 |
 |
||||||
 |
 |
 |
 |
 |
 |
 |
|
 |
 |
||||||
  |
|||||||
 |
|||||||
| Company information |
| Customers |
| Testimonials |
| Team |
|
- Overview |
| Worldwide |
| Cambashi press release | ||||||||||
|
||||||||||
|
THE MARKET FOR EXTENDED ERP AND BEYOND CBS.024/04/99/F A presentation at Cambashi's tenth annual seminar by Peter Thorne and Dan Roberts Enterprise Resource Planning (ERP) has been the success story of the past few years, with massive rises in the fortunes of the leading vendors. This success has been based on the ability of ERP technology to keep the score: it is adept at delivering information to managers about the current state of their enterprises, allowing them to identify the processes that are delivering true added value. The high visibility of information provided by ERP allows managers to make better informed decisions faster; it also allows them to try out new processes and measure the results. Today's ERP addresses the core business processes of corporate accounting, manufacturing planning and distribution planning, but there are huge opportunities for future development. Pioneer users are already adding bolt-on applications such as manufacturing execution systems, process automation, sales and marketing automation and advanced planning engines, many of which will deliver quick and immediate benefits. But these are still mainly departmental applications. When they link to ERP, then these. departments' operations are reflected in the management accounts. However, managers are employed to improve profits, not simply to report. They need support to make changes in tasks and organisation that deliver improved profits. Cambashi describes these future systems that will let them simulate changes and measure the potential impact as ORP (Optimisation of Resources and Processes) systems. ORP, like Kaizen techniques, is based on the concept of continuous improvement. It offers far greater flexibility of control than the ERP system: with ORP, information technology supports and improves the business process rather than just recording it. The current pattern of add-ons to ERP shows that there is no single rule for any sector. Different industry sectors have different business drivers, and each company has its own requirements. But in many cases, the ERP system acts as the backbone of the enterprise, whilst the add-on applications provide the ribs. Options to extend ERP include customer relationship management, human resources, manufacturing execution and process automation, new product introduction, business intelligence, supply chain management, distribution planning and advanced planning. Each of these areas plays a critical role in the success of the enterprise, and their integration into the mainstream can have a significant impact on the efficiency of the entire business. Of them all, advanced planning is probably the most significant in paving the way for Cambashi's vision of the future of ERP. Planning methodology in the current generation of ERP systems is limited, but advanced planning engines provide a clear way for laymen to judge the true capabilities of their businesses. With a solid base of core technology complemented by a range of competent add-ons, the future looks good for ERP as it evolves into ORP. But it is not going to be a smooth ride. This has been demonstrated by the rapid drop in the share prices of the larger ERP vendors - even Oracle, whose shares have been kept up by the revenue generated by its database technology - has seen a drop in the past month. Wall Street analysts attribute this to the fact that the growth of these companies has slowed, and that existing ERP systems are not yet sufficiently Web-enabled. Nonetheless, Cambashi estimates that, world-wide, there is the potential to sell 350 million ERP seats, the biggest potential being in the mid-market which, with 163 million seats to be sold, accounts for almost 50% of the total. The problem for the mid-market is uncertainty. Buyers are less concerned with going for "big name" suppliers, but focus far more on the vendor's ability to work for small companies in their vertical market sectors. The cost and risk of implementation are the key purchasing criteria. The key for ERP vendors will be to minimise these criteria with innovative sales and marketing. Cambashi's advice to ERP vendors is to look at extended ERP, supplying complementary technologies alongside the core systems. As they move into the mid-market, they need to cut their costs, reduce implementation times and focus on specific industry sectors. Development of the VAR channel and the use of small business consultants will assume increasing importance, as will 'outsourcing' - in this context meaning the use of third party service providers to host the enterprise's ERP facility. Some, but not all of the top ERP developers are ready to take on and succeed in the mid-range market. Cambashi's assessment of their current positions is:
On a world-wide scale, there is the potential to sell at least 300 million ERP seats. Only 15 million seats have been sold so far. Most manufacturing organisations are penetrated with some kind of ERP system but nowhere are accounts saturated with a high proportion of potential users accessing the ERP system. The message is that there is an enormous, as yet untapped market in the installed user base. ERP vendors are still focussing too heavily on finding new customers. Microsoft hopes to be the enabler for this change. However, while it is strong in the mid-range market there is an AS400 wildcard. Mid-range users like the concept of a low maintenance box that sits undisturbed in the corner. No one has yet developed the strategy, taken by Autodesk in the early days of CAD, which was immensely successful in exploiting its installed base by selling volume. This could expand the size of the cake. |
back to top