Data Centers

ERP's 'Cool Hand Luke' problem

ERP has proven to be great at integrating the internal processes of an enterprise, but not so great for external communications. New solutions are bridging that gap.

"What we've got here...is failure to communicate." - Cool Hand Luke

ERP (enterprise resource planning system) is one of the great success stories for linking and integrating cross functions within companies together, a task at which so many pre-ERP systems failed. In fact, the largest enterprises today seamlessly flow data through from manufacturing to finance to customer service to human resources. The savings in pain and expense is virtually incalculable.

But like many systems that do their job well, there is also weakness in strength.

ERP came on the scene in the 1970s, a time that preceded commercial Internet and Web-based communications. Most vendor information at that time was received on paper, and had to be hand-keyed into internal systems. By the 1980s, if you were a manufacturer and you needed to communicate outwardly with your trading partners, you likely did so through a complex of EDI (electronic data interchange) systems, in which every single vendor and business partner painfully and iteratively tested its security and its data exchange integration with you until you knew you had a viable way of porting this outside vendor information into your corporate ERP system.

Of course, today's velocity of business and speed of market change render these approaches to outside supplier and trading partner information exchange difficult, if not impossible. Consequently, it is only natural for companies to turn to their tried and true ERP systems for help.

Unfortunately, ERP can't help in the area of outside communications with vendors, and for one simple reason: its greatness was built on how well it integrates everyone within an enterprise's four walls-but it was never designed to communicate outside of those walls.

To solve the task of communicating with the outside world, most enterprises have found that they have to look past their internal ERP solutions for new ways in which to enable efficient outside business processes that link them into the world at large. Many have chosen to go to cloud-based solution providers that provide secure supply chains already teeming with thousands of pre-qualified trading partners from every corner of the world. An enterprise can onboard onto one of these systems in weeks or even days, finding itself in a position where it can share a common data repository in a secure cloud environment with its other trading partners for the daily exchange of purchase orders, bills of lading, invoices, etc.

In other cases, companies still use EDI to exchange documents and information-but in almost every business case, no one is opting to grant suppliers and trading partners direct access to their ERP systems, due to security concerns.

The inflow of data and information from these externally facing cloud and EDI systems comes to ERP through a secure API (application programming interface) to ERP that corporate IT controls and manages.

Does the process work? It seems to -- judging by the numbers of enterprises that either have or are seriously considering augmenting their ERP with external systems and processes that interact with the outside world.

The overall takeaway for IT in all of this is that it seems that enterprises have at last discovered "best of breed" ways of running proven systems like ERP, without trying to change these systems into something that they were never intended to be. It wasn't too many years ago that someone would have conceived a massive project to customize an entire ERP system so it could somehow start working the outside business processes. Thankfully, the full benefits of ERP continue to be exploited and the integrity of the systems respected -- as outside business processes get shifted to new solutions that are equipped for the "outside" environment.

About

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

1 comments
khaled
khaled

Hi Mary, This is not the case with modern ERP systems. For example, Oracle EBS has a module called iSupplier which is designed to allow external vendors deal with the firm over a secured internet connection (DMZ). This module is integrated with internal ERP modules used by the firm. Regards, Khaled

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