Supply chain ‘collaborative commerce’ software company Logility’s product strategy vice president, Andrew White, declares on the firm’s website: “The value provided by ERP (enterprise resource planning) has already expired and passed its sell-by date”. Sorry, Andrew, that’s tripe. Certainly, the ERP market has been rough. “ERP is an incredibly harsh marketplace at the moment,” says Alastair Middleton, European marketing director of restructured ERP supplier Geac (formerly JBA). But even Middleton sees signs that the gloom “is lifting”, and Doug Miles of rival Infor:Swan (formerly Swan) says the business cycle is coming to the rescue. Given the toehold that ERP still has in nearly every business (see MCS, December 2000, page 64, ‘Last Word’ with Fourth Shift’s David Waldron), it’s foolhardy to write ERP off on the basis of two bad sales seasons. According to new Baan president Laurens van der Tang: “A lot of people are saying ‘ERP is finished’, but the ERP pendulum is swinging back. ERP systems are extremely critical.” Even volume markets are moving towards build-to-order (BTO), he says, and “ERP forms the backbone for any company moving to build-to-order as they seek to reduce inventories and reduce lead times.” Adrian McNay, managing director of manufacturing business software developer Frontstep (formerly Symix) UK, says: “It’s a great tool. ERP as a shrink-wrapped package within the four walls is dead, but otherwise it’s still at the core.” Frontstep doesn’t claim that users are now investing huge sums in e-commerce and other add-ons to the ERP model, but, says McNay: “We’re now closer to the day when these commitments will be made.” Much more from ERP But if the market’s ready for another gentle move forward, in which direction? The evidence collected for this snapshot is as mixed as the mid-market these software and IT service providers serve. Today’s businesses want more from ERP. But though some manufacturers are keen to adopt customer relationship management (CRM), business intelligence (BI), ‘e’ or non-‘e’ supply chain management (SCM), or better warehouse and distribution management technology, others simply want finite capacity scheduling, or to improve asset management and link ERP planning to computerised maintenance management – or the shopfloor. Vic Shepherd, chief executive officer of reborn ERP supplier SSA Global Technologies believes the biggest growth is in “the portfolio products that surround the actual ERP application”, particularly BI from Cognos, and other applications, like advanced planning from Synquest, and e-procurement and ‘demand chain’ software from vendors Ariba and CommerceOne. Shepherd admits that, for SSA, this is a big change. The strong interest in scheduling is forcing many ERP vendors towards some level of advanced planning and scheduling (APS), though for many APS is no longer thought of as an MRP alternative. At Infor:Swan, for example, the offerings include integrated APS aimed specifically at the middle manufacturing market. Some expectations are frankly unrealistic. Andy Makeham, CEO of K3 Business Technology Group (which took the former Kewill ERP), describes “a gaping hole in people’s perceptions”. He says K3 is having to educate companies that believe they can ‘buy’ e-commerce. “People think all they have to do is buy a bit of technology. They don’t perceive that you have to embrace e-commerce and put it at the heart of your business. It’s a strategic tool, a catalyst, which forces you to re-examine what you do and how you do it.” What departments? At the beginning of the re-education process, says Makeham, he gathers directors and department heads round a table: “They think they’re there to talk about information flows from department to department. But they have to face the idea that they’re there to talk about which of those departments they really need.” Done properly it can be that fundamental. By Middleton’s account, there is a clear disparity between the attitudes of those in logistics and distribution, and those in production. He notes that companies interested in distribution have taken up a lot of the available technology and are now busy making incremental improvements by adding bar-coding or radio-frequency technology, upgrading picking systems in warehouses and so on. “In production it’s a different story,” he says. “If you talk about supply chain management (SCM), their immediate response – in over 90% of cases – is to talk about their internal supply chain, what happens within the four walls… Our customers have little or no appetite for an end-to-end CRM solution. And as for big scale SCM, forget it.” Neither, he says, are they ready for APS: “They’re holding too much safety stock as a buffer against forecasting and planning errors.” In terms of systems sold, McNay’s view isn’t that different. He says that in Europe, “[The typical] SME hasn’t automated its processes by any means. Tier one has started.” So