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Data Research DPU for Evaluation of Information Technology

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ERP-The Next Generation: ERP Is Web Enabled for E-business

Pages: 185
ISBN: 1-56607-075-9
Published: July 2000

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About the report

As demand for year 2000 (Y2K)-compatible systems began to decrease in mid-1998, so did the enterprise resource planning (ERP) software boom. To remain competitive in this era of online business, ERP vendors have extended their packages to manage more than the core business processes, such as payroll and accounting, human resources (HR), manufacturing, and sales and distribution.

While these primary applications remain important parts of any ERP system, ERP now embraces e-commerce, advanced planning and scheduling (APS), Internet-based procurement, business intelligence (BI), and customer relationship management (CRM). CTR's new report, ERP-The Next Generation: ERP Is Web Enabled for E-business, also examines other services offered for ERP software providers, including portals, Web-based hubs for easy application access, online marketplaces, and interactive industry-specific trading communities.

Although thousands of companies still do not use ERP, but they soon will. Industry analysts expect sales of next-generation ERP software extensions to spur 25% to 30% annual growth for the next several years. Predictions indicate the ERP market, which reached $16 billion in 1998, will be valued at more than $60 billion by 2005.

The use of the Internet and the Web to communicate, collaborate, and trade with customers and business partners is causing a fundamental shift in how companies define and manage their business processes. Companies can no longer think of their business singularly; they must consider their trading partners and customers. As a result, they need systems that support e-businesse transactions.

ERP-The Next Generation: ERP Is Web Enabled for E-business discusses the four new e-business applications ERP vendors include in their systems to accommodate this e-business trend:

  • Supply chain management (SCM)
  • E-commerce
  • CRM
  • BI

ERP systems are well positioned for e-business. Integrating e-commerce sites with back-office systems enables companies to present a unified image to their trading partners and customers. Without this continuity, customers will lose their sense of security and trust while conducting business on a Web site because they cannot be certain the company is managing its information well.

CTR's new report also identifies critical Web-enabled business functions that ERP providers have not incorporated into ERP systems, including quick and simple reconfiguration of business processes, intuitive interfaces that require no training, real-time or near real-time data access, interactive and collaborative features such as real-time chat and whiteboarding, real-time analysis, and open access to any internal and external users.

CRM software must be connected to back-end ERP systems to be effective. ERP-The Next Generation: ERP Is Web Enabled for E-business discusses how ERP systems and CRM applications should connect at several points, including the financial, order entry, purchasing, and inventory functions. Without this connectivity, the systems cannot share critical business information about customers, orders, and financial data.

ERP systems leverage Internet technology and the component-based architectures of the newer software to open the purchasing function, simplifying participation in the purchasing process. In addition, Internet-based procurement benefits companies, allowing them to reduce costs by controlling purchasing habits, leveraging total spending power, and lowering the number of suppliers they must manage.

BI refers to a broad category of analytical applications that help companies exploit the data in their systems. ERP software providers now include BI applications in their offerings to provide an efficient way to analyze the volumes of transactional data gathered by the ERP system.

ERP tools were not traditionally considered necessary for SCM. Today, however, effective SCM requires fast, accurate business processes and the reliable capture and retrieval of information-functions within the domain of ERP systems.

ERP software vendors must also address functional SCM gaps, including decision support, demand planning, and warehouse management. As a result, the lines between ERP systems and traditional SCM are blurring. ERP-The Next Generation: ERP Is Web Enabled for E-business analyzes the changing relationship between supply chain planning software and ERP systems to enable companies to decide which system will provide the most effective SCM support for their businesses.

ERP software vendors argue that only they can provide tight integration between back-office systems and e-commerce applications. Although other software vendors must use methods such as application program interfaces (APIs) to integrate their applications to an ERP system, ERP software companies can include the e-commerce features directly in the applications themselves.

E-commerce is new territory for ERP software vendors. ERP-The Next Generation: ERP Is Web Enabled for E-business explains how links between their e-commerce offerings and the ERP suite are not necessarily as tight as they appear. Companies must compare these ERP products with third-party offerings.

Deciding a course of action when a software vendor enters one new market is challenging, but the difficulties buyers face when looking for a solution increase exponentially when providers enter several new areas simultaneously as ERP systems suppliers have.

