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Reinventing ERP after Y2K

The "e" in e-commerce is being added to what has traditionally been viewed as a transaction-based back-office system: ERP. This is making ERP more an equal partner in front-office customer interactions.

In about 45 days, we'll find out whether the Y2K crises is merely a Blip On The Road (BOTheR) or The End Of The World As We Know It (TEOFTWAWKI). I'm betting it's a BOTheR, though it has been expensive in time and money.

The good thing about the Y2K crisis is that it was a wonderful excuse for companies around the world to update and upgrade their enterprise resource planning (ERP) systems...and make 1996, 1997, and especially 1998 banner years in ERP sales and implementation projects.

Sometime early in 1999, companies began pulling the plug on ERP projects they couldn't fully implement by December 31, 1999. They instead focused on renovating legacy systems. ERP vendor revenues, not surprisingly, tanked.

Now automotive OEMs and suppliers are looking at next year's ERP implementations. What will they find? There's plenty of business-as-usual. Microsoft Windows NT-based systems; even a Linux-based ERP system. New ERP vendor mergers. Advanced planning and scheduling (APS) is still hot. Lately, ERP vendors have been announcing the second versions of their APS modules or that their APS acquisitions or partnerships are now ready for prime time. Some ERP vendors are focusing on the automotive industry, primarily by incorporating the specifications for the Automotive Network eXchange (ANX).

But most of the ERP news comes from a whole new set of buzzwords, uh, initiatives: portals, on-line communities, e-commerce, and customer relationship management (CRM). Converted to information technologies (IT), these initiatives help improve supply chain management, customer service, and, ultimately, customer retention. They also significantly broaden the conventional concept of ERP as a back-office commodity.

Here's a sampling of how these initiatives play out in ERP.

Start Here

The Web—through its progeny, e-commerce—is probably the greatest force reinventing ERP. All the major ERP vendors seem to be announcing, if not demonstrating, e-commerce features of some sort. The slickest are portals and on-line communities, which mask the incredibly complex task of linking a transaction-based system to the Web.

Here's the problem these two features solve: There's too much content out there! What with reentering passwords, switching between different user interfaces, working with marginally integrated applications, and finding information among the pile of Internet, intranet, extranet, legacy, front- and back-office, and personal applications, users are losing vast amounts of unaudited time.

A web portal is more than a nicely designed page of web bookmarks. It can be the one-stop area for "content" (information and applications): news, stock quotes, e-mail, chat rooms, calendars, and more.

In a business setting, portals can point to information in and outside the enterprise. That's what makes them intriguing to ERP vendors. Portals, such as mySAP.com Workplace from SAP AG (Walldorf, Germany), give users a single, personalized point of access to everything they need to do their jobs: accessing production schedules, monitoring vendor performance, viewing customer profiles, filling out expense reports, reading and answering e-mail, and so on. And all of this is accessible from any web browser.

Like SAP, Oracle Corporation (Redwood Shores, CA) is providing "site templates that can be customized for an instant out-of-the-box portal, including organizational charts, stock feeds, and travel services," as well as company-specific applications. This is all packaged in Oracle WebDB 2.2, along with tools to customize, deploy, manage, and update the portals, define access privileges, and even render the Web site in more than 20 languages.

That's the conventional side of portals. mySAP.com Workplace also provides drag-and-drop functionality between Web-based resources and ERP applications. For example, a buyer using Workplace can drag and drop a bill of materials (BOM) on a supplier's icon in the same screen window. Workplace will then surf the `net, automatically accessing the supplier's ERP system, which is also linked to the Web through a password-protection scheme, and then gathering and returning the shipping schedule for the relevant parts on the buyer's BOM.

ERP as Community Support

Portals can also be the entrance way to on-line communities. SAP's mySAP.com Marketplace, for example, is an Internet-based community that provides an open electronic business-to-business (B2B) hub for "enterprises and business professionals to collaborate, conduct commerce, access personalized content, and interact in professional communities."

Think of Marketplace as a virtual kerietsu—a vertically integrated trading community for specialized commerce, similar to what ANX is to provide.

