Recent Developments in the field of ERP

Shilpa Mukesh
School of Management Studies CUSAT, Kochi -22 Email id: dhuva3@gmail.com

Abstract: Information in large organizations is often spread across numerous homegrown computer systems, housed in different functions or organizational units. ERP is a software architecture that facilitates the flow of information among the different functions within an enterprise. Similarly, ERP facilitates information sharing across organizational units and geographical locations. It enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion. Various modules of ERP software has enabled enterprise to optimize its resources and maximize customer satisfaction. The new trend in ERP has enabled customization of the products and the services of the firm providing easy implementation and acceptance of the software.

Keywords: Enterprise Resource Planning Developments, Web enabled ERP, Wireless ERP, ERP Future, Recent ERP developments.

1. INTRODUCTION
Enterprise Resource Planning is a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing. As the ERP methodology has become more popular, software applications have emerged to help business managers implement ERP in business activities such as inventory control, order tracking, customer service, finance and

human resources. Enterprise resource plannings true ambition is to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular needs. Thus ERP attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular needs. ERP systems are IT systems which are meant to serve all the IT needs of a manufacturing company.

2. RECENT DEVELOPMENTS IN ERP 2.1. Upgrade and footprint expansion activity.

ERP decreased 24% in 2009 but it is expected to grow 8% per annum over the next 5 years. I disagree. I think that growth should be slightly higher. I believe that as organizations consolidate and look to get more out of their IT operations moving to a single vendor ERP system only makes sense. Moreover, as the industry continues to consolidate vendors are going to standardize on one technology platform and begin to replace many of these multi-system platforms that currently [1] dominate most environments. In a recent Forrester survey 26% of the respondents felt that updating/modernizing key legacy applications was very important and a high priority. 20% of the respondents felt that consolidating or rationalizing enterprise applications was very important. 22% of the same respondents also indicted that they had plans to Expand/upgrade existing ERP implementations. Consequently, I interpret this data to suggest that an 8% expected growth is too conservative; I anticipate double digit growth. What we do agree on, however, is that maintenance revenue and service revenue will grow at a higher rate than license revenue over the next few [2] years and that the majority of all ERP Revenue will be maintenance . Moreover, I expect this trend to continue into the future as services and support continues to outgrow license at a higher slope.

2.2. Open Source

The use of Open Source Technology will continue to increase except for ERP Applications. I Agree. Open Source technology really doesnt have a large play in regards to ERP. SaaS and Cloud are more relevant and the trend is more towards these uses than it is towards Open Source. Open source brings an alternative which addresses many of the key problems of both custom and commercial enterprise software. It begins by offering the user a freely available code base as a starting point. The user can try it for free to see if it meets his needs. There is no risk of upfront licensing fees for software that may not work. If no modifications are required, open source software can be implemented with the same rapid time-to-market as commercial packages. If customizations are required, the user has a head start with an existing code base. Furthermore, he can leverage the expertise of both in-house and open source community developers. An open source project brings with it the domain knowledge and business requirements of many contributing organizations, significantly reducing the specification risk typical of custom software. Open source communities also offer user-developers collaborative help in developing and debugging of his software. The net result is better software in less time. Longer term, open source offers the user the control of custom software and the external resources previously available only with commercial software. With the source code in hand, the user can decide on future support and upgrades. There is no one to "discontinue" the software for him. At the same time, because the software shares the common roots with open source, he can obtain

support and upgrades from the open source community or purchase professional-quality support from a range of vendors in the community. Thus, the risks of becoming "stranded" due to the loss of vendor support or key employees are significantly reduced with open source.

2.3. Small businesses going ERP sooner.

Small Businesses will be moving to an enterprise level ERP system sooner. In 2005 the average company had at least 29 employees before adopting an ERP system; this number is expected to decrease to 18 in 2010. Im 50/50 on this. I can see how many small businesses wouldnt have the revenue, cash, or credit, to purchase and implement an ERP system in this economy so I would disagree with this trend. On the other hand I can understand how economic conditions would dictate the need for cost savings that can only be generated through the increased efficiencies that ERP can bring. Consequently, many small firms may view ERP as a tool to stay competitive in tough economic conditions. Unfortunately, I dont have a feel for which theory is more prominent so I can neither agree or disagree with this assertion. Please feel free to comment and contribute your opinion on where small business is trending.

