Enterprise Software

ERP mission is critical, but not center stage

Enterprise resource planning (ERP) has been a tour de force for many organizations, but as other segments of the enterprise application market fight for the spotlight, the role of an ERP system must change.

Despite some well-publicized implementation disasters, automating your company’s business processes can enable smoother and more efficient workflow. Enterprise applications are pushing beyond the four walls of the enterprise, and so the former heavyweight ERP must now become a team player, sharing the stage with customer relationship management (CRM) and supply chain management (SCM).

According to AMR Research , the enterprise application market as a whole will skyrocket from $27 billion in 1999 to $78 billion in 2004, whereas the ERP market segment will see a substantially slower growth rate of $16.9 billion in 1999 to $21.4 billion in 2004.

"In the last two years, companies have focused more and more on the improvement of inter-enterprise processes, using the Internet to enable basic technology and application systems, such as supply chain management or customer relationship management systems. The improved inter-enterprise collaboration requires accordingly optimized intra-enterprise processes,” said Dr. Mathias Kirchmer, president of IDS Scheer. “These business processes are usually realized based on ERP systems, which leads to a growing ERP market. ERP systems are not just implemented as a piece of technology but as enablers of the relevant business processes. Therefore, process-oriented-implementation approaches have become crucial for enterprise success.”

As ERP vendors struggle to embrace a more collaborative model of the supply chain, they must re-invent themselves as a cooperative participant in an organization’s enterprise application strategy, rather than forcing companies to make their business rules conform to the workflow of the application.

“The major vendors are slow to respond and change because of their legacy baggage and ‘in the box thinking,’” said Richard Artes, principal of Lean Operations Management.
Traditional ERP is dying a quick death at the hands of a more collaborative approach to business process. Find out what's in store for the ERP market in this interview with Gartner Group Vice President Bruce Bond.
The payoff: Extended value supply chain
“As enterprise functions expand into value supply chain relationships, stakeholders (suppliers, producers, and customers) can optimize system-wide value and eliminate redundant resources and costs,” said Artes.

ERP will still be a key component in making the extended value chain a reality. “All companies wishing to compete on a global basis, and more will with the advent of e-business, will have to have a quality enterprise management system/ERP framework upon which to build their e-business structure,” said Dr. John Whiting, director of strategic e-business enablement services for Computer Associates International. “The keys will be interoperability, manageability, scalability, security, and user-friendliness.”
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