The limitations of extended ERP

If you buy all of your bolt-on applications from an enterprise resource planning software vendor, it may deprive your users of important functionality.
Posted November 1, 1998

Larry Marion

In this article:
The major vendors of enterprise resource planning suites have been busy building, buying, or bundling new functionality so that their packages go beyond the traditional realms of finance, materials planning, and human resources. While the appeal of end-to-end solutions is strong, the short-term weaknesses are not to be dismissed lightly.

Financial analysis, customer analysis, and product performance will be the three most popular uses of a data warehouse by the year 2002.
Source: Palo Alto Management Group

Supply chain management, salesforce automation, call centers, product data management, and data warehousing are increasingly becoming part of the ERP vendors' "integrated" offerings. However, recent interviews and discussions with customers and vendors lead to a painful conclusion: It will be years before these integrated solutions achieve the best-of-breed status that the ERP vendors covet, if at all.

Let's focus on data warehousing, where Oracle, PeopleSoft, and SAP are making big bets by either by building their own tools (Oracle and SAP) or via bundles with other vendors. SAP recently began shipping its Business Information Warehouse (BW) package of data warehousing tools, and the beta customers trotted out by the company earlier this year are happy campers. No surprise there. Companies like Colgate-Palmolive, Hercules, and Procter & Gamble either are using BW or will be soon. SAP contends that BW is more than just an add-on to its R/3 suite of ERP applications; it's also a stand-alone product running on a separate server that will either be competitive with the best of the data warehousing products within three years, or it will be withdrawn.


Executives from Colgate-Palmolive, Hercules, Procter & Gamble, S-B Power Tools, and other user organizations were interviewed for this column. In addition, officials from Acta, IDS Scheer, KPMG, Prism Solutions, SAP, SAS Institute, and other vendors supplied information. Here are some of their more memorable comments:

S-B Power Tools in Chicago, a subsidiary of The Bosch Group of Germany, built a datamart for sales analysis of R/3 data out of a variety of point solutions, including Acta and Informatica. The cost of building the datamart was one-tenth the cost of the R/3 implementation
Procter & Gamble in Cincinnati has more than 2,000 users of its data warehouses. Currently users at P&G use Oracle software to access R/3 and legacy data, but will shift to BW. "We want to be pure SAP," says CIO Todd Garrett.
A data warehouse is the best way to get accurate data from legacy and other production systems, says Eric Hunley, program manager for Cary, N.C.-based SAS Institute's ERP warehouse solutions. "You can't do decision-support requests from a production system."
"A lot of people are tying their futures to SAP and BW," notes Sarah Bassett, director of SAP Solutions for Prism Solutions, based in Sunnyvale, Calif.
"Extraction is the scariest thing in building a data warehouse," notes Robert Wentz, KPMG's senior manager. "The value of moving to this environment [BW] is the sense of comfort with SAP. It already has the tools and technology in place."
"A data warehouse and ERP are not sufficient to share data," warns Mathias Kirchmer, CEO of IDS Scheer, the Chadds Ford, Pa., unit of the German integration firm. "You need a process warehouse and a knowledge warehouse so you can answer the question, 'Where is my know-how?'"
"Many clients will go for BW," adds Kirchmer. "They can suck all their information into it and ensure better integration with decision support tools. If you've already standardized on SAP, why deal with another data warehousing vendor? However, it will be a major effort to sell BW in non-R/3 environments."
SAP has a lot of work to do to get BW up to world-class status, though. The version demonstrated at the recent Sapphire user conference achieves less than half of the functionality of an end-to-end data warehouse, in my humble opinion. For example, while it has an online analytical processing (OLAP) engine to process information, it currently can't deliver the answer to an inquiry that cuts across more than one cube (called a join in database circles). Furthermore, BW has around half of the mathematical formulas of a more established OLAP package, such as the SAS System from SAS Institute. And when you ask SAP officials when they will roll out datamart modules for BW, they say they're studying the area.

Some of these limitations will be fixed soon--watch for a join capability within six months. However, it will take SAP at least two years to extend the functionality of BW to even get within 75% of that of leading players. And what of the other 25%? You're left to rely on third parties, I'll bet.

So what is really going on? Simple, BW merely fixes a number of the weaknesses of R/3. Specifically, it is an excellent tool to get reports out of R/3 without affecting the performance of the production system. Everybody knows that an ERP system wasn't really built to provide decision support--a production system shouldn't be asked to provide reports and analyses. For years R/3 users have been suffering with lousy performance and inscrutable report-writing procedures. "There's a lot of pain with reporting at the operational level," notes William Gilbode, a senior manager with the consulting arm of Montvale, N.J.-based KPMG Peat Marwick. He is considered the BW and data-warehousing-with-R/3 expert at the firm. "Clients want to bring in data from multiple sources," he says.

Asking end users to avoid printing reports is like asking them to back up their own disk drives.
And changing the process--telling users not to print reports--is a Sisyphean task. Many IT managers I know have implored their users to avoid printing reports, at the advice of SAP officials and their implementation partners. But that's like asking end users to back up their own disk drives. Muttered one SAP official when describing executive reaction to the customers' demand for extensive printing capabilities, "People still want paper, but Hasso didn't believe [in] it." Hasso is Hasso Plattner, co-founder and CEO of SAP and the driving force behind its software design these days.

It's true that a data warehouse bundled by an ERP vendor will make a majority of users happy with the functionality available within a year or two. But IT must expect to continue to add and manage third-party packages to deliver all of the functionality their organizations will need.

There are a lot of loose ends in those end-to-end solutions vendors tout. //

Larry Marion is the editor of PlugIn Datamation. He has been researching and writing about manufacturing technology for more than 20 years. He can be reached at
For more information about data warehousing, go to the Palo Alto Management Group (PAMG) Web site for a useful white paper.

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