Picking Up Steam
Maybe someday we'll look back at 2003 and say it was the year when everything turned around and the great tsunami of worldwide prosperity began picking up steam, but it certainly didn't seem like that at the time. 2003 was, however, a step in the right direction compared to the preceding year, and consumer goods companies began to show signs of optimism and forward thinking. One of the reasons for this optimism and forward thinking was the activity in the Enterprise Resource Planning (ERP) technologies. More and more consumer goods companies, especially small and mid-size companies, found themselves in position to exploit ERP technologies, and those technologies began to deliver on some long-held promises.
All-New ERP
Arguably the biggest news of the year came early, when SAP one of the leaders in ERP technology, released the all-new mySAP ERP, which will effectively, if not officially, replace SAP's R/3 Enterprise, the preeminent ERP product for a decade. Essentially a combination of R/3 and SAP's NetWeaver platform, mySAP seems poised to better fit the needs and desires of companies that aren't yet looking for a product with all the features of the mySAP Business Suite.The ERP functionality and power of mySAP can be extended with modules for Customer Relationship Management (CRM), Product Lifecycle Management (PLM), and Supply Chain Management (SCM), so many analysts believe the new product will be more than capable of replacing most legacy systems, including those upgrading from R/3 Enterprise.
The Big Merger
Hot on the heels of the mySAP announcement came news of the biggest merger of the year (in ERP terms), as PeopleSoft purchased J.D. Edwards for $1.7 billion in stock. The merger moved PeopleSoft firmly into the number two position in the ERP market (behind SAP), with an estimated $2.8 billion annual revenue, pushing it past Oracle. The merger didn't have huge resonance in the United States, as both PeopleSoft and J.D. Edwards continued to produce independent products, not wanting to alienate either company's consumer base. However, it's thought that since the two companies had largely different industry and market concentration (PeopleSoft's strength in the back office of large clients complements J.D. Edwards' forte in small and mid-size asset-intensive companies), will improve the overall product strength of both.
Oracle's Attention
Oracle didn't spend the year sulking about the merger. Taking on process ERP was the company's 2003 strategy, with the release of Oracle 11X (Oracle Process Manufacturing, or OPM), a successful rewrite and integration of Datalogix' GEMMS. But OPM was more than a remake of a successful product, it was a remake and a couple of sequels all in one, offering best-of-breed level process manufacturing capabilities as well as order management and procurement.
According to John Fontanella, vice president supply chain services at AMR Research, Oracle's attention to order management and procurement are aimed right at the heart of a major ERP trend. "Procurement and supplier management are big," he says. "It's almost taking Wal-Mart's philosophy of the supply chain so that you leverage everything." Fontanella tells a story of a company that was buying whole eggs in mass quantities, but using only the egg whites. The company couldn't buy egg whites as cheaply as the whole eggs, so it simply resold the separated yolks to another buyer. Voila! An ERP success story, as a loss (the wasted yolks) is turned into a revenue stream.
Fontanella says the story could be seen as a triumph of the company's ability to solve a problem instead of a purely technological win, but without the technology, the company may not have been able to quickly and completely exploit its own abilities.
Microsoft's Market Share
Microsoft is known for giving people the technology they need to fully exploit their abilities, yet the company hasn't cracked the top three in terms of ERP market share. In an effort to strengthen its position in the ERP market by offering clients the Microsoft Business Network, a combination of on-premise software integrated with Microsoft Office, Microsoft Business Solutions applications or Microsoft BizTalk Server and hosted Web services, creating a fully automated Microsoft.NET-connected suite. Microsoft Business Network, then, follows another major ERP trend by focusing its benefits (and targeting as its market) on small and midsize businesses. In addition, Microsoft released a pair of Demand Planner modules -- DP Power User and DP Collaborative -- to enhance the Axapta, Great Plains, and Navision products.
Global Presence
SSA Global's ERP technology is better known in Europe than the United States, but the company began taking strides toward changing that with the release of the SSA Corporate Performance Management (CPM) suite, a single-source, and enterprise-wide product with extensive integration to SSA Global core ERP applications. Including components such as Enterprise Planning (SSA Planning Manager and SSA Financial Manager), Enterprise Scorecarding (SSA Metrics Manager and SSA Visualizer), and SSA Enterprise Business Intelligence (SSA Enterprise Analytics and SSA BI Jumpstarts), the CPM suite shows that SSA also has the small and midsize markets in their sights.
The Future of ERP
Integration, analytics, procurement and supplier management, all aimed at improving ERP's functionality for small and midsize consumer goods companies, were some of the major trends in ERP technology in 2003. But analysts such as John Fontanella believe that 2004 is going to be the year when ERP really begins to demand attention, and a recent study released by IBM seems to bear that thinking out, showing that only 19 percent of the 450 CFOs surveyed worldwide believe they are fully exploiting the capabilities of the ERP systems. That leaves a huge amount of room for growth and improvement. Look for it to start happening in 2004.