ERP faces threats old and new

Just when consolidation appears absolute, the market atomises

Enterprise Resource Planning software has been with us for more than two decades now and that's a long time in ICT.

The term was (according to Wikipedia) coined by Gartner in 1990 and derived from MRP (materials requirements planning). Basically ERP software is a suite designed to deliver integrated business functionality, as opposed to a point solution designed to deliver a specific set of functions.

Almost since the time ERP software was christened it has faced threats from what are loosely termed "best-of-breed" software providers, companies that really specialise in delivering software to distinct market and functional niches. That threat continues as ERP vendors struggle to be all things to all businesses by adding new modules and deepening the functionality of the ones they already have.

The emergence of cloud computing is a more recent threat. First, there were SaaS providers, such as RightNow, targeting the ERP space directly. Then there were SaaS CRM providers, such as Salesforce.com, sidling up to the ERP market with platform as a service offerings and developer communities offering add-ons to CRM that encroach on the traditional ERP space.

The ERP vendors fought back and most offer a SaaS alternative, but the fact remains, full blown ERP does not necessarily answer all needs.

Pharmaceutical manufacturer API Consumer Brands, which runs a plant in Manukau City, for instance, runs a legacy MRP system BPIX on IBM iSeries boxes. This delivers ERP functionality, but the company recently implemented Infor SCM Advanced Scheduler to better plan and manage its manufacturing operations and address a large backlog of orders.

General manager Peter Day says the company had been struggling for up to six months to gain visibility into capacity issues at the plant -- using Excel spreadsheets to do the analysis. API was looking at "lean manufacturing" but there was a lack of information on why the plant was running at reduced capacity.

The company wanted minute by minute reports on activity at the plant, which employs 140 on three round-the-clock shifts five days a week.

Day describes the implementation as the "start of the journey". The project is expected to increase production capacity by 20 percent when it goes live late in October 2009.

"Hopefully it will give feedback information and get the plant moving properly," he says.

So why did API opt for a best of breed solution rather than ERP? According to Day no ERP system provides the kind of information he needs, including floortime planning. He says ERP systems will flag issues, but mostly they are issues you are already aware of. What was needed was what he describes as "planning against constraints".

"The Infor SCM Advanced Scheduler will allow us to completely change our approach, freeing up resource, production lines and labour. We will now be able to focus on the job requirements rather than a daily schedule. which we just couldn't do before," he says.

So while some businesses still find value in specialised packages, others are looking at non-traditional suppliers of ERP software, many of whom are emerging from the cloud and platform as service sectors, but also from the CRM space where "application platforms" are emerging..

At this year's Microsoft Tech Ed conference in Auckland, for instance, ERMLive CEO Donald Hastie demonstrated an employee relationship management (ERM) system built on Microsoft's CRM framework, now dubbed xRM. The "x" in xRM means you, the developer, can fill in the gap. The "x" could be a team, a relationship or a process.

Christchurch-based Hastie says he truly believes Microsoft's CRM framework and Workflow Foundation is a development platform and he has been sold on it in that use since he started on it three and a half years ago.

He says any application where you can build data models inside a configurable framework would lend themselves to such uses.

Hastie says legal practice management systems are an obvious candidate for this approach, but he says he can easily see how to develop general ledger and stock control systems on the same foundation and, he suspects, in Salesforce.com as well.

ERMLive scored its first New Zealand site in 2008 and Hastie claims to have since closed another 15, beating the major ERP players in many deals. Customers include the Royal New Zealand Foundation for the Blind, Intergen, ASP Ship Management, P&O Maritime, NZ Correspondence School, Whitireia Community Polytechnic, Wellington Institute of Technology, Loyalty NZ and Westland Co-operative Dairy Company.

Salesforce.com calls its platform Force.com and bills it as "The fastest way to build business apps and websites". A quick flick through the site shows Salesforce is rapidly moving away from its CRM roots, with fleet management applications, project management and a survey application.

Fujitsu, for instance, has built an application on the platform (glovia.com) that deals with the post-sales process: order management, shipping, billing and returns. Similarly, Coda 2go offers just what Hastie was talking about: accounts payable, receivable, general ledger and invoicing.

Salesforce.com's New Zealand country manager, Aden Forrest, says Coda was one of the largest ERP players in Europe, but had to replatform. The company decided to move to the Force platform to gain speed to market and access to Saleforce's user base.

Forrest says Saleforce.com is targeting the CRM market, but partners on Force.com are extending into other areas.

He says Salesforce's strategy is to build an open platform and provide connectors to many of the most popular ERP and accounting packages, to help users of such software get more out of their investment.

ERP providers deliver for shared services

The drive for shared services both within and between organisations is accelerating, with government cost-cutting forcing some agencies to rethink ICT delivery and the economic downturn hitting the private sector.

HealthAlliance provides ICT services to three District Health Boards and more could be about to join in the search for increased efficiencies in delivery. The organisation provides purchasing, inventory, logistics, self service, project accounting and many more functions using Oracle E-Business Suite 11.5.9.

Formed in 2002, the three DHBs involved tried to adopt the best each had to offer in establishing the shared services organisation, says head of business solutions Kathy Frame. On the systems side, Waitemata was seen as leading with its Oracle implementation.

"It wasn't just about applications, but about converging on a single process" Frame says.

One key challenge in the organisation is managing capital spending and also reporting, she says. Project management is being targeted to alleviate this and Frame says Oracle delivers a powerful standard application with configuration option to allow different delegated authorities to be created and managed.

Another strength of the software is in enabling workflows.

Frame says release 12 of Oracle is expected to deliver huge benefits for shared services environments with an application structure built to support such users.

It is also expected to deliver a central place to manage customers and suppliers and further reduce duplication.

Neil Padley, general manager, corporate HR shared services at Air New Zealand says his company runs PeopleSoft 8.9 for human capital management and financials. He says the focus for his shared service unit is on continued automation of manual processes to eliminate activities that don't add value to the organisation.

Air New Zealand is looking at an upgrade in the next 12 months to version 9 or 9.1, which Padley says would certainly support shared services.

"Shared services are about the customer and about delivering process improvements," he says.

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