Summer of Love Among ERP Rivals?

New Feature: In his first monthly column on enterprise resource planning, consultant Joshua Greenbaum discusses a startling development among competitors SAP, Oracle, and PeopleSoft -- they're allowing their software to work together. But don't get too enthusiastic, Greenbaum warns, giving a short list of remaining concerns.
One of the more startling innovations that SAP failed to announce at a recent Sapphire user conference came in a presentation that showed the unshowable: a heterogeneous environment that included SAP and, in full, copyrighted glory, the logos of its two archrivals, Oracle and PeopleSoft.

The message was almost revolutionary. SAP will actively support integration with non-SAP applications, including those from its most bitter competitors.

An unwritten rule has dominated the enterprise software market since punch card days: deny the existence of competing products and, against all evidence to the contrary, promote the idea that customers can and will standardize on a single enterprise vendor to run their myriad business processes.

The contrary evidence has been what made this head-in-the-sand strategy so patently absurd. The majority of real-world IT departments are a hodge-podge of enterprise applications, and a huge amount of IT's efforts are focused on making these applications work together.

SAP isn't the only vendor that has woken up to this reality. PeopleSoft, Oracle, and even smaller upstarts like Sweden's IFS AB are talking about making free use of the competitions' applications and data. It's starting to look like the summer of love all over again.

Or is it? While America is the land of redemption, I remain a little suspicious of how well any ERP vendor will manage this shift in attitude toward the competition. In the end, many of you will stick to what you're doing now: a combination of duct tape and baling wire, supported by an open check to the systems integrator of your choice, with a big chunk of change tossed at your enterprise applications integration (EAI) vendor as well.

Part of my skepticism comes from the obvious absence of altruism in these ERP vendors' actions. Indeed, support for heterogeneity goes straight to the vendors' bottom line. The more integration they do, the more the vendor can claim a larger number of users in the enterprise. And the more users, the more licensing revenue. These born-again integrators also get to solidify their account control, particularly if the vendor's single sign-on portal is used as the point of integration.

The vendors also get to capture consulting dollars. When you choose an ERP vendor's integration solution, you cut the umbilical cord to your EAI vendor and short-circuit the systems integrator's free lunch. Some of your budget will still flow in these directions, but more and more will likely be siphoned off to the ERP vendor.

The other problem is that I fear the IT blame game will only get worse. Who do you call when your SAP portal can't launch a PeopleSoft application because an Oracle Financials process failed? All of a sudden your integrator or EAI vendor starts to look like your best friend.

Of course, this friendship comes at a price. The upside of letting your ERP vendor handle applications integration is that you may genuinely lower your integration costs. Baling wire, duct tape, integrators, and EAI technology are not the most elegant technology platforms for enterprise-wide applications. A pre-integrated applications environment should be cheaper to implement. And when things do go wrong, it's nice to dial only one phone number before you get to start yelling.

As with most innovations on the vendor side, the impact on the user will be mixed. The vendors' new-found love for integration will work best at greenfield sites and in adding incremental improvements to existing environments. There will be no winner-take-all conversions that make the wholesale replacement of heterogeneous systems a viable strategy for user or vendor alike. At best, this new-found tolerance for the competition will chip away at EAI vendor revenues; witness the recent shortfalls at WebMethods and Tibco.

So keep an eye out for the new promise of heterogeneous support. It's a minor palace coup masquerading as a full blown revolution. But as palace coups go, it's a good one. The outgoing regime had its head in the sand. The new one knows you need to support a multi-vendor world. All these vendors still need to prove that they actually play well with the competition. But admitting that customer needs might be more important than competitive positioning is a good first step.

Joshua Greenbaum is a principal with Enterprise Applications Consulting, a technology and marketing consultancy in Daly City, Calif.

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