Johannesburg, 16 Jul 2003
The Oracle/PeopleSoft/JD Edwards affair is the "mating dance of dinosaurs". That is how George F Colony, CEO and president of Forrester Research, recently described the fight to the death of the software giants that has sent their South African customers into a whirlpool of uncertainty and doubt.
But in referring to the three enterprise software vendors as "dinosaurs", Colony was not heralding the end of ERP. Rather, he was questioning the validity of a Harvard Business Review article, which said IT is a commodity and no longer relevant in the greater scheme of enabling competitive advantage.
His argument is that the dinosaur dance overlooks the industry need for a standardised infrastructure that allows customers to focus on point solutions that will deliver a competitive advantage unique to the user`s specific needs. The biggest payoff of this standardised approach is that IT resources are freed up to focus where new technology is emerging.
Colony describes this, perhaps inappropriately, as the IT iceberg. He does not see this iceberg as a threat in the sense of hidden danger, but as IT`s role in creating an enabling infrastructure that management does not have to worry about because it is out of sight - below the surface - out of mind and most importantly - standardised. IT has to keep it as such so that business can focus on bringing in the new applications that will really add the competitive advantage.
So, it can certainly be argued that ERP in its traditional form of key business process integration - financials, sales, inventory and manufacturing - is a commodity solution. It is the enabling structure - below-water in Colony`s terms.
Above the water are the competitive advantage enablers that typically make up extended ERP suites today. These are software components, or pieces of software, such as electronic procurement, supply chain management, collaboration, warehouse management, product lifecycle management, plant design, document management or business intelligence.
Gartner sees this move to adding components as a shift in buyer behaviour, saying the failure of previous software implementations to meet expectations, "has created a more cautious buyer that seeks smaller, less-expensive pieces of software to quickly drive positive bottom line results".
Such extended ERP components compete head-on with best-of-breed products with functionality that today certainly equals and often betters the point solutions. The key advantages of ERP suite solutions is that, providing they are based on open standards, they can be easily customised to meet unique user needs as well as easily integrated into the underlying ERP infrastructure.
Also, as such solutions lose their competitive-edge - and they certainly will as more users come on stream, they themselves become part of the standardised commodity infrastructure on which new solutions, that address new business opportunities, will be based.
Forrester makes the point that in its research, among the key factors that contribute to a company`s greatness is high standardisation. This results in decreased cost and higher flexibility.
"It`s more expensive to maintain different types of infrastructure. Implementing, maintaining, customising, and supporting three financial systems take more resources than handling one. A standard IT infrastructure also knocks down barriers within companies and enables divisions or lines of business to reorganise and collaborate without worrying about tech impediments," says Colony.
Any ERP development today should be aiming to make it easier for customers to change and upgrade technologies and components, step-by-step, repeatedly, and without major disruptions in operations. Component architecture makes it possible to meet the most important requirements first. By quickly implementing selected components, business benefits are created at an early stage.
With each individual component or software piece having a standardised interface it can be used in an unlimited number of solutions and configurations depending on the industry, processes or geographical location in which it is used.
Most importantly, it gives users the flexibility they need today and in the future, to avoid being stomped on while dinosaurs do their mating dance.
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