The enterprise applications market has been as turbulent during the past year as at any time in manufacturing IT. But the waters are beginning to clear, say Cambashi consultants Edwin Ecob and Dan Roberts.

Enterprise applications comprise ERP, shop floor automation, supply chain management (SCM), e-business and customer relationship management (CRM) systems. Roberts says end user expenditure rose 14 per cent overall last year. But much of it was spent on top-end projects, and much of that went in service revenues rather than software.

Ecob notes that only one or two per cent of all business to business (B2B) transactions are conducted electronically. He adds that e-business "has barriers to overcome". One is the confusion the vendors cause by telling users they have to adopt e-trading but not what they should do or how they should do it. Another is the lack of standards. Yet another is the difficulty users face in configuring the products they want on line. Even advanced websites make customers print out a form, fill it in and fax it.

SCM has been heavily hyped in the last year. A lot of companies have invested huge amounts in e-driven SCM projects: "Vendors need to learn a few lessons," says Ecob "Users are beginning to complain." For SCM to work, companies have to be able to persuade suppliers to come on line, and they need to be able to expand the SCM system quite quickly. The technology isn't there yet.

CRM and SCM are taking the place of ERP as the source of long, costly implementations, as companies try to implement software quickly without addressing cultural change. Roberts warns that CRM "is going to be a major problem area".

The ERP market, by contrast, has been written off. Revenue has suffered minor decline but it is still the main enterprise application terms of end-user expenditure, Roberts says: "ERP sales have now recovered to the point where they would have been had Y2K not happened."

ERP works, says Ecob, adding: "It has shown good return on investment". He concedes that industry thinking is moving away from "ERP" towards another name, perhaps 'collaborative e-business solutions'. But such applications assume either added, integrated or built-in ERP functionality. There is a need for the transaction backbone.

Vendors have failed to serve midmarket users. The mid-market buys packages from VARs. It needs a central message delivered with a local flavour, but even big vendors like SAP and Oracle have struggled with this concept.

Shopfloor automation is an unglamorous source of reduced costs. Better control systems are getting cheaper all the time and can reduce input costs, energy, and raw materials. Remote monitoring is particularly neglected, Ecob argues. The ability for an engineer to log in remotely and see if he needs to come on site is particularly important for work that needs to be done in hazardous areas.

Also see: enterprise applications market reviewed at the 2002 Cambashi seminar

Cambashi articles which may also interest you:

What are PLM and SCM?

What are the returns on investment from CRM?

Supply chain management: reinventing the wheel

Supply chain communications

CRM in the real world

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