One of the oldest dilemmas in IT has always been the choice between bespoke business systems which fit requirements exactly, and off-the-shelf packaged applications. And, over time, more flexible packaged software has all but replaced bespoke development for key generic business systems.
But packaged applications, which now dominate every level of systems from PC spreadsheets to mainframe-based financial systems, have brought with them a new problem. The decision today is whether to opt for an integrated suite of business applications from one vendor or to blend best-of-breed systems.
Integration began with financial systems, which used to be sold as different modules ? general ledger, sales order processing, purchasing ? but were unified into single packages.
Dennis Keeling, author of a new report by research firm Ovum on corporate financial systems, says: ?Historically, financial packages were best-of-breed and modular in design, and were often bought from different developers.?
He adds: ?Today?s accounting packages offer an integrated suite of applications from the same developer. The trend is towards enterprise-wide packages with all the modules ? not just finance ? but distribution, logistics, manufacturing and human resources.?
It is important to bear in mind that every vendor is concentrating on this client-server, mid to high-end integrated business applications market. Organisations looking to replace their legacy systems with a new suite of packages need to consider three groups of suppliers.
The first group is dedicated to supplying a single suite of applications, but it also publishes interfaces to allow integration with other systems. This band includes SAP, Peoplesoft, Oracle, JD Edwards, SSA and JBA. Some of these vendors have moved into the Unix/NT client-server space from proprietary platforms such as the IBM AS/400.
Others, such as UK developer Tetra, have capitalised on improvements to PC hardware and software and moved their integrated business applications further up the corporate chain.
They are likely to meet high-end vendors such as SAP, which recently began selling its system through value added resellers (VARs), head-on in the middle of the market.
The second group of vendors includes those that started out with single best-of-breed packages, and which are adding new modules for different processes.
An interesting example is Peterborough Software, UK market leader in payroll and human resources management, and now part of the Rebus Group. Peterborough Software has developed a financials product, and Rebus Group also offers payroll bureau services and software for local government.
The third band includes vendors that may only offer financial software, but which also provide so-called frameworks or eco-systems to support and manage corporate applications. This group includes Computer Associates, with Masterpiece financials and the Unicenter management framework, and Coda, with Coda Enterprise.
The most successful supplier of integrated business applications in Europe, SAP was set up in Germany. Its key product today is R/3, which includes functionality for financials, HR management, supply chain management and manufacturing.
SAP built its business with its mainframe-based product, R/2. R/3 was released to take advantage of open systems: first Unix and now Windows NT.
Despite the clear success of SAP, critics accuse it of being too prescriptive in its approach to implementing software, which can involve some degree of business process re-engineering (BPR). Because of that relatively time-consuming process, experts believe that the benefits of implementing SAP do not always come quickly enough.
But SAP points out that many of its customers use SAP modules, as well as those provided by other vendors, including key rivals Peoplesoft and Oracle. There are about 400 third-party vendors of packages which work alongside SAP, mainly because it is the market leader.
SAP has also developed a way to speed up implementation (without BPR) which will be fully exploited by a growing number of VARs appointed to sell R/3 into the mid-range market. To SAP, mid-range means companies with a #20m to #150m turnover.
Although SAP is taking advantage of the stability of lower-end platforms to move its products into the mid-range market, it is not abandoning its high-end customers. It is trialling R/3 in an IBM mainframe environment, using the mainframe as an efficient high-end server.
According to UK corporate communications director Trevor Salamon, other strategic directions for SAP in 1997 include a push into vertical markets, such as retail and financial services.
?The general trend towards business solutions will continue,? says Salamon. ?And although the market is growing fast, there will be further fragmentation ? particularly after the year 2000 date change, which many companies see as an opportunity to replace older systems.?
SAP UK on 0181 893 2893
Founded in the US in 1987, Peoplesoft?s aim has always been to develop modern business applications based on open systems and client-server technology. Today, it sells applications for financials, HR management, manufacturing, distribution and payroll.
Peoplesoft applications are written with the People Tools 4GL, and are highly modular and flexible. Finding itself up against SAP, Peoplesoft has sold its technology on the basis that it can be implemented quickly and delivers fast business benefits.
Peoplesoft has had to work hard to ramp up its sales and support infrastructure in Europe, now with headquarters in Munich but offices in the UK, France, Spain and the Netherlands. It has a larger market share in the US than in Europe, and its modules have traditionally first appeared in the US.
However, Peoplesoft 6 ? the latest version of the company?s business application suite ? was launched in the UK. Billed as Peoplesoft?s first truly global implementation, this version is rounded out in three different directions, says European product strategy manager, Martin Mackay.
?We develop some modules ourselves on top of financials and HR, such as manufacturing and distribution,? says Mackay. ?Our second approach is to work with partners to port their technology to People Tools. We are in the process of completing systems for treasury management and retail merchandising, for example. The third option is to make our systems as open as possible so that customers can integrate highly specialised systems with Peoplesoft technology.?
