Does ERP matter?

Best-of-breed applications are chipping away at the foundations of enterprise software

Stack attack
The superior functionality and evolving technical capabilities -- especially in integration -- that best-of-breed applications now boast takes the main argument of single stack vendors like Oracle and SAP off the table, Checketts says. And the claim that integrating and supporting a whole other technology stack is too difficult and expensive if you go the best-of-breed route is very much at odds with the reality of SOAs and the Web services that these new applications are built on, he adds.

But Philip Say, vice president of ERP Solution Marketing at SAP, says that, despite the hype around SOA and Web services, not that much has changed. If a company wants to do more advanced processes, they need to build on a solid foundation.

"The smart companies are asking themselves, 'Do I want to build this on a fragmented environment that is unstable, that could break, or a tightly integrated set of systems that is proven and has a history in terms of performance?'" Say asks.

But the argument in favor of SOA and Web services is not lost on Shai Agassi, who up until March was the de facto spokesman for technology policy at SAP and a force behind the changes that have taken place at that company, before a leadership shakeup forced him to leave the company.

"My view is that with the service enablement, as we have performed through the introduction of Enterprise SOA at SAP, ERP, in combination with a middleware platform like NetWeaver, becomes the next Enterprise platform. In a sense, this combo 'ERP Platform' (called Applistructure or BPP by the analysts) becomes the enterprise equivalent to Windows for the back-end processes," Agassi said in an e-mail response. (For the full text of his answer and surprising conclusions, read his blog).

Strategy and the stack
But platform is only one of the issues that threaten ERP's continuing relevance today. The other is the question of who gets to supply the enterprise with the next round of strategic applications.

According to Checketts and Greenbaum, line-of-business executives in mission-critical areas like supply chain, spend management, procurement, and retail believe that the disparity in capabilities between what an ERP vendor can offer and what a best-of-breed vendor can offer is large and the ROI big enough that it makes sense to buy best-of-breed. For example, ERP applications don't do well with applications related to the procurement of complex services that rely on sophisticated requirements that resist easy cataloguing, Checketts says. Smaller vendors that really understand their space, however, can address such challenges using SOA to build certified applications that integrate with SAP, Checketts says.

Core strengthening or brain surgery?
E2Open is one example. The best-of-breed supply chain management company offers a SaaS-based extended supply chain, inter-company solution that Oracle and SAP don't handle as well, Greenbaum adds.

Fundamentally, ERP and the back office focus on core data objects that, over time, it perfected. Human Resources has as its core data object the employee record. ERP itself has the bill of materials. Finance has the general ledger.

There are a lot of core data elements, however, that have never been automated, Greenbaum says. If you are a big box retailer or a Starbucks and your business depends on growing the number of retail outlets, then the retail contract for the lease and lease management turns out to be a key strategic object.