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The enterprise systems market

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A short introduction to the market surrounding enterprise systems, and the current development and trends.

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The enterprise systems market

  1. 1. www.handels.gu.se Johan Magnusson Centre for Business Solutions School of Business, Economics and Law University of Gothenburg Market: Enterprise Systems 2013-08-29Centre for Business Solutions
  2. 2. www.handels.gu.se Agenda After this lecture, the student will be able to: 1. Evaluate some of the drivers for changes in the ES market 2. Explain technological changes and their effects on the design of ESs 2013-08-29Centre for Business Solutions
  3. 3. www.handels.gu.se Learning Points: Current crisis • Even though the IT Budget has been slashed with 10% in many companies, business has not been affected • CIOs have not sufficiently communicated the cost of cost-cuts • Application management is lagging • IT Governance has received increased attention • Now is the time to plan for growth! 2013-08-29Centrum för Affärssystem
  4. 4. www.handels.gu.se Historical development: Recap • Material Requirement Planning Systems • Material Resource Planning Systems • Enterprise Resource Planning Systems • Enterprise Application Integration • Service Oriented Architecture • Software as a Service
  5. 5. www.handels.gu.se Centralized 1960 | Fiktiv beskrivning 1960 | Fiktiv beskrivning 1980 Decentralized1980 Centralized 1998 | Fiktiv beskrivning 1998 Decentralized with centralized integration 2002 Enterprise Application Integration / Enterprise Service Bus | Fiktiv beskrivning 2002 Service Oriented Architecture | Fiktiv beskrivning 2010 Decentralized 2010?? 2015
  6. 6. www.handels.gu.se Service Oriented Architecture (SOA) • ”The Client/Server of the 21st century” • Architectural guidelines for micro-integrations • Used as guidelines for most new applications • Applications are broken down into services • Strong focus on ”re-use” as a measure of success • Modular, distributable, clearly defined, interchangeable and shareable • High risk of initial failures without clearly defined governance 2013-08-29Centrum för Affärssystem Abrahms, G, & Schulte, R.W. 2008. Service-Oriented Architecture and guide to SOA research. Gartner group.
  7. 7. www.handels.gu.se Services Software as a Service • Natural effect of SOA • Software delivered as loosely coupled services • 10% of ERPs were SaaS-based 2009 (IDC, 2007) • 40% of SMEs have moved to SaaS by 2011 (Gartner Group, 2008) • Business models under construction • Muddy waters between Application Service Provider (ASP) and SaaS have now turned into Cloud Computing… 2013-08-29Centrum för Affärssystem ERP2002 Services ERP2010
  8. 8. www.handels.gu.se Examples from ERP and CRM • Ataio, Netsuite, 24SevenOffice, Fortnox & Salesforce • Business models built on high level of standardization • Low maintenance costs and ease of use/access • Issues concerning agility and ownership 2013-08-29Centrum för Affärssystem
  9. 9. www.handels.gu.se ERP Vendor strategies • How do we relate to the new market? • Leaders – Building directly on new platform – No legacy to take into account – Quick adoption of new model – Ex: Fortnox, 24/7 office, Ataio • Laggers – Re-configuring old versions – Re-packaging of instance – Slow adoption, milking previous market – Ex: SAP, Microsoft, Oracle • Brokers – Taking over the customer-relationship 2013-08-29Centre for Business Solutions
  10. 10. www.handels.gu.se Incumbents and Challengers 2013-08-29Centre for Business Solutions Magnusson etl. 2012. “Incumbents and Challengers: Conflicting institutional logics in SaaS ERP vendors business models. Journal of Service Science and Management, 5:2.
  11. 11. www.handels.gu.se Cloud Computing • The use of disparate resources to secure computational needs • Elastic, off-premise sourcing • Remember Watson… • Federated ERP • SaaS, IaaS and PaaS • Issues concerning QoS (Quality of Service), accountability and responsibility • ”I’m still confused, but on a higher level…” • Market bled €3B 2009-2011 • Paradigm shift 2013-08-29Centrum för Affärssystem
