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Wednesday April 17 2002 Enterprise Resource Planning and Web Services The Third Wave Every major technology goes through a series of revolutions or "waves" with each wave building upon the generation before it, and ERP is no exception. The first wave of ERP was the onset of computers in manufacturing. This was followed by a wave where specialized ERP applications began to emerge. Web Services based ERP solutions constitute what can be appropriately termed as the Third Wave in Enterprise Resource Planning. This article looks at who the major players in the foray are. Enterprise Resource Planning is a generic term for the broad set of activities facilitated by multi-module application software that helps businesses manage their important facets. ERP also includes application modules for the finance and human resources aspects of a business. Typically, an ERP system uses or is integrated with a relational database system at the back end. The Business Drivers behind ERP No solution would be embraced by the industry unless it is economically promising. Businesses accept ERP because it carries in its wake the promise to alleviate hitherto unsolved chronic problems. The following points are the key business drivers:
In the 1990s, the need to develop a system with tightly integrated programs that would use a unified database and would be used across the enterprise gained prominence. This common-database, company-wide integrated system was named Enterprise Resource Planning (ERP). ERP Implementation Methodology Traditionally ERP is implemented as a product based solution. The businesses assess their requirements, come up with the product they want to employ to address the requirements and then go about customizing it. There are three commonly used ways of installing ERP:
Why ERP and Web Services? In the context of ERP, Web Services offer a two-fold advantage: ease of integration and reduction in costs through the hosted application model. Ease of Integration Integration is a major source of expenditure across enterprises. According to figures from the Meta Group, Global 2000 companies rely on an average of 49 enterprise applications, and they spend up to 33% of the IT budget just to get them to talk to one another. ERP is complex and not intended for public consumption. Now, however, clients and outsourcing vendors are demanding access to the same information employees get through the ERP system - things like order status, inventory levels, and invoice reconciliation - except they want to get all this information simply, without all the ERP software. This is where Web Services come to the rescue, wherein seamless URL calls make it possible to expose just the appropriate amount of material to the authenticated users at the right time. With the availability of Web Services we can achieve integration with a superior quality of service for reliability, security, manageability, routing, discovery, testing, and effectiveness. Web Services basically use object-oriented technology to "wrap" data and programming elements in Web Service methods to be accessed by different applications. A software bridge of sorts may exist to connect a PeopleSoft human resources package to SAP's R/3 system, but that same bridge won't work for other human-resources packages trying to connect to SAP. Reduction in Costs through the Hosted Application Model The deployment of a traditional ERP system can involve considerable business process analysis, employee retraining, and new work procedures. A franchising strategy to adopt Web Services for ERP implementation or enhancement takes advantage of the investment made in the legacy ERP applications and provides them a new lease of life. Web Services enable proprietary applications to communicate over the Web. The goal of chief vendors is to create "wraps" to access a high-level tool that turns Java or any other proprietary program into a Web Service. Proprietary ERP applications and Web Services can talk to each other by using such high-level tools - HP's E-Speak toolsets; IBM's Dynamic e-business (infrastructure and software); and Sun ONE (Forte technology and iPlanet's ECXpert) - all of which assist data flow and communications between vastly diverse applications. ERP provides for integrated, multicomponent application software performing multiple business functions. It involves the use of packaged software instead of client-written custom software. How does Web Services Make ERP Easier? The enterprise may still require an ERP application for its internal systems to function efficiently together. Web Services allow the enterprise to acquire the information needed to respond effectively, even in situations where tightly coupled application design isn't necessary. By developing an integrated Internet information solution, ERP systems companies make public information that was never before accessible from the enterprise. Markets created in this way are by definition more efficient, because they permit companies to concentrate their efforts on customer service and profits. As this new technology gains business-wide support, more vendors will venture into product support for these Web Services. Traditional ERP vendors had a hard time building the links between the Web and their software. Most of them are now presenting solutions helpful for bridging the gaps. The number and functionality of available Web Services is starting to increase and ERP and accounting systems vendors are beginning to tackle the integration problem by introducing what are called Web Service broker hubs. A broker hub offers a portal to provide a user interface for consumers so that they can find, evaluate, subscribe to, cancel, manage, or monitor Web Services. An increasing number of accounting and ERP vendors are delivering Web Service broker hubs. SAP and Oracle offer them for users of mySAP and Oracle E-Business Suite. Intuit and Peachtree offer them for use with QuickBooks and Peachtree Complete Accounting. And Navision is one of the few ERP vendors that will offer a Web Service broker hub to users of midtier accounting software. Current Scenario Major enterprise application software vendors have already embraced the Web Services architecture. Oracle, SAP, and PeopleSoft are on the forefront on this aspect, with many of them already having graduated to the Web Services way of life. SAP and PeopleSoft are pursuing Web Services to help facilitate application integration. Where Oracle, SAP, and PeopleSoft see Web Services as a foundation for better integrating applications within their own suites, others see Web Services as an industry-standard infrastructure that will facilitate business-logic integration across diverse best-of-breed applications on a global scale. The following table summarizes the Service Oriented
Architecture offerings that some of the major vendors have, with which all
of them aspire to capture a piece of the pie:
Comparison between Current ERP Systems and Web Services Solutions This is a comparison between the current day ERP solutions
and the Web Service based ERP solutions:
Economics of ERP Web Services The TCO for a Web Services solution would be substantially lower than the staggering $53,320 reported by the Meta Group for a "heads-down" user over the first two years after installation of a similar ERP solution. This is due to the fact that the following costs normally incurred in a traditional ERP solution are alleviated or reduced in this approach:
The rapid turn around time of a Web Service solution promises higher yield and ROI, lesser investment, and faster break-even point. The Road Ahead A growing number of small and midsize companies are deploying enterprise resource planning applications. In the past, many of these companies, typically with annual revenue of less than $500 million, didn't have the budget or time to consider implementing large, complex, and expensive ERP packages. But with an array of software vendors such as Oracle, PeopleSoft, and SAP to choose from and who are creating less expensive, modular, Web-architected, and hosted versions of their ERP software, a lot of smaller companies are rethinking their options. Within the next two years, ERP will be redefined as a platform enabled by Web Services globally. Originally focused on automating the internal processes of an enterprise, ERP systems will begin to include customer and supplier-centric processes as well. ERP Web Services will become universal business applications that will encompass front office, business intelligence, e-commerce, and supply chain management. Summary ERP is a great concept, but like so many of these great ideas, conditions apply. It seems very likely that future ERP applications will not be either products or services, but rather combinations of products, services, and "loosely coupled" applications. These applications are another form of hybrid because they combine locally installed product functions with distributed service functions delivered electronically over the Internet. Hybrid models offer a best-of-both-worlds solution. They provide fast, locally installed product functions combined with on-demand remote services that take advantage of the Internet. They help maintain private data ownership, while making select data public in a controlled manner. They deliver simple customization of applications through the addition of Web Services channeled via service broker hubs, which focus on the needs of a specific ERP suite. This article is an extract from Web Services Business Strategies and Architectures. Buy the book from Amazon.com Or purchase the extended PDF version of this article from:
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