This new CTR report offers these guiding principles:

  • Stay focused. Corporate business needs should guide the entire process.
  • Think strategically. Do not look too narrowly at each application; consider how the application will affect the entire business.
  • Understand the basic strengths and weaknesses of each type of provider. Each provider claims to be in the ideal position to provide e-commerce functionality.
  • Look for open technology. Companies should look for products supporting extensible markup language (XML).
  • Do not wait too long. Once a business need is established, do not wait until the technology has been proven to purchase it. A competitor may implement the technology first and change the rules of the business, leaving other industry companies far behind.

ERP-The Next Generation: ERP Is Web Enabled for E-business provides the information necessary to determine whether ERP applications and systems are appropriate for the business. Companies must begin looking for and familiarizing themselves with ERP systems now to gain competitive advantage. Companies that have no intention of using any of these new applications today will inevitably use them within the next two to five years.

Report contents

Executive Summary

  • How Enterprise Resource Planning (ERP) Software Has Changed
  • New Applications
  • E-business
  • ERP Challenges
  • The Challenge for Buyers

Traditional ERP Systems

  • ERP Systems Support Cross-functional Processes
  • Support for Other Types of Processes
  • Why the Different Database Model Matters

How the ERP Market Has Changed

  • Changing Market Dynamics
  • Mid-market Madness
  • ERP Providers Are Forced to Offer New Applications
  • ERP Systems Must Also Run on the Web
  • A Fundamental Shift

Web Enabling ERP

  • Traditional ERP Architecture
  • Web Browser Access to ERP Software
  • ERP Needs to Leverage Web Technology
  • N-tier Architecture
  • User Benefits
  • Ready for E-Business: The Ultimate Benefit

ERP and E-commerce

  • E-commerce Defined
  • Types of E-commerce
  • Business-to-Consumer (B2C) Commerce
  • Business-to-Business (B2B) Commerce
  • Integration with the Back Office
  • ERP Vendors' E-commerce Products Vary
  • B2B Selling
  • B2C Storefronts
  • Internet-based Procurement

Customer Relationship Management

  • Customer Relationship Management (CRM) Supports the Customer Management Process
  • Types of CRM Software
  • The Value of CRM Applications
  • The Connection between CRM and ERP
  • Vendors that Sell CRM Applications
  • Oracle Corp: An ERP Provider Aggressively Pursuing CRM
  • The Differences between CRM Providers
  • The Differences between ERP Vendors and other CRM Providers
  • More about Web-based CRM
  • Interactive Web-based Customer Service
  • A Word of Caution
  • Integrating ERP and CRM Is Risky
  • CRM Is about People-Not Technology


  • What Is a Portal?
  • Portals Provide Web Access to Collections of Information
  • Portals and Business
  • New Portals Are Being Created for Business Use
  • ERP Software Providers Want Control of the Desktop
  • Examples of the Three Types of Portals
  • Marketplace Portals
  • Desktop and Enterprise Portals
  • Industry-specific (Vertical) Portals
  • The Business Case for Portals
  • Vendors that Supply Portals
  • Choosing a Portal
  • Build Your Own Portal
  • Unanswered Questions about Portals
  • Portals Are More Complicated Than They Appear

Procurement, APS, and Business Intelligence

  • Internet Procurement
  • Internet and Component Technology Opens the Purchasing Process
  • How Internet-based Procurement Works
  • ERP Software Providers That Offer Internet Procurement
  • Oracle Strategic Procurement: An ERP Internet Procurement System
  • Advanced Planning and Scheduling (APS)-Another Extended ERP Application
  • APS, ERP, and Supply Chain Management (SCM)
  • Business Intelligence (BI)

New Delivery and Pricing Models

  • Traditional ERP Pricing
  • Preconfigured Systems
  • Preconfigured, Preinstalled Systems
  • Preconfigured, Preinstalled, and Preintegrated Systems
  • ERP Outsourcing
  • New Pricing Models
  • The Disadvantages of Outsourcing ERP
  • ERP Rental Is Worth Considering
  • More about Oracle Business Online
  • SAP Introduces Role-based Pricing
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