Under Pressure, ERP Giants Struggle to Innovate
Facing mounting competition from upstart application providers and mounting gripes from CIOs, Microsoft, Oracle and SAP are scrambling to innovate with ERP applications. It's about time, IT leaders say.
CIO — Will upcoming "dynamic" applications from Microsoft, Oracle and SAP add options and flexibility to ERP suites? Yes, says Paul Hamerman, VP of business process and applications at Forrester Research: We are now in an era where the large software vendors are investing in innovation. Those vendors are feeling the pressure from upstart rivals and, to some extent, are finally hearing CIOs' demands (or, perhaps more accurately, complaints), he says. "Customers are demanding better usability, easier access to information, more flexibility and lower cost of ownership," notes Hamerman in his 2007 report, "ERP Applications 2007: Innovation Rekindles."
But just how quickly the ERP giants will be able to cook up those innovative products remains a big question.
Analysts often note that the enterprise software space is predictably cyclical. Boom times with huge investment in software innovation are followed by lean years of R&D spending and overreliance on software's fat margins. And then, every so often, a competitor comes along, threatening the giant enterprise software vendors, and the giants quickly earmark funds for "innovation"; Salesforce.com's emergence and Oracle's Siebel CRM On Demand response leap to mind.
At the moment, that innovation urge has struck, Hamerman notes in the report. Hamerman focuses on innovative applications for ERP suites that have just arrived, or will soon, encompassing a broad range of functions, including finance and accounting, procurement, human resources, customer relations, order management, inventory and supply chain activities.
Even with the glut of mergers and acquisitions that have occurred during the last two years, Hamerman claims, "substantial innovation is under way." He terms the new breed of enterprise applications "dynamic" and says that they have resulted from the convergence of four technologies: content and collaboration, business process management, service-oriented architectures (SOA); and business intelligence.
Combined, he says, these four factors make new applications dynamic because they are user-centric with lots of personalization; have business process management (BPM) capabilities; are more flexible and configurable, thanks to SOA; and allow for real-time collaboration. These apps can also extract BI data in real time, and not just for after-the-fact reporting. Finally, they've been built with software-as-a-service usability and flexibility in mind.
What kind of applications are we talking about? Microsoft, he notes, has been focusing on role-based user experiences. With its aptly named Dynamics product line—which covers financial, CRM and supply chain management software products—the company "is on a path to innovate the user experience in a way that will create differentiation in the marketplace," he writes. Microsoft has already given a "user interface facelift" to the latest releases of the Dynamics suite that incorporates some of the familiar usability models from Microsoft Office, he notes, as well as using content and collaboration features from SharePoint. "Perhaps the most innovative aspect of Dynamics is the development of role-based and process-oriented experiences, which will be more visible in future releases," Hamerman writes.
