ERP, componentization, and e-commerce: Page 2

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Componentization refers to the act of breaking up large, monolithic ERP systems into individual modules or components that would work together. By breaking up the large applications into components, vendors would be able to more quickly fix or add functionality. The accounts payable component, for example, could be enhanced without having to touch any other the other financial components or any of the other components, such as planning or logistics. And once the ERP vendor has established a component architecture, it becomes easier and safer for IT to customize the systems.

"Componentization is absolutely essential to enable ERP systems to support e-business activity," asserts Vic Muschiano, director/enterprise applications, ARC Advisory Group, Dedham, MA. Componentization also helps the vendors extend the core ERP system with supply chain, CRM, and SFA solutions. The new e-commerce capabilities are being delivered as individual components.

Interest in componentization, however, began long before e-commerce. "The perception at the time was that these applications were too big and unwieldy. They needed to be more flexible," explains Joshua Greenbaum, principal, Enterprise Applications Consulting, Berkeley, Calif.

With componentization, a customer could selectively upgrade -- upgrading some components without having to upgrade the entire ERP solution, which usually entails a substantial effort.

Componentization would not only make it easier for the ERP vendors to enhance their solutions but make it easier for customers to upgrade the software. With componentization, a customer could selectively upgrade -- upgrading some components without having to upgrade the entire ERP solution, which usually entails a substantial effort.

Selective upgrade still appeals to some customers. "HR might have requirements that Finance doesn't so we might want to apply an upgrade independently," says Marcus Brigance, SAP HR implementation manager, Reliant Energy Inc., Houston. But in practice, the company discovered, the ERP system is so intertwined that "we would have to take a hard look before we try to upgrade one module without upgrading the others," he continues.

Componentization has proven a hard sell with ERP users. "It runs contrary to the whole idea of ERP solutions," says Spaulding. Adds Colgate-Palmolive's Gittleman, "We're not interested in components. We want to leverage the integration of the whole thing."

Componentization, however, is critical for vendors to move these systems into e-commerce and to provide other capabilities and most vendors insist they remain fully committed to it, although progress has been slow. The reason: componentization is enormously difficult to achieve even when the commitment is solid. At best today, some vendors have succeeded in creating large-grain proprietary components, which are simply large function modules.

SAP, Shepherd reports, has made progress in breaking its core offering into large-grain components and all new pieces are being added as components. JD Edwards was embarking on a rewrite of its ERP offering when the component craze broke, so the company incorporated componentization into its redesign. Oracle also rewrote large amounts of code and has managed to componentize to a large extent. Baan, cash strapped, talked a component game and developed plans, "but its plans are a long way from reality," notes Shepherd.

Open Interfaces
If ERP customers aren't demanding componentization, they are embracing the more open interfaces and improved integration capabilities that the vendors are providing, capabilities intended for the componentization effort. SAP, for example, has created over 1,000 business APIs (BAPI) for use in integrating third-party products with the core ERP system.

"We can't stress openness enough," insists Spaulding, who chairs the Business Information and Analysis Group, a 300-member group that focuses on management reporting for SAP. This requires open APIs to enable the integration of third-party data reporting and analysis tools as well as other tools.

The problem isn't solely an SAP issue. Metropolitan Life wanted to let managers see workers by their title and position, who they reported to, and other basic information necessary for managing staffing. What the company needed was a basic organization chart. Simple enough, but Peoplesoft by itself couldn't produce an organizational chart although all the necessary information resided in the HR modules.

Instead, the company turned to Org Publisher, an add-in that easily integrates with Peoplesoft and other leading ERP systems. Because of the published APIs, the company could easily integrate Org Publisher with Peoplesoft by itself, notes Berrios, saving the time and cost of calling consultants to do the job.

Even with published and certified APIs, the integration job isn't necessarily easy. Murdock Madaus Schwabe, Springville, UT, a marketer of herbs, vitamins, supplements, and minerals under the Nature's Way label, looked at SAP's certified APIs to integrate its third-party warehouse management system and a payroll system with the core ERP solution before deciding to write its own interfaces. "We would have spent more money trying to get the certified interfaces to work than to write one ourselves," recalls Bill Waters, director/information services.

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