2.4. Mobile ERP

Mobile ERP will grow in use and importance. I agree. With the emergence and popularity of the iphone, i-store, and mobile applications, the next evolution in ERP will be a mobile client interface to ERP systems. Oracle already has a mobile client and Oracle Lite for disconnected applications but Tom and I both feel that the next evolution in mobile ERP will be interchangeable and downloadable mobile interfaces. That is, depending on the business area of interest HR, Finance, Procurement, etc you will be able to select a mobile interface that corresponds to that business area and a specific business process.In surveys conducted by Forester companies have already implemented some form of mobile ERP application: Sales Force applications (18%), Field Service applications (15%), Logistics applications (15%), Inventory Management applications (22%), Customer-facing applications (15%), and Enterprise Asset management (15%). Moreover, Forrester also found that these same companies had plans to either implement/expand their use of mobile applications: Sales Force applications (10%), Field Service applications (10%), Logistics applications (5%), Inventory Management (5%), Customer-facing applications (15%), and Enterprise Asset management (5%).This data supports what I have seen in the field, and more importantly, it is representative of what an ever increasing number of customers have been asking for. Moreover, I foresee this trend not only continuing, but increasing each year as we go forward.

2.5. New enterprise resource functionality: energy utilization

New enterprise resource functions going forward will require increased energy utilization. That is there will be an even greater emphasis on ERP energy/carbon management systems. I agree. In a 1 recent Forrester survey 69% of the companies surveyed felt that the need to implement green (energy-saving) software tools to cut operations costs was an important initiative. This sentiment can only increase given the Presidents new energy agenda and ARRA funding for Green IT initiatives. This trend should increase exponentially given the monies available for these types of programs and the desire to take advantage of these public monies.

2.6. 3 party support vs. maintenance contract renewals

Third Party Support vs. Software maintenance contract renewals. Many customers will choose to discontinue vendor sponsored maintenance plans in the upcoming year. The maintenance renewal

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rate will decrease 1-3% and third party support will increase 5% or more in 2010. I agree with this. Most customers have contempt for the software support process and view the entire process as a necessary evil. Consequently, as long as viable third party options are available I can see more customers choosing third party support as a more practical option than vendor sponsored programs.

2.7. New-growth markets

New Growth Markets: Verticals. Forrester anticipates that of the seven major verticals the largest amount of ERP growth will occur in the Manufacturing sector even though the manufacturing industry is the third ranked industry in regards to overall ERP implementations. In regards to current ERP implementations the industries are ranked in this order based on the percentage of ERP installed in that sector: 1. Utilities & Telecom; 2. Retail/Wholesale; 3. Manufacturing; 4. Financial Services; 5. Business Services & Construction; 6. Media, Entertainment & Leisure; 7. Public Sector & Healthcare. The aforementioned list does not surprise me. What does surprise me is that moving forward the manufacturing sector by percentage is currently expanding their ERP systems and/or planning to expand their ERP systems within the next 12 months more so than any other vertical. The Manufacturing vertical was first, the Media, Entertainment & Leisure vertical was second, and the Retail/wholesale vertical was third. This ranking is surprising given that these industries have been hit the hardest by the recession so it only seems logical that they would be the least likely to expand their ERP footprint. The data, however, suggests otherwise. Apparently, during this recessionary period businesses are looking to consolidate and control costs through technology. This expansion probably doesnt include a lot of new licenses but it is more about implementing and configuring what these firms have already purchased. That is, they are finally making use of the shelf ware that has accumulated over the years. This theorem coincides with the projected increase in spending on IT Services and support relative to the decreased spending on net new licensees over the next 3-5 years. The complete rankings of the verticals in regards to expected ERP implementations is listed below: 1. Manufacturing; 2. Media, Entertainment & Leisure; 3. Retail/Wholesale; 4. Public Sector & Healthcare; 5. Utilities & Telecom; 6. Business Services & Construction; and 7. Financial Services. New Growth Markets: Regions. The region that is expected to have the greatest growth in ERP is Germany and the US is second. The complete list is as follows: 1. Germany, 2. US, 3. Canada, 4. France, and 5. The UK. Im a little shocked by the German ranking. I would have thought that the US would have been number 1 but overall I agree with these rankings given the overall strength of each regions economy. New Growth Markets: Company Size. Not surprisingly, anticipated ERP growth is directly related to company size. Those companies with 20,000 customers or more have the highest percentage of companies/organizations looking to implement ERP. This isnt unexpected. What is surprising, however, is that these firms are in the process of expanding now in 2010 and very few of them are planning to expand/implement ERP in the next 12 months.

