Why Your ERP System Isn't Ready for the Next Evolution of the Enterprise

ERP has been the backbone of enterprise software.  The data held in your ERP system is core of most companies.  Efficiencies gained through the accounting and resource allocation through ERP software have literally saved companies trillions of dollars. Not only does everything seem to be fine with your ERP system, you haven't had to touch it in years.  Why aren't you ready for what comes next?

Well judging by the growth rates in the space (Oracle posted only a 3% growth rate, while SAP showed a 12% decline) there hasn't been much modernization going on, just a little replacement activity. If you are like most companies, your ERP system is connected to a proprietary middleware solution that only effectively talks with a handful of other systems you might have acquired from the same vendor.

  ERP HALF CIRCLE.JPGConnecting your legacy system through proprietary middleware is expensive and brittle and if you are like most companies, you were only willing to pay an SI so much before you said "enough."  So your ERP is working.  It's humming along.  You might not be able to get Order to Promise information when you take orders in your call center, but there are work arounds that work just fine. So what's the problem?

The problem is that you built your business around your ERP core, and now there is such pressure to innovate your business processes to keep up that you need a whole new slew of modern apps and you need ERP data to be accessible from everywhere.   Every time you change a sales territory or a comp plan or change a benefits provider your ERP system, literally the economic brain of your business, needs to know what's going on.  And this giant need to access and provide information to your ERP is only growing.

What makes matters even more challenging is that apps today come in every flavor under the Sun™.   SaaS, cloud, managed, hybrid, outsourced, composite....and they all have different integration protocols.

The only easy way to get ahead of all this is to modernize the way you connect and run your applications.  Unlike the middleware solutions of yesteryear, modern middleware is effectively the operating system of the enterprise.  In the same way that you rely on Apple, Microsoft, and Google to find a video driver for your 23" monitor or to ensure that Word or Keynote runs, modern middleware takes care of intra-application connectivity and process execution.  It effectively allows you to take ERP out of the middle while ensuring connectivity to your vital data for anything you want to do.  The diagram below reflects that change.

  Enterprise Infrastructure.JPG In this model, the hegemony of ERP is over.  It too has to become a stealthy modern app to help you quickly adapt to business changes while managing vital information.  And through modern middleware it will connect to everything.  So yes ERP as we've know it is dead, but long live ERP as a connected application member of the modern enterprise.

I want to Thank Andrew Zoldan, Group Vice President Oracle Manufacturing Industries Business Unit for introducing me to how some of his biggest customers have benefited by modernizing their applications infrastructure and making ERP a connected application.

by John Burke, Group Vice President, Applications Business Unit

Comments:

You've done it again! Amazing writing!

Posted by Melanie Espinosa on June 14, 2010 at 05:49 AM PDT #

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