an ERP strategy. Lack of proven ROI
  5. 5. ERP Economics: Operational Efficiency Remains the Primary Driver If the enterprise is focused on operational efficiency and aggregation of information, for the majority of enterprises (Type B and Type C), the benefits of vendor-offered integration outweigh the benefits of best of breed (user- owned integration). 20% Innovation Type A Type B Type C Operational 15% 62% 23% 80% Efficiency Operational Efficiency Behaviors: 2003 • Cost Savings by cost center • Instance consolidation • Centralized asset management
  6. 6. ERP and the Transparency Imperative The Transparency Imperative: Visibility throughout the value chain to enterprise data and processes Drivers ERP Strategy Delivers: Multienterprise collaboration Single view of the data Compliance Single source for processes Competitive advantage Security concerns Single source of technology Outsourcing Enterprise collaboration At Issue: Complete view of all enterprise data Multienterprise processes Enterprise execution of processes Technology “lock-in”
  7. 7. Market Consolidation Continues: Single Vendor Risk at Issue 1999 2002 2007 H Megasuite Megasuite Vendors Vendors No-Man’s readth Land Focused Focused L Vendors Vendors L Depth H L Depth H L Depth H By 2007, there will be no more than 3 viable megasuite vendors, including SAP, Oracle, and Microsoft (0.8 probability). By 2007, there will be at least 40 percent fewer ERP vendors than in 2003 (0.7 probability).
  8. 8. The Vendor Product Management Model Gather requirements (marketing) – Customers, industry groups, emerging technologies, regulatory issues Size requirements (development) – Impact on current and future releases – Technology impacts Optimization and rationalization – Time vs. cost vs. return on investment Execution – Coding, testing, product marketing, product launch Release general availability
  9. 9. ERP Technology: From Client/Server to Service-Oriented Architecture More Architecture Database Database Process- Revolution X Oriented Architecture Published Published Evolution Service Service Database Database General General Private Private Client Client Database Database App. App. Service X Private Architecture Private Private Messages Database App. App. Data Private Sharing More App. Data- Most ERP Vendors Oriented Shared-Nothing Are Here! “Stovepipes” 1995 1998 2001 2003 2007
  10. 10. ERP Application Development: Componentization Required ERP Vendors Here 1. Applications Order Entry Fulfillment Receivables Business Process Application Application Application Credit Configure Check Price Ship Bill Collect 2. Microflows Business Objects 3. Enterprise Process Demand to Service Enterprise-Spanning Business Process 4. Value Chain Optimization Need to Get Here Multienterprise Business Process
  11. 11. Business Process Fusion Moves Users to a World of Services Business View: Enabling agile, end-to-end business processes Business Process Fusion Orchestration Services SOBA — Service-Oriented Using BPM BAM Process … Maps (and Event-Driven) Business Applications Process View SES APS CEP … Created and App. View Deployed by SODA – Service-Oriented Development of Applications Diverse devices Delivered by ISE BPA WS* WSM RTI P2P MAG M2M Construction View
  12. 12. Four SOBA Categories Have Emerged SOA compliance is the key attribute of a SOBA Meshed applications Application working in concert Designed Complexity as SOBAs 4. Composite SOBAs through SODA. 2005 3. Modular enterprise suites Important standards: 2004 BPEL 2. New ‘best-of-breed’ components WSDL Limited 2000 1. SOAP-wrapped legacy applications SOA Utility Capability to orchestrate complex processes SOBAs emphasize modular design, extensibility, business process fusion, and SODA design principles.
  13. 13. ERP Functionality: From TLAs to Processes Prospect to Cash CRM Applications Best of Breed 16. Apply Payment 1. Log Activity EAI 15. Invoice 2. Log Opportunity EAI 14. Ship 3. Check for Contract Financials, ERP 13. Send ASN Inventory Mgmt., 4. Check Inventory Order Mgmt. 12. Plan and 5. Check ATP/CTP Purchasing Produce EAI 6. Determine Price 11. Confirm Order 7. Quote Customer EAI 10. Check Credit SCM Applications 8. Create Quote 9. Generate Order
  14. 14. ERP Functionality: From TLAs to Processes Prospect to Cash Process CRM With ERP Strategy Applications 16. Apply Paymen 1. Log Activity CRM Functionality 15. Invoice 2. Log Opportunity 3. Check for Contract 14. Ship ERP 4. Check Inventory Functionality 13. Send ASN 5. Check ATP/CTP 12. Plan and 6. Determine Price Produce SCM 11. Confirm Order 7. Quote Customer Functionality 10. Check Credit 8. Create Quote 9. Generate Order
  15. 15. The Coming Battle of SOBA Megavendors: Application Infrastructure Takes Center Stage Strength: Application offerings Challenge: Expanding into platform markets Between Giants IBM Strength: Independen Strength: Dominance platforms and with Windows and services; great Linux .NET everywhere; D Can independent win? support Neutral: Applications Challenge: Packaged software (SMB only) applications overlap Challenge: Integrating and lack coherence their stack Strength: Single data architecture; comprehensive application stack Challenge: Reliance on Oracle DBMS
  16. 16. ERP: Functional Breadth Scorecard General - Domain Specific will vary Financial Mgmt. Human Capital Mgmt. Supply Chain Planning Supply Chain Execution Asset Mgmt. Supplier Relationship Mgmt. Plant Operations Product Life Cycle Mgmt. Customer Relationship Mgmt. 0% Functionality Percent 100% ERP Vendor Best-of-Breed Vendor Combination
  17. 17. ERP Functional Depth: Industry Specificity Process Manufacturing Example Vertical- Extended Domain Specific Enterprise SCM Extended Enterprise CRM Catch Weight Domain Recipe Mgmt. Unique Production Mgmt. Inventory Mgmt. ERP Accounting, Purchasing, Order Entry, Costing
  18. 18. Recommendations Enterprise-specific drivers (for example, functionality, external/ internal integration costs, multienterprise process enablement) should be used as benchmarks to help assess the effects of selecting an ERP or best-of-breed deployment strategy. Understand that an ERP strategy allows you to choose the degree of integration; it does not eliminate integration completely. Choosing to execute an ERP strategy does not necessarily mean less risk in vendor viability. Assess viability regarding financial capabilities, as well as the vendors’ ability to evolve/transform to the next generation of business applications. Few ERP vendors will make it to the next stage of business application evolution. Emphasize service architectures, functional componentization, vertical specificity and business process fusion in your ERP vendor selection process.
  19. 19. The Business Applications Scenario: ERP for the 21st century. Kristian Steenstrup otes accompany this presentation. Please select Notes Page view. hese materials can be reproduced only with Gartner's official approval.
  20. 20. The Business Applications Scenario: ERP for the 21st century. Kristian Steenstrup otes accompany this presentation. Please select Notes Page view. hese materials can be reproduced only with Gartner's official approval.