Alternatively, customers can create their own applications using People Tools. For example, one company in the UK has built a subscriptions system with People Tools, and another in Norway has developed a scheduling system for the oil industry.
Peoplesoft UK on 01734 522000
The second largest software company in the world, Oracle dominates the relational database market alongside Informix and Sybase. It also holds a strong position in the global business applications sector, competing mainly with SAP and Peoplesoft.
Oracle?s trump card is that its applications are based on its own tools and database technology. Not only does this give the company unique leverage in corporate accounts, but its customers believe there are significant benefits in keeping applications and databases in sync (see the HP Bulmer case study on page 112).
But Oracle?s competitors are highlighting the dangers of customers putting too many eggs in one Oracle-shaped basket. While they can benefit from the integration of applications, tools and databases, they may lose out if Oracle decides to take them down a particular technology route.
Oracle?s applications include financials, HR management, manufacturing and supply chain. Like SAP and Peoplesoft, it has built up a loyal following of independent software vendors (ISVs) which develop third-party products to run on the Oracle platform, alongside Oracle applications.
Also like its rivals, Oracle recognises the need to slant application suites at particular vertical markets. As a result, it recently announced Oracle CPG, a modular solution engineered specifically for the consumer packaged goods (CPG) industry.
Dave O?Connor, industry marketing manager at Oracle UK, says: ?The days of achieving growth through price increases or reaching new markets through geographic expansion are over. For CPG companies today, profitable growth depends on being a low-cost supplier, armed with advanced, intelligent systems that provide timely access to competitive data.?
Oracle CPG includes third-party best-of-breed applications from supply chain specialists Manugistics, Industri-Matematik International and TSW International. Each has agreed to develop its applications to fit in exclusively with Oracle?s CPG strategy, ensuring tight integration.
Oracle UK on 0118 924 0000
System Software Associates
Founded in 1981, SSA has always focused its business enterprise information systems firmly on the industrial sector. A global player, it has developed its applications to run on open systems platforms, as well as in proprietary environments such as the IBM AS/400.
SSA?s product suite is called the Business Planning and Control System (BPCS). It includes specific functionality for the industrial sector, such as multi-mode manufacturing, process engineering and discrete manufacturing.
It also covers supply chain management, including electronic commerce, logistics and warehouse automation; as well as global financials, including support for national requirements and global or regional reporting.
BPCS is running at 8,000 sites in more than 70 countries. Companies using the software include those involved in pharmaceuticals, chemicals, food, beverages, tobacco, electronics and the automotive manufacturing industry.
The main recent development at SSA has been the release of version 6 of BPCS Client-Server, which is based on a new Distributed Object Computing Architecture (Doca). Sharon Ward, UK marketing manager, says that there are now 18 live sites worldwide using this version, with a further 116 predicted to take on the new system in the next few months.
SSA has invested heavily in Doca, which allows organisations to re-use components managed using the standard Common Object Request Broker Architecture (Corba). Applications are shielded from operating environments, and processes are implemented using electronic messaging over a network.
This means that organisations can run BPCS on a number of different servers, and can change applications and processes more easily than with legacy systems.
SSA on 01276 692111
Set up in 1977, JD Edwards has 43 offices around the world and 4,100 customers in more than 90 countries. It started its UK operation in 1990, and now employs 190 people in its High Wycombe office.
The company?s products include systems for financials; HR management; architecture, engineering, construction, mining and real estate; energy and chemical; public services, government, education; and manufacturing, distribution and logistics.
Its multiplatform, network-centric integrated business software, One World, allows organisations to run the system over the Internet, and includes embedded Web browser technology.
This means that users can access the Internet, corporate intranets and business applications from a single Web browser interface.
With this approach, applications and business processes can be changed and updated much quicker, and user training costs are reduced.
Version B71.4 of One World also includes support for multiple currencies and new functionality for processes such as forecasting, job costing, fixed asset management and maintenance management.
The company has developed a nine-step methodology for implementing its software, which is called REP. This is designed to de-risk the implementation process, from agreeing on expectations to rolling out systems and carrying out periodic system audits.
JD Edwards on 01494 682700
There is no doubt that the integrated business software market is now in full swing. Partly driven by changes in technology, vendors can offer broadly comparable systems in terms of integration and quality.
Another key driver in the market is the impending potential disasters associated with year 2000 date change and EMU. These future problems will be difficult to avoid with legacy systems.
This means that there has never been a better time to invest in new core business applications. But choosing the right vendor depends on a number of factors: do you want applications written specifically for your vertical market? Do you need global support, yet also local features and functionality?
Do you want to be committed to a single vendor for technology and applications, or do you want to keep your options open? Is your company big enough to justify a major BPR exercise along with investment in new systems?
There are also other important questions about maintenance and upgrades. How expensive and frequent are upgrades likely to be? What skills do you need in-house to keep systems running smoothly, and are those skills difficult to find and/or expensive?
By asking those questions first, it is possible for organisations to reduce the number of suitable vendors to a reasonable shortlist. It?s also vital to check out reference sites of a similar size and industry, and to involve business representatives in both the package choice, and its implementation.
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