SAP's Marketplace, hosted at www.mysap.com, will consist of vertical applications that feature goods, services, and content unique to an industry. For example, a brake supplier using SAP's Marketplace can register itself in a business directory that contains company information, product catalogs, contacts, and target market data on buyers and sellers within the transportation industry. A document exchange capability based on the Extensible Markup Language (XML) format will let participants exchange information. For example, the brake supplier can add vendor master data to its entry in the business directory, which would be used during the purchase requisition process by an automotive OEM to create a vendor master record of the brake supplier in the OEM's ERP system.

Marketplace will also have cross-industry applications, such as auctions, spot-market buying, and request for proposal/quotation (RFP/RFQ) matching. And it will offer aggregate information about industry products and services, industry analyst reports, business information, generalized content, chat rooms, hosted forums, and more.

Some of this content will require a membership fee. For example, companies were reportedly going to pay PeopleSoft, Inc. (Pleasanton, CA) about $1 million each to become "charter merchants" on the PeopleSoft Business Network portal. For now, the on-line communities are mostly announcements; virtual moving-in day is scheduled sometime in the first half of 2000.

eERP + CRM

Portals and on-line communities are only part of the e-commerce story. There is also the shift in IT from client/server architectures to Internet-based architectures, namely servers and web browsers. New ERP versions scheduled for the first half of 2000, such as PeopleSoft Release 8 and Oracle 11i, will be truly Internet-based, versus being a Java-based web browser port.

Lately, vendors have been rushing to link ERP to the Web, effectively integrating their ERP systems to supply chains between customers and suppliers worldwide. To pick one example, Baan E-Enterprise from Baan Co. (Reston, VA) includes three applications that extend Baan's ERP system into the Internet:

  • Baan E-Sales for self-service, personalized, B2B selling
  • Baan E-Collaboration provides XML-based, on-line access to enterprise information
  • Baan E-Procurement is an intranet-based requisitioning system that automates the largely paper-based process for purchasing office supplies and maintenance, repair, and overhaul procurement.

Pricing for Baan E-Sales and Baan E-Collaboration is $25,000 each per server for up to 25 concurrent users; Baan E-Procurement costs $1,000 per seat.

All of this assumes the ERP user company has customers to begin with. Enter customer relationship management (CRM). Conceptually, CRM involves all aspects of a company's interactions with customers, such as identifying, acquiring, and informing customers, selling products and services, and providing after-sales service. Technologically, CRM point solutions and "complete" systems are available that include sales force automation (SFA, such as sales lead tracking, customer sales analysis, telemarketing, and point-of-sale support), sales-order management, sales configurators, customer self-service applications, call center management, field service scheduling, warranty management, and installed base management.

ERP vendors see SFA at minimum, and CRM in general, expanding their traditional back-office systems to the front office. This makes sense because ERP can give CRM users visibility into back-office processes that can affect the customer relationship, such as inventory management, production scheduling, and warehousing. This visibility, points out AMR Research (Boston, MA), "creates a more complete profile of the customer's business and helps identify opportunities for additional sales of products and services." This visibility is also particularly useful in, continues AMR Research, navigating product catalogs, generating custom quotes, and calculating available-to-promise information, to name a few critical customer-related interactions.

Dozens of standalone CRM vendors exist that offer individual CRM modules and entire suites. The leading CRM suite vendors include Clarify, Inc. (San Jose, CA), Siebel Systems, Inc. (San Mateo, CA), and Vantive Corporation (Santa Clara, CA). Infusing this CRM functionality into ERP comes in various ways. For example, last year Baan acquired Aurum Software, Inc. (Santa Clara, CA) and that company's SFA functionality. PeopleSoft is partnering with Clarify and Vantive. Oracle has released its own CRM suite, which does not require implementing Oracle ERP. Because Oracle products are written from the same tool set for the same database technology, their integration is a no-brainer. Like Oracle, SAP provides standalone CRM applications (from an acquisition last year, plus new code). These CRM applications are integrated with SAP's R/3 ERP system through SAP's Business Application Programming Interfaces (BAPIs).

So just remember, after January 1st, if there's a dial tone on your telephone, then there'll be an ERP system you can surf to.