2.8. Expanding ERP

The traditional ERP concept that we are familiar with was first introduced in 1992. Going forward traditional ERP systems will transform into what is being called EERM (External Enterprise Resource Management) which incorporates knowledge management information into your business process. I totally agree with this prediction. In the 1990s era, enterprise applications addressed the operations level of the organization. Enterprise applications functioned at the Operations level incorporating all of your traditional business functions: IT, HR, Accounting, SCM, Production, Sales, and Service. Your direct Line Management has access to these applications and can control the operational output/function of each. Executive and senior management, however, still needs to depend on spreadsheets and historical analysis to make decisions on current and future performance under this model of ERP. As we enter into the new century and beyond the knowledge economy has shifted the move-thedial resources from physical to people. As we move the focus of the enterprise from Physical Assets to People Assets the classification of our business processes has become less modular and more categorical. ERP or Physical Assets are now grouped around concepts instead of discrete functions. For example, we now classify business functions in the following manner: Capital, Materials, Inventory, Fixed Assets, etc. Moreover, over time People Assets have blended the distinction between Line Management, Senior Management, and Executive Management into more collaborative concepts such as Relationships, Knowledge workers, Work, and Information. This has led to customers investing for ERP integration value through even further changes to the people component of their enterprise. This investment has further changed management from a hierarchical structure with an emphasis on historical analysis and spreadsheets to a flatter management style focused on instant analysis, widespread collaboration, and real-time analytics. As a result, traditional hierarchical work structures like Executive Management, Line Management, and Middle Management have been replaced by modern business functions such as: Social Networks, Collaboration, PPM, and BI Content Management. These modern functions have replaced the top-down authoritarian mandates of the previous century with a more fluid collaborative decision making process that depends on technology to provide real-time decision making capability and group consensus. As the continued integration of social media (wiki, blogs, tweeter, face book, IM, etc.) into the workplace continues to expand, I believe that this emphasis on People Assets will continue to grow and increase adoption of EERM in the enterprise.

2.9. ERP as SaaS

SaaS is probably the most significant non-ERP trend to look forward to. There isnt much growth for ERP in regards to cloud computing but there is anticipated growth in application hosting. In fact, application hosting for ERP growth was almost 100% last year, and I anticipate this trend to continue. In fact, application hosting has shown growth in every functional area and SaaS in particular has shown tremendous growth in HCM and CRM. What is also surprising is that on-premise deployment of software for any given functional area does not exceed 80% which means the majority of firms are using some form of SaaS or Application hosting to deploy one or more of their business functions.

The chart below provides the relative percentages for each category. [1] ERP HCM CRM Spend PLM Mgmt/SRM 60% 9% 15% 65% 5% 13% Order Mgmt 73% 3% 14% SCM

On-Premise SaaS

76% 3%

61% 13% 15%

74% 13% 13%

68% 4% 18%

ApplicationHosting 11%

2.10. Micro-Verticalization will be delivered by channel partners.

In the future we will see increased specialization amongst channel partners providing specific services to a sub-set of a major vertical; this process is known as micro-verticalization. For example, there are traditionally eight major verticals: Manufacturing, Business Services, Utilities & Telecom, Transportation, Public Sector, Retail & Wholesale, Media, Entertainment & Leisure, and Finance & Insurance. Now when we look at the Transportation vertical (NAICS code 48) closer we see that it consists of 41 micro-verticals such as Scheduled passenger air transportation, Short line Railroads, Taxi service, Freight transportation, etc. Channel partners deliver micro-vertical value by addressing the needs of each of these sub-verticals. For example, if we focus on freight transportation partners, well have the option of developing services and solutions for the following sub-verticals: Line-haul railroads, Deep sea freight transportation, General freight trucking local, Scheduled freight air transportation, etc. This process will essentially allow partners to build an expertise in a vertical that exists within a larger vertical. By focusing on micro-verticals and sub-verticals many channel partners can maximize revenues by focusing on a niche portion of the market wherever market segmentation may exist. The specialization that firms offer when they focus on this micro-vertical approach has been increasing over time as the industry continues to consolidate. As software vendors become all things to everybody customers need the specialization that channel partners bring in order to implement the solutions to the necessary degree of specificity that customers require to meet their business needs. This is one trend that I definitely see continuing into the future.

3. CONCLUSION
Enterprise Resource Planning (ERP) integrates core business areas such as manufacturing, distribution, financials and human resources. ERP is often implemented in companies together with process-oriented organization or Supply Chain Management (SCM). In order to manage the information-flow of such structures new IT-systems are generated known as ERP-Systems. ITsystems of this kind allow managers from all departments to look vertically and horizontally across the organization to see what others are accomplishing or not. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different department's particular needs. ERP-systems also implement and automate business processes, putting them into a useful format that is standardized across the corporation and

between their suppliers and customers. ERP-systems capture data about historical activity, current operations and future plans and organize it into information people can use to help develop business strategies.

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