ERP, componentization, and e-commerce

ERP is growing and changing to meet interest in e-commerce and demands for more managaeable, scalable modules.
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October 1999

ERP, componentization, and e-commerce

ERP is growing and changing to meet interest in e-commerce and demands for more managaeable, scalable modules.

By Alan Radding

When it comes to e-commerce, why reinvent the wheel? That's the thinking of many IT organizations in their scramble to create e-commerce applications. As they look around for the transaction processing and order fulfillment piece behind their e-commerce storefront, many think they have found it right under their nose -- in their workhorse ERP systems. By extending the existing ERP system to support e-commerce, organizations not only leverage their investment in the ERP solution, but can speed the development of their e-commerce capabilities.

ERP systems, however, have proven difficult to change and extend. Barricaded behind complex, proprietary APIs and based on complex, nearly indecipherable relational database schemas, ERP systems do not readily take to e-commerce. However, IT managers are finding an increasing set of options for not only extending these systems to support the Web and e-commerce but for other key activities, such as decision support.

Shifting focus of applications
Source: 1999 SG Cowen/Datamation Networked Computing Survey


ERP penetration is high
Source: 1999 SG Cowen/Datamation Networked Computing Survey


E-commerce applications are booming across the board
Source: 1999 SG Cowen/Datamation Networked Computing Survey
Underlying the new options are ongoing initiatives to break ERP systems into separate components (componentization), open up the core databases and proprietary application interfaces, and provide tools for customization. Not all these changes, particularly capabilities to customize the systems, are equally welcomed by IT. Similarly, IT views componentization as something that benefits the vendors more than directly benefiting the user organization.

However, most of the efforts to extend ERP, particularly in the direction of the Web, are finding strong IT endorsement. "The Web is exactly what we want, and beyond the Web, the whole e-commerce thing," declares Dan Spaulding, director/management reporting, Halliburton Company, a Houston-based diversified energy company. Halliburton operates a single instance of SAP worldwide.

Similarly at Colgate-Palmolive Co., New York, which runs an extensive SAP implementation, the Web and e-commerce are pivotal in the company's future plans. "We are counting on the Web for things like employee self-service," reports Chester Gittleman, director/human resources information systems. Using a browser over a corporate intranet, employees could update and change basic HR information, as when new dependents arrive for tax reporting purposes.

Peoplesoft user Metropolitan Insurance Co., New York, also is counting on the Web. If nothing else, Web-enabling Peoplesoft will eliminate the nightmare of installing client software on desktops across the global company, insists Victor Berrios, business systems consultant at the company.

If users want the Web and e-commerce from their ERP solutions, the vendors certainly are trying to oblige. SAP revealed a slew of Web and e-commerce solutions at its recent SAPphire conference. Since then, SAP introduced mySAP.com, a suite of e-commerce components for SAP. Oracle has numerous initiatives, including one that will allow its ERP and e-commerce solutions to share the same database. Baan and JD Edwards are both preparing to roll out e-commerce modules. Finally, Peoplesoft's newest version includes a number of e-commerce capabilities, including support for online procurement and eStore, PeopleSoft's online sales and customer management solution.


By extending the existing ERP system to support e-commerce, organizations not only leverage their investment in the ERP solution, but can speed the development of their e-commerce capabilities.

Despite the hoopla around the new ERP Web/e-commerce initiatives -- each announcement accompanied by a blizzard of press releases and slick presentations and demos at a user conference -- some long-time observers don't see much that is fundamentally different. "Very little of the code underneath has changed," observes Jim Shepherd, senior vice president, AMR Research, Boston. "The vendors are still selling the same applications to the same buyers to solve the same problems."

The first stage in the ERP march to the Web is to allow browser access through support for HTTP, HTML, and Java. This stage is pretty much complete, reports Steve Bonadio, senior analyst with Hurwitz Group, in Framingham, Mass. The next stage, which has just begun, is to extend the ERP applications themselves to the Web, where they can be accessed and run by outside partners and customers, he notes.

With the Web, the vendors are falling into line with what their customers actually want and need. By contrast, a number of the other recent bandwagons the ERP vendors have jumped upon recently -- componentization, open interfaces, database access, and customization tools -- were leading to problematic destinations at best. It is not that such initiatives were bad or wrong, but they often promised more than they delivered, or they delivered capabilities relatively few customers could or should use.


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