An evolutionary approach to ERP

It's been a volatile few years for ERP (Enterprise Resource Planning), which has survived the dot.com era, Y2K and exaggerated reports of its own demise. Today, the new generation of ERP has permeated throughout business - and those companies still not using ERP, soon will.

The thinking in the late 90s was that companies would do best by simply taking a myriad of products and "tying" them together over the Internet. As hindsight has shown us, there is far more to a successful business IT landscape.

The dot-com revolution has ended, but the use of the Internet and the Web to communicate, collaborate and trade with customers and business partners is causing a fundamental shift in how companies define and manage their business processes. Companies can no longer think of their businesses singularly: they must consider their trading partners and customers. As a result, they need systems that support e-business transactions.

Where the old ERP solution was about making the back office efficient, the new generation ERP is about making everyone in the enterprise efficient, allowing information to be made available to everyone, anytime, anywhere.

Combining the power of capabilities such as enterprise portals, employee self services, mobile infrastructure and collaborative on-demand applications, the power of ERP needs to be brought to all users rather than just a privileged few.

Business processes in modern organisations must be integrated, streamlined, and transparent. The next generation ERP needs to provide a comprehensive, integrated solution, allowing companies to gain better control of their whole administrative and operations environment and increase efficiency and profitability. It needs to drive down the costs of integration and deployment by shortening time to benefit and leveraging existing IT investments.

Business applications should include full functionality in areas like Finance, Human Capital Management, Operations and Corporate Services. Furthermore, within these areas a customer needs powerful analytic and collaborative capabilities.

This ability to extend ERP to integrate with all systems within a company is critical. The next generation will have visibility through transparency compliance and the delivery of new functionality supported by proven industry best practices. This is why a new technology platform will be a key feature of the next generation ERP.

Furthermore, companies want to empower and enable their managers and employees to manage their contribution to the enterprise. This generation of ERP will be about bringing the power of ERP to every manager and employee in the enterprise.

In times when IT budgets are being reduced, the remaining projects are typically focused on optimizing the enterprise's current IT environment to extract more value out of systems that already exist and to reduce the total cost of ownership (TCO). But integrating heterogeneous systems remains a key challenge in IT. Tying disparate systems together in point-to-point integration projects is not only costly and results in a rigid IT environment, it also leaves the business aspect of integration unsolved. In order to address this problem, ERP vendors will need to introduce a comprehensive integration and application platform.

The ERP platform needs to be completely based on open standards, built to incorporate information and applications from virtually any source to reduce complexity, increase flexibility, and lower TCO of integrated IT landscapes. It also needs to interoperates with market technologies like Microsoft .NET and IBM WebSphere. SAP NetWeaver is one example, supporting all SAP business application solutions, including mySAP Business Suite and SAP xApps - applications capable of tying together end to end business processes through multiple systems and vendor products.

To provide complete business integration rather than just connecting IT systems, the integration platform needs to facilitate the integration and alignment of people, information, and business processes across organizational and technological boundaries.

The "people integration" layer should bring together the right functionality and information to the right people, while the "information integration" layer should make both structured and unstructured information available in a consistent and accessible way. The "process integration" layer enables business processes to run seamlessly across heterogeneous systems.

The difference between pure technology and the required business solution is the business content. The platform needs to come with ready-to use, integrative business content, which shortens the implementation time and speeds up return on investment. Business content delivered with such a platform should include portal content and roles for boosting people integration; reports and analyses that speed up information integration; and interfaces for weaving together the business processes of various back-end systems.

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The next generation ERP and its integration platform will have to extract more value and business insight out of existing systems. It also will reduce the cost of integration by making costly point-to-point integration projects unnecessary.

Evaluating the benefits of ERP projects produces a top 10 list of intended accomplishments, according to Meta: replace outdated software, improve financials, improve analytics and decision-making, standardise cross-platform processes, improve IT performance, improve customer service, get a single-system view, improve purchasing, improve order management and reduce personnel costs.

Trying to justify spending 1% to 3% of your company's annual revenue on ERP software is always going to be more art than science, but the business content delivered should distinguish the business solution offered from pure technology and ensure fast ROI.