Will upcoming "dynamic" applications from Microsoft, Oracle and SAP add options and flexibility to ERP suites? Yes, says Paul \n\nHamerman, VP of business process and applications at Forrester Research: We are now in an era where the large software \n\nvendors are investing in innovation. Those vendors are feeling the pressure from upstart rivals and, to some extent, are \n\nfinally hearing CIOs' demands (or, perhaps more accurately, complaints), he says. "Customers are demanding better usability, \n\neasier access to information, more flexibility and lower cost of ownership," notes Hamerman in his 2007 report, "ERP \n\nApplications 2007: Innovation Rekindles."MORE ON ERP\nOpen Source ERP: Today's Hottest Emerging Technology?\n\nSAP 'Ecosystem' Is a Booming Economy Unto Itself\nBut just how quickly the ERP giants will be able to cook up those innovative products remains a big question.\n\nAnalysts often note that the enterprise software space is predictably cyclical. Boom times with huge investment in software \n\ninnovation are followed by lean years of R&D spending and overreliance on software's fat margins. And then, every so often, a \n\ncompetitor comes along, threatening the giant enterprise software vendors, and the giants quickly earmark funds for \n\n"innovation"; Salesforce.com's emergence and Oracle's Siebel CRM On Demand response leap to mind.\n\nAt the moment, that innovation urge has struck, Hamerman notes in the report. Hamerman focuses on innovative applications for \n\nERP suites that have just arrived, or will soon, encompassing a broad range of functions, including finance and accounting, \n\nprocurement, human resources, customer relations, order management, inventory and supply chain activities.\n\nEven with the glut of mergers and acquisitions that have occurred during the last two years, Hamerman claims, "substantial \n\ninnovation is under way." He terms the new breed of enterprise applications "dynamic" and says that they have resulted from \n\nthe convergence of four technologies: content and collaboration, business process management, service-oriented architectures \n\n(SOA); and business intelligence.\n\nCombined, he says, these four factors make new applications dynamic because they are user-centric with lots of \n\npersonalization; have business process management (BPM) capabilities; are more flexible and configurable, thanks to SOA; and \n\nallow for real-time collaboration. These apps can also extract BI data in real time, and not just for after-the-fact \n\nreporting. Finally, they've been built with software-as-a-service usability and flexibility in mind.\n\n\nWhat kind of applications are we talking about? Microsoft, he notes, has been focusing on role-based user experiences. With \n\nits aptly named Dynamics product line\u2014which covers financial, CRM and supply chain management software \n\nproducts\u2014the company "is on a path to innovate the user experience in a way that will create differentiation in the \n\nmarketplace," he writes. Microsoft has already given a "user interface facelift" to the latest releases of the Dynamics suite \n\nthat incorporates some of the familiar usability models from Microsoft Office, he notes, as well as using content and \n\ncollaboration features from SharePoint. "Perhaps the most innovative aspect of Dynamics is the development of role-based and \n\nprocess-oriented experiences, which will be more visible in future releases," Hamerman writes.\n\nIn terms of flexibility, however, Hamerman says Microsoft still has some work to do, "since the applications still tend to be \n\ncustomized with nonstandardized tools. SaaS is still a few years off for Microsoft's ERP products, but it is nearing \n\navailability for its CRM product."\n\nOracle's big play has been its years-long march toward its next-generation Fusion applications. The saga surrounding Fusion \n\nhas been well-documented\u2014including many stops and starts since its announcement in 2005. Oracle has recently asserted \n\nits 2008 initial release date, even with a recent corporate shake up. "The Fusion applications package appears to measure up to the dynamic applications capabilities \n\nrelated to its process orientation, SOA-based flexibility, information, collaboration and an enhanced user experience, but \n\nthese capabilities are still largely theoretical at this point," Hamerman writes. "One thing that we have not seen from \n\nOracle is a commitment to deliver a SaaS-based ERP offering, a significant omission that is likely to hamper its efforts to \n\ncompete in the lower mid-market."\n\nAnd SAP is making a bold move for midmarket customers with its Business ByDesign on-demand \n\nproduct, Hamerman says. Since SAP announced the product in late 2006, executives have been positioning it as "a SaaS offering \n\nthat will feature an innovative application configuration environment for rapid deployment without customization," he writes. \n\n"This product offering is initially aimed at the lower midmarket, and it will also feature enhanced usability, embedded BI \n\ngraphics and process management, as well as integration via the SOA-based NetWeaver middleware platform."\n\nAnother critical reason for the recent influx in investment by the big boys: Smaller software vendors are offering robust \n\napplications that are forcing the SAPs of the world to beef up and broaden their product offerings. Vinnie Mirchandani, an IT \n\nindustry veteran whose Deal Architect consultancy counsels CIOs during negotiations with enterprise software vendors, says he \n\nsees most of the truly innovative software development happening outside the stratosphere of SAP and Oracle.\n\n"There is so much innovation going on that is not coming out of the big software vendors," he says. Mirchandani points to \n\ninnovations in software as a service and social networking mapping technologies (called "corporate X-rays"), sensory networks \n\nthat rely on RFID and GPS technologies, and predictive analytics, just to name a few.\n\nHis biggest gripe is that CIOs have historically put up with this lack of innovation from the big boys. "My point to a lot of \n\nCIOs is: You're not getting this [kind of innovation] from the Oracles and SAP," Mirchandani says. "So what exactly are you \n\npaying these big guys for?"\n\nForrester's Hamerman does acknowledge one David that's been challenging the Goliaths: Workday. The company has received a lot \n\nof attention, he says, in part to the fact that it was formed by David Duffield and other veterans of PeopleSoft. "Initially \n\nstarting with a SaaS human capital management suite that is currently in its first release, Workday will follow with \n\napplications for finance, resource management and revenue management, which is a mix that should support many types of \n\nservices organizations," Hamerman notes. "Without the burden of traditional ERP designs, the user-centric orientation is \n\nappealing, and the application suite promises advanced configuration flexibility and embedded business intelligence."\n\nSo, where does this focus on innovation leave CIOs? During the past couple of years, one could make a case that enterprise \n\napplication vendor "innovation" has seemed more like how "innovative" can the big players be by swallowing smaller vendors \n\nthat are bringing some really cool technologies to market.\n\n "So, SAP buys Business Objects: What good does it do a buyer? It's a Wall Street play," \n\nMirchandani says, also mentioning Oracle's recent overtures for BEA Systems. "The tech \n\nindustry is listening to investors and not buyers right now."\n\nIn addition, Mirchandani points out that while an ERP system may seem like a commodity piece of infrastructure these days \n\n(everyone has to have one), the reality of systems management in 2007 makes it a bit more complicated. "The reality is that \n\nin other commodities you have a lot of choice to swap out activities. It's not that difficult," he says. "But it's not that \n\neasy to fire Oracle or SAP. The lock-in with software is much more dramatic. You can fire Accenture or IBM. You can swap your \n\nhardware\u2014in six months you can get it done. And you can get rid of Verizon or AT&T. But it's much, much harder to fire \n\nOracle."