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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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Examples 2013-08-29Centrum för Affärssystem
  20. 20. Analytics go Social • Social Network Analysis • Enterprise Internet Reputation Management • Sentiment and Prediction analysis • Prediction Markets 2013-08-29Centre for Business Solutions
  21. 21. 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. 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. 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