Next-Generation Enterprise Systems

Next-Generation Enterprise Systems

Charles Møller (Aalborg University, Denmark)
DOI: 10.4018/978-1-60566-026-4.ch451
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Abstract

“ERP is dead - long live ERP II” was the title of a path breaking research note from Gartner Group (Bond, Genovese, Miklovic, Wood, Zrimsek, & Rayner, 2000). In this research note, Gartner Group envisions how the ERP vendors respond to market challenges and how ERP and ERP strategies evolved by 2005. Gartner Group defines ERP II as a transformation of ERP (Enterprise Resource Planning), and today the major vendors have adopted this concept in their contemporary ERP packages. ERP (Enterprise Resource Planning) is an important concept to industry. Enterprises are increasingly implementing packaged ERP systems. A recent study confirmed that over 90% of the 500 largest Danish enterprises have adopted one or more ERP system. Further, the study found the systems to be of an average age of 2.8 years and decreasing (Møller, 2005a). ERP is a standardized software package designed to integrate the internal value chain of an enterprise (Klaus, Rosemann, & Gable, 2000). In 2002, the five major ERP vendors were: (i) SAP; (ii) Oracle; (iii) Peoplesoft; (iv) SAGE; and (v) Microsoft Business Solutions. They controled almost 50% of the ERP market (c.f. Table 1) and consequently the corporate infrastructure is dominated by the design of these systems and the vendors. By 2006, the market is consolidated and many of the smaller vendors have been merged with larger vendors. Oracle acquired PeopleSoft and JD Edwards and the global market seems to be dominated by SAP, Oracle and Microsoft. According to Nah (2002) the American Production and Inventory Control Society (APICS) defines ERP as: “a method for the effective planning and controlling of all the resources needed to take, make, ship and account for customer orders in a manufacturing, distribution or service company.” This definition expresses ERP as a tool but ERP is also a management vision and an agency of change and ERP has been attributed to almost any good or bad that IT may bring about in business. In the late 1990s, the ERP hype was primarily motivated by companies rushing to prepare for Y2K (Calloway, 2000). Then, after a short recession the adoption of ERP has continued. Davenport’s sequel on enterprise systems (Davenport, 1998, 2000; Davenport & Brooks, 2004) illustrates the changing business perspective on ERP and the ERP hype. Davenport (1998) sums up the first wave of experiences from implementing ERP systems in a much cited paper on “putting the enterprise system into the enterprise,” and points to the new potential business impact of the ERP systems. The discussion evolved over the first enthusiastic expectations, continued over a growing number of horror stories about failed or out-of-control projects, toward a renewed hype of expectations on e-business and SCM. The ERP II concept is the software industry’s perception of the new business challenges and the vision addresses the issues of e-business integration in the supply chain. ERP II is the next-generation ERP concept and in a few years from now the ERP II vision is going to be institutionalized into the infrastructure of most enterprises. This article will portray the conceptual framework of ERP II.
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Introduction

“ERP is dead - long live ERP II” was the title of a path breaking research note from Gartner Group (Bond, Genovese, Miklovic, Wood, Zrimsek, & Rayner, 2000). In this research note, Gartner Group envisions how the ERP vendors respond to market challenges and how ERP and ERP strategies evolved by 2005. Gartner Group defines ERP II as a transformation of ERP (Enterprise Resource Planning), and today the major vendors have adopted this concept in their contemporary ERP packages.

ERP (Enterprise Resource Planning) is an important concept to industry. Enterprises are increasingly implementing packaged ERP systems. A recent study confirmed that over 90% of the 500 largest Danish enterprises have adopted one or more ERP system. Further, the study found the systems to be of an average age of 2.8 years and decreasing (Møller, 2005a).

ERP is a standardized software package designed to integrate the internal value chain of an enterprise (Klaus, Rosemann, & Gable, 2000). In 2002, the five major ERP vendors were: (i) SAP; (ii) Oracle; (iii) Peoplesoft; (iv) SAGE; and (v) Microsoft Business Solutions. They controled almost 50% of the ERP market (c.f. Table 1) and consequently the corporate infrastructure is dominated by the design of these systems and the vendors. By 2006, the market is consolidated and many of the smaller vendors have been merged with larger vendors. Oracle acquired PeopleSoft and JD Edwards and the global market seems to be dominated by SAP, Oracle and Microsoft. (see also Table 2)

Table 1.
Top 5 worldwide ERP software application new license revenue market share estimates for 2002. Source: Gartner Dataquest (June 2003)
Vendor2002 Market Share (%)2001 Market Share (%)
SAP AG25.124.7
Oracle7.07.9
PeopleSoft6.57.6
SAGE5.44.6
Microsoft Business Solutions4.94.6
Others51.150.3
Total Market Share100.0100.0

Key Terms in this Chapter

Business to Business (B2B): or e-procurement systems, improves the efficiency of the procurement process by automating and decentralizing the procurement process. The traditional methods of sending Request for Quotes (RFQ) documents and obtaining invoices and so forth, are carried out over the Web through purchasing mechanisms such as auctions or other electronic marketplace functions, including catalogues

Consumer to business (B2C): or e-commerce systems, deals with the carrying out of commercial transactions with businesses or with individual customers by using the Internet as an electronic medium. This requires an extensive infrastructure of which the main features are a catalogue, online ordering facilities and status checking facilities

Enterprise Resource Planning (ERP) II: systems are second generation ERP systems. ERP II extends on the ERP concept (see Figure 1 ). The ERP II vision is framed by Gartner Group and in practice defined by the contemporary systems of the major ERP vendors.

Supplier Relationship Management: ( SRM ) is the vendor side analogy to CRM aimed at the effective management of the supplier base. SRM facilitates the management of the supplier relations in its entire life-cycle.

Product Lifecycle Management: ( PLM ), including Product Data Management (PDM), enables enterprises to bring innovative and profitable products to market more effectively, especially in the evolving e-business environment. PLM enables enterprises to harness their innovation process through effective management of the full product definition lifecycle in their extended enterprises.

Enterprise Application Integration (EAI): or extranets, provides the ERP II system with a portal and a platform for integration with other systems inside or outside the corporation. EAI provides the support for automating processes across various IT platforms, systems and organizations

Supply Chain Management: ( SCM ) systems provide information that assist in planning and managing the production of goods. For instance, SCM assists in answering questions such as where the good is to be produced, from what the parts are to be procured and by when it is to be delivered.

Customer Relationship Management: ( CRM ) systems facilitate the managing of a broad set of functions relating to managing customers relations that primarily include the categories of customer identification process and customer service management.

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