  12. 12. www.handels.gu.se Research in Progress: The emergence of ERP App Stores • From: To: 2013-08-29Centre for Business Solutions Partner SMErp CustomerSMErp Partner Customer Magnusson and Nilsson. (fortcoming). “The ERP App Store: A cradle of Conflicting interests in platform ecosystems“ 0 1 2 3 4 5 Price Revenue Market Responsibility OwnershipControl Accreditation Platform Scope SMErp Partner
  13. 13. www.handels.gu.se2013-08-29Centre for Business Solutions Growth Profitability New Customers Additional sales Decreased cost Increased revenue Increased brand awareness Lower barriers for procurement Externalizatio n of development Courtage • Full scope • Medium price • Full responsibility • Small scope • Low price • Medium responsibility • Medium scope • Medium price • Low responsibility • Small scope • Low price • Low responsibility Strategic choice for ERP App Stores
  14. 14. www.handels.gu.se Software Ecosystems • Multi-sourcing in the wake of SOA and SaaS • Strive for agility • IT Relationship models are unsophisticated, partnerships built on opportunism • Are your current vendors right for your ecosystem? • Evaluation of vendors – Open source – Web and consumerization – SaaS – SOA Governance and Strategies – Master Data Management (MDM) – Business Process Outsourcing (BPO) – Sourcing innovation 2013-08-29Centrum för Affärssystem Genovese, Y. ete al. 2007. Evaluating Global-Class Software Ecosystems. Gartner Group | Genovese, Y. 2007. Evaluating IBM, Microsoft, Oracle and SAP strategies in software megatrends. Gartner Group
  15. 15. www.handels.gu.se Business Impacts of SOA and SaaS • Agility & Alignment: Quick response to changes in business processes • Vendors and Customers have different intentions – Vendors: Keep the customer close: Increase dependence – Customers: Keep the vendor at a distance: Decrease dependence • Vendors have used different approaches so far • Customers have not yet seen the true possibilities of SaaS • 3rd party suppliers are closest to the customer 2013-08-29Centrum för Affärssystem
  16. 16. www.handels.gu.se Consumerization and ERP • Consumerization is regarded as the most influential mega-trend during the coming decade • Standardization and commoditization are powerful drivers • 50% of all Global 2000 companies have deployed consumerized IT • Web 2.0 and Social Computing comes with a collection of new risks • Transparency and Crowdsourcing • How will this effect ERP? 2013-08-29Centrum för Affärssystem
  17. 17. www.handels.gu.se Contrasts: Process vs Emergence • IF (erp IS process-based) • AND (erp IS focused on de-crease in lead-times) • AND (erp IS based on standardized processes) • THEN (ERP is NOT agile) • Enterprise 2.0 vs Enterprise 1.0 • Emergent design requires individualistic processes, fully re-configurable • Learning and experimentation as standard • McAffee, 2005; Hedberg & Jönsson, 1987 2013-08-29Centre for Business Solutions
  18. 18. www.handels.gu.se Web 2.0 and Enterprise 2.0 • W2.0 is the Read/Write Web • High degree of dialogue and transparency • Companies need to adress the change in access and exposure • Impacts will ripple throughout the entire enterprise • First step will be passive market intelligence 2013-08-29Centrum för Affärssystem Austin, T. 2009. Pattern based strategy and E2.0. Gartner Symposium, Cannes.
  19. 19. www.handels.gu.se Examples 2013-08-29Centrum för Affärssystem
  20. 20. www.handels.gu.se Analytics go Social • Social Network Analysis • Enterprise Internet Reputation Management • Sentiment and Prediction analysis • Prediction Markets 2013-08-29Centre for Business Solutions
  21. 21. www.handels.gu.se Food for Thought: Prediction Markets • Economic theory during the 1980’s • Iowa Electronic Market and the Hollywood Stock Exchange • Will price reflect average belief? • Wisdom of Crowds and Wikinomics • HP, Google, GE, Dell, Pfizer… • Could we predict our revenues? 2013-08-29Centre for Business Solutions
  22. 22. www.handels.gu.se Regulation • Three forms of isomorphism (DiMaggio & Powell, 1983) – Coercive (Regulation) – Mimetic (Imitation) – Normative (Norms) • Regulations give rise to new demands • Continued regulative changes give rise to agility 2013-08-29Centre for Business Solutions
  23. 23. www.handels.gu.se Recapitulation After this lecture, the student will be able to: 1. Evaluate some of the drivers for changes in the ES market 2. Explain technological changes and their effects on the design of ESs 2013-08-29Centre for Business Solutions

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