Mixmasters find an alternative to all-in-one ERP software: Page 2

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Building around SAP modules

Emergence of the middle(ware) class

The emergence of prominent middleware vendors makes it simpler for companies to take the mix-'n'-match approach to ERP systems.

Middleware vendors sell a growing class of software designed to knit together enterprisewide applications. Tim Klasell, analyst at the Minneapolis-based regional brokerage firm Dain Rauscher Wessels, says the market for middleware tools was $300 million in 1998 and will exceed $1 billion by 2001.

"Six months ago this industry was undefined," Klasell says. "However, it has tremendous growth potential over the next decade."

Generally, middleware serves as a bridge or hub that translates and transports information among applications. "We're trying to give a customer the same level of integration that they can get from a single-vendor solution," says Bart Foster, senior vice president for marketing for CrossWorlds Software Inc. of Burlingame, Calif.

But Roger Walters, vice president and CIO of Booz Allen & Hamilton, a management consulting firm based in McLean, Va., cautions that turning integration over to middleware doesn't erase the expense or difficulty involved.

"I don't see it as a panacea," Walters says. "You're still going to end up either writing custom interfaces, or you'll have to sell your soul to a middleware vendor who will have to write the custom interfaces."

As part of an update of its business-management systems, a project begun in November 1997, GM is building its ERP foundation around the financial-management module that is offered as a component of the R/3 ERP system from SAP AG headquartered in Waldorf, Germany. It's also using R/3 for managing the purchase of work gloves, ballpoint pens, and other such "indirect" material.

"We went with SAP in finance and indirect material because of the commitment it has made to the automotive industry in those two areas," Stolpe says, referring to functionality that is tailored to carmakers' needs. When fully operational at the end of 1999, the R/3 software is expected to support about 10,000 users.

At the same time, starting at four of its international business centers, the carmaker is installing human-resources and employee-administration portions of the ERP package from PeopleSoft Inc., the Pleasanton, Calif., software vendor. By GM's reckoning, PeopleSoft sold it the best administration and payroll functions for countries including Canada, Japan, and Thailand, where GM needed to automate its human-resources operations most urgently.

"It gave us the flexibility to implement in the sequence that we wanted to implement in," Stolpe says. "If we hadn't taken this approach, we would not be able to roll out the human-resources functionality at the sites we needed to roll it out at."

Naturally, GM requires communication between the SAP and PeopleSoft systems. Certain workflow rules governing procurement, such as job descriptions designating the people who can authorize purchases, reside in the PeopleSoft HR system, for instance. When the SAP procurement system needs to look up those rules, it enters the PeopleSoft module via a middleware link built by GM using Mercator integration software from TSI International Software Ltd. of Wilton, Conn.

Smaller firms take the one-vendor ERP route

Small and medium-sized companies typically don't have the information-systems resources to attempt the mix-'n'-match approach to enterprisewide applications.

"In the midmarket you see less and less of the homemade integrations, because it's too costly," says Rob Beswick, spokesman for Effective Management Systems Inc.(EMS), based in Milwaukee.

EMS' Time Critical Manufacturing ERP product targets middle-sized manufacturers. "People have discovered that the costs of trying to do custom integration can get out of hand very quickly," Beswick says. "It's unpredictable."

Similarly, Don Campbell, vice president of marketing for Atlanta-based Ross Systems, is hard-pressed to come up with customers who take just a portion of Ross' ERP package. Ross' Renaissance CS system is tailored for mid-sized companies in process manufacturing industries like pharmaceuticals and food and beverage. For medium-sized companies, integration among modules remains a primary selling point, Campbell says.

Stolpe's primary concern about that connection is performance. "This other piece of software managing the interface between these two major enterprise systems impacts the response time and the speed of the process," he says. So far, it hasn't slowed the process enough to have a serious effect on operations, but GM has yet to test the connection at high transaction volumes. "It's still a work in progress," Stolpe says.

GM also is evaluating ERP-level packages for supply-chain management and advanced production planning, including planning systems from i2 Technologies Inc. in Irving, Texas, and Manugistics Inc. of Rockville, Md., and the Scope module from SAP. Stolpe says GM may add a PeopleSoft payroll module to replace a legacy paycheck system outsourced to Electronic Data Systems (EDS), a one-time GM holding.

Making room for acquired systems

ERP systems inherited during acquisitions may force a company to pursue a hybrid approach. Pittsburgh tubing manufacturer Copper Weld Industries Corp. operates the payroll system for its Miami division, just north of Dayton, Ohio, on ERP software from Denver-based J.D. Edwards World Source Co., running on an IBM AS/400 midrange computer. But the SmartEnterprise Solutions ERP system from Atlanta-based Geac Smart Enterprise Solutions Inc. provides modules for the division's financial and human-resources systems. Copper Weld switched those parts from J.D. Edwards to Geac in phases after it acquired the Ohio operation in 1993.


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