Which way now for ERP?

Enterprise resource planning has spread like a purple tide across corporate business. But where does it go from here? asks Julia...

Enterprise resource planning has spread like a purple tide across corporate business. But where does it go from here? asks Julia Vowler

It was Sir Winston Churchill, quoting a Hindustani proverb, who wrote: "Dictators ride to ride to and fro upon tigers from which they dare not dismount." The same is also true of corporate IT: like a cyclist it has to keep pedalling furiously to maintain the momentum.

For the last 10 years the most inescapable thing it has been doing is implementing enterprise resource planning (ERP) systems.

Throughout the 1990s, ERP has been spreading like a purple tide across corporate business. Now, scarcely a blue chip giant or below exists without some massive implementation out of a handful of favoured industry packages from a select band of names.

But where does ERP go from here?

Cynics might be tempted to say that corporate IT is being pushed into customer relationship management, supply chain management and e-commerce to divert the board from the millions spent, questionably, on ERP. However, a cynic is only someone who knows the price of everything but the value of nothing.

And was there value in ERP and is there still more to come?

The latest guidelines bulletin from the National Computing Centre (NCC) suggest a guarded "yes".

True, coming up with positive cost-benefit figures for ERP is a tricky business. It is also true there is a wave of post-implementation doubt and disillusion.

But for all that, ERP has been the mechanism by which large corporations have put their houses in order in preparation for the age of globalisation and e-commerce. Its value has been in creating internal efficiencies and an in-house "common market" dissolving local barriers to inter-departmental free trade between such principalities as manufacturing, finance, logistics and human resources. It has also ensured all internal transactions are conducted in a lingua franca, common data currency.


But ERP, the guidelines point out, is essentially inward-looking. Customer relationship management, supply chain management and the Internet are not - they reach out to customers and suppliers and do so over new channels.

So does ERP have anything to contribute to these new areas?

"Yes," say the guidelines. In-house ERP is - and must be - extensible beyond the boundaries of the organisation, both to suppliers and customers. In supply chain management and business-to-business e-commerce, the seamless chain of processes between one company's production and another customer's purchasing creates an obvious need for extended ERP across the join.

Similarly with customer relationship management and business-to-consumer e-commerce, integration between the multi-channel customer-facing processes driven by sales and marketing must be firmly integrated with the back-end fulfilment and finance processes within the ERP domain.

The guidelines point out the kind of ERP that can tackle this will need to be different from the monolithic, wall-to-wall, multi-year implementations that corporate IT has been hammering in for the last decade - they are too slow, too expensive and too inflexible for the new external-facing focus.

The only way to break the deadlock, say the guidelines, is for ERP to liquefy into smaller, fleeter parts. Components must become the name of the game.

Component solution

"Componentisation... [offers] cost advantages, ease of deployment, improved manageability, effective scalability and... vendor independence," say the guidelines.

Components - a chunk of functional (object-based) code wrapped up in usability-focused layers such as communications, data validation, event handling and relationship management services - can communicate with each other via message passing (ideally using standards common to all ERP packages). This means that they can establish an inter-company customs-free exchange mechanism irrespective of what package is installed.

According to the guidelines, "Each component exposes its methods so that other components or applications can exchange information with it, and this architecture is intended to make it relatively easy to extend the scope and scale of the ERP solution, taking in any part of the enterprise or of any other enterprise whose own components support the same message-passing techniques and standards.

"The component approach is ideally suited to the deployment of ERP within organisations committed to trading partnerships or intending to rationalise the supply chains," the guidelines argue.

"It also simplifies the processes by which complementary software, such as data warehouses and customer relationship management systems, can be integrated within ERP."

Because the component approach is modular, risk is minimised and systems can be built organically at the most appropriate pace and with the benefit of a growing body of experience.

And, the guidelines conclude: "What users increasingly want from ERP systems is support for e-commerce, lower cost, flexibility, ease of use and ease of maintenance and development. All of these are offered by componentisation."

  • NCC Guidelines for IT Management: ERP - From Enterprise to Components is available from the NCC. 0161-242-2121,

    Supplier component plans

    According to the NCC report

    ERP suppliers are driving towards component strategies but each one is starting from a different base line and each has adopted a different approach to componentisation

  • SAP, the market leader has opened up its core R/3 system, but is concentrating its effort on producing new component modules

  • Baan has taken a more radical approach in an attempt to steal a march on its competitors and is committed to reengineering all its offerings as true components.

  • Oracle has gone further down the road to Web enablement than either SAP or Baan

  • JD Edwards has built component architecture from the bottom up.

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