forrester research paul hamerman ray wang
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The Future of ERP ApplicationsPaul Hamerman Ray Wang
Vice President Senior Analyst
Forrester Research
July 14, 2005. Call in at 10:55 am Eastern Time
Agenda
• ERP challenges and deployment trends
• The evolving ERP software market
• The next generation: SOA
• Strategies of the major vendors
• Summary and recommendations
• Questions
Theme
Optimize your ERP investments for lower
operating costs and long-term business value
ERP challenges and deployment trends
Definition: ERP
► ERP — means “enterprise resource planning”
► A set of applications for core business operations and back-office management
► Originally developed for manufacturing
► Now applies to a wide variety of businesses and government
ERP functional footprint
Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”
Propertymanagement
Salesforceautomation
Financialmanagement
Humanresources Compliance
Projectmanagement Product
managementQuality
management
Asset &maintenancemanagement
Production &plant
management
Field service/post-market
support
Ordermanagement Procurement
Inventory &warehouse
management
Distribution,transportation,
& logistics
Reporting and analytics
CRM applications Supply chain applications
Enterprise
Customers Suppliers
ERP Challenges
• Functional gaps, supplemented by bolt-ons
• Customization to address real and perceived gaps
• ERP environments are costly to maintain
• Multiple vendors, multiple installations
• Complex systems integration
Trends in ERP deployment
• Single ERP vendor versus multiple vendors
• Fewer instances or single instance
• Less customization
• More frequent upgrades
• Using integrated modules instead of bolt-ons
• Hosting and outsourced support
• Integration using Web services
Applications top 2005 IT investment priorities
Source: December 15, 2004, Data Overview “2005 Enterprise IT Outlook”
Overview of the ERP software market
Top 10 ERP vendors by total Revenues ($ millions)
Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”
Market segment definitions
Market segment Size range Representative suppliers
Large company $1 billion + SAP, Oracle
Upper midmarket $250 million to $1 billion
SAP, Oracle, Lawson/Intentia, SSA Global, IFS, MBS Axapta
Lower midmarket $50 million to $250 million
MBS Great Plains & Solomon, Epicor, Exact
SMB Under $50 million
SAP Business One, Sage/Best, MBS Navision, NetSuite, Intuit
ERP market forecast
Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”
Market trends
• Continuing vendor consolidation
• Fewer large new deals, more sales to existing customers
• Emphasis on recurring revenue
» Maintenance, hosting, subscription licensing
• Focus on midmarket and industries
• Growing importance of SOA platforms in technology buying decisions
• Simplicity and usability (UI, tools, reporting)
Recent consolidations
• Oracle-PeopleSoft
• Lawson-Intentia (pending)
• SSA Global-Baan
• Infor-Mapics
• Epicor-Scala
The future:SOAs will transform the market
SOA stages for ERP
• Integration of heterogeneous applications across multiple platforms
» Time frame: Now
• Modular components within suites
» Time frame: Two to three years
• Market transformation to standards-based architectures
» Time frame: End of decade
Smaller components add more flexibility
HumanResources
Customerrelationshipmanagement
Service-based integration
Component arbitration
Component arbitration
Process integration
Process integration
Productlife-cycle
management
Supplychain
management
BusinessAnalytics
GL AP ARCNHuman
resources
Businessanalytics
SOA for ERP — What it means to you
• Message-based integration — easier connections using standards
» Lowers maintenance and integration costs
• Components — more flexibility
» Assembly of industry-specific and process-oriented solutions (e.g., order-to-cash)
» Fewer vendor choices but more deployment options
• Architecture transformation — major upgrades may be required by the major vendors within five to eight years
The next generation:Strategies of major apps vendors
Next generation timelines
Next-generation delivery dates are a moving target
2004 2005 2006 2007 2008 2009 2010
SAPESA
OracleFusion
MBS Green
LawsonLandmark
Technology platform direction
Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”
SAP
• SAP is the furthest along of the major apps vendors in moving to SOA
• Enterprise Services Architecture (ESA) represents the service-enablement of the application suite
• NetWeaver is the middleware platform
• Business process platform is the unifying marketing umbrella
• Timetable for completion is 2007
» Core ABAP code will be retained — not a total rewrite
SAP: The move from monolith to components
SAP’s vision is a process-driven architecture
Microsoft business solutions project green
• Well-publicized next-generation application strategy announced in 2002
» Features .NET-based SOA and process-centric design
» Promises greater flexibility and openness
» Will converge five product lines into new code base
• Transitional strategy based on:
» User interface alignment within existing products
» Technology infrastructure alignment
» Conversion to .NET based processes
• Meanwhile, existing products are being enhanced and supported at least through 2013
MBS Project Green Roadmap
Source: Microsoft Business Solutions
Today:Axapta
CRMGreat Plains
NavisionSolomon
Future“Best of”solution
2005-7 2008+
Wave 2:
• Modular process configuration
• Enhanced Visual Studio .NET
• Enhanced UX
• “Best of” process library
Wave 1:
•Role-based user experience
•Sharepoint-based portal and workflow
•SQL-based conceptual BI
•Web services-based composition and integration
Oracle’s application strategy
• Project Fusion announced in January 2005
• Fusion features:
» A J2EE-based SOA
» Components and data hubs
» Platform independent, but leverages Oracle middleware, and database technologies
• Transition to Fusion middleware in next releases of current products
Oracle’s product convergence is similar to MBS
PeopleSoft Enterprise 8.9
9
JD Edwards EnterpriseOne 8.11
8.12
Oracle E-Business Suite 11i.10
12
CurrentRelease
NextRelease
Pro
ject
Fu
sio
n
Source: Oracle
Lawson/Intentia: Path to technology convergence
• Lawson and Intentia announced merger two weeks ago
• Both have proprietary architectures:
» Lawson 4GL generates COBOL and RPG
» Intentia introduced Java version in 1999, but it is not J2EE compliant
• Common direction is WebSphere and J2EE code
• Landmark project will produce a blueprinting language that generates J2EE code, UI, and schemas
» Promises dramatic code reduction and higher quality
Lawson’s Landmark strategy
Construction architecture
Execution platform
Lawson application design technology tooling built on Eclipse
J2EE, SOA
Program model
Lawson brand Signature features
Source: Lawson Software
Recommendations
• Stay current on releases to keep migration options open
» Consider alternatives if on older, customized products
• Consolidate disparate ERP applications
» Improve reporting capabilities
• Negotiate to reduce maintenance costs
• Use Web services for integration, but wait for proof points on business flexibility
Paul Hamerman
Ray Wang
www.forrester.com
Thank you
Entire contents © 2005 Forrester Research, Inc. All rights reserved.