though SME manufacturers might say they can only take ‘bite sized chunks’ of the evolution, says McNay, “the reality is that the OEMs are going into this big time, and the SMEs are an integral component of their supply chain.” For McNay, the essential components are still ERP plus APS, e-commerce and some kind of CRM engine. Morna Brazier, UK managing director of Infor:Swan, says prospective customers still want “solid ERP,” plus they want better integration between all the bits of functionality they need from that: CRM; sales force automation; service and maintenance scheduling; returns processing. “Until now all that hasn’t been terribly well integrated,” says Brazier. “People are looking much wider these days.” Integration really is all, but how to deliver it? Baan’s Van der Tang believes that strategic alliances of the Ariba-IBM-i2 Technologies variety don’t have any track record. “The difficulty of having strategic alliances between companies like i2 and Baan is maintaining that alliance when the two are moving – not just interfacing, integrating the two different worlds. That’s difficult to do and I don’t know examples where people have done it and proved it will work in the long term.” Most customers are “thoroughly sick of integration,” adds van der Tang, “except for the big league users who have the resources and can afford to spend time integrating other people’s different products into one system.” Mid-market companies have slender IT resources, with the financial director doubling as IT director. “It’s a completely different story in Tier One,” says van der Tang. Tier One companies “have the substantial IT functions necessary for holding a best-of-breed strategy together.” He says there is “a big market among manufacturing people who say ‘I just want a solution for this part of the business,’ or ‘I just want to have an integrated solution’. They want the freedom to choose. They want to be flexible. They want to know what to pay, where to go, and then get the benefits.” Makeham agrees: “ERP functionality is going to merge with the e-commerce and CRM worlds: the emergent product will be a customer-focused, internet-ready ERP system.” McNay agrees: Frontstep’s Syteline ERP product is now a suite that comprises ERP, APS, e-commerce and CRM, all as one Microsoft Office-style shrink-wrapped product, “for the people that want that.” Similarly Geac is bundling its Active Enterprise process-modelling tools into the main body of its ERP applications suite. Active Enterprise looks similar to the (later) electronic bills of process (eBOP) developed by Tecnomatix for eMPower (MCS, September 2000, page 38), and Infor.Swan’s Bill of Resource, which includes not just materials but tools, workcentres and people. Doubtless the ‘integrated’ ERP school see providing seamless functionality as a way of taking on the XML challenge from the best-of-breeders. XML is one of the most powerful integration tools available. Both the integrators (Infor:Swan uses XML links to accounting) and the best-of-breeders are using it full tilt to tie together their loose ends. As Symix, says McNay, Frontstep had to pursue the best-of-breed route, with all the separate integrations that entailed: “Bolting [an application] on was an expensive job [but] we had to do that because there weren’t the standards available. XML has provided what the industry has been wanting for a long time.” New issues with XML Middleton, however, doesn’t see XML as a panacea. The biggest pressure his Tier Two and below customers feel is from their Tier One customers to adopt EDI because XML (allegedly) makes EDI so much easier. “This XML to EDI transformation,” says Middleton, “that’s the biggest single area of pandemonium. They wake up in the middle of the night worrying about it.” The problem is not XML: it’s the lack of consistent data formats and the need, no matter how clever XML may be, to write translation ‘gateways’ between the different formats. This, he points out, is being driven by companies like Walmart, Tesco, B&Q, Curry’s, and PC World: “What level of commitment do they have to standards bodies?”, he asks, compared with their commitment to their own businesses. In all this, there is a temptation to over-complicate. Miles notes that many of Infor:Swan’s customers are interested in e-reporting so that their customer can go onto a website and see a statement of account, stock situations and order progress. But then, he says, “you have to ask them why they’re doing it. After all, an email can say when the products were despatched, or if there’s a change in the status of an order. You have to ask what’s the hype and what’s the reality. “The core planning and scheduling goes on in the system. Beyond that, the customer only wants to know ‘When am I going to get it?; ‘Why is it late?’; and ‘How late is it going to be?’. If the ERP is up and running properly it will allow you to react to what’s going through hour by hour.”