Forrester Research Paul Hamerman Ray Wang

The Future of ERP ApplicationsPaul Hamerman Ray Wang

Vice President Senior Analyst

Forrester Research

July 14, 2005. Call in at 10:55 am Eastern Time

Agenda

• ERP challenges and deployment trends

• The evolving ERP software market

• The next generation: SOA

• Strategies of the major vendors

• Summary and recommendations

• Questions

Theme

Optimize your ERP investments for lower

operating costs and long-term business value

ERP challenges and deployment trends

Definition: ERP

► ERP — means “enterprise resource planning”

► A set of applications for core business operations and back-office management

► Originally developed for manufacturing

► Now applies to a wide variety of businesses and government

ERP functional footprint

Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”

Propertymanagement

Salesforceautomation

Financialmanagement

Humanresources Compliance

Projectmanagement Product

managementQuality

management

Asset &maintenancemanagement

Production &plant

management

Field service/post-market

support

Ordermanagement Procurement

Inventory &warehouse

management

Distribution,transportation,

& logistics

Reporting and analytics

CRM applications Supply chain applications

Enterprise

Customers Suppliers

ERP Challenges

• Functional gaps, supplemented by bolt-ons

• Customization to address real and perceived gaps

• ERP environments are costly to maintain

• Multiple vendors, multiple installations

• Complex systems integration

Trends in ERP deployment

• Single ERP vendor versus multiple vendors

• Fewer instances or single instance

• Less customization

• More frequent upgrades

• Using integrated modules instead of bolt-ons

• Hosting and outsourced support

• Integration using Web services

Applications top 2005 IT investment priorities

Source: December 15, 2004, Data Overview “2005 Enterprise IT Outlook”

Overview of the ERP software market

Top 10 ERP vendors by total Revenues ($ millions)

Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”

Market segment definitions

Market segment Size range Representative suppliers

Large company $1 billion + SAP, Oracle

Upper midmarket $250 million to $1 billion

SAP, Oracle, Lawson/Intentia, SSA Global, IFS, MBS Axapta

Lower midmarket $50 million to $250 million

MBS Great Plains & Solomon, Epicor, Exact

SMB Under $50 million

SAP Business One, Sage/Best, MBS Navision, NetSuite, Intuit

ERP market forecast

Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”

Market trends

• Continuing vendor consolidation

• Fewer large new deals, more sales to existing customers

• Emphasis on recurring revenue

» Maintenance, hosting, subscription licensing

• Focus on midmarket and industries

• Growing importance of SOA platforms in technology buying decisions

• Simplicity and usability (UI, tools, reporting)

Recent consolidations

• Oracle-PeopleSoft

• Lawson-Intentia (pending)

• SSA Global-Baan

• Infor-Mapics

• Epicor-Scala

The future:SOAs will transform the market

SOA stages for ERP

• Integration of heterogeneous applications across multiple platforms

» Time frame: Now

• Modular components within suites

» Time frame: Two to three years

• Market transformation to standards-based architectures

» Time frame: End of decade

Smaller components add more flexibility

HumanResources

Customerrelationshipmanagement

Service-based integration

Component arbitration

Component arbitration

Process integration

Process integration

Productlife-cycle

management

Supplychain

management

BusinessAnalytics

GL AP ARCNHuman

resources

Businessanalytics

SOA for ERP — What it means to you

• Message-based integration — easier connections using standards

» Lowers maintenance and integration costs

• Components — more flexibility

» Assembly of industry-specific and process-oriented solutions (e.g., order-to-cash)

» Fewer vendor choices but more deployment options

• Architecture transformation — major upgrades may be required by the major vendors within five to eight years

The next generation:Strategies of major apps vendors

Next generation timelines

Next-generation delivery dates are a moving target

2004 2005 2006 2007 2008 2009 2010

SAPESA

OracleFusion

MBS Green

LawsonLandmark

Technology platform direction

Source: June 9, 2005, Market Overview “ERP Applications — The Technology And Industry Battle Heats Up”

SAP

• SAP is the furthest along of the major apps vendors in moving to SOA

• Enterprise Services Architecture (ESA) represents the service-enablement of the application suite

• NetWeaver is the middleware platform

• Business process platform is the unifying marketing umbrella

• Timetable for completion is 2007

» Core ABAP code will be retained — not a total rewrite

SAP: The move from monolith to components

SAP’s vision is a process-driven architecture

Microsoft business solutions project green

• Well-publicized next-generation application strategy announced in 2002

» Features .NET-based SOA and process-centric design

» Promises greater flexibility and openness

» Will converge five product lines into new code base

• Transitional strategy based on:

» User interface alignment within existing products

» Technology infrastructure alignment

» Conversion to .NET based processes

• Meanwhile, existing products are being enhanced and supported at least through 2013

MBS Project Green Roadmap

Source: Microsoft Business Solutions

Today:Axapta

CRMGreat Plains

NavisionSolomon

Future“Best of”solution

2005-7 2008+

Wave 2:

• Modular process configuration

• Enhanced Visual Studio .NET

• Enhanced UX

• “Best of” process library

Wave 1:

•Role-based user experience

•Sharepoint-based portal and workflow

•SQL-based conceptual BI

•Web services-based composition and integration

Oracle’s application strategy

• Project Fusion announced in January 2005

• Fusion features:

» A J2EE-based SOA

» Components and data hubs

» Platform independent, but leverages Oracle middleware, and database technologies

• Transition to Fusion middleware in next releases of current products

Oracle’s product convergence is similar to MBS

PeopleSoft Enterprise 8.9

9

JD Edwards EnterpriseOne 8.11

8.12

Oracle E-Business Suite 11i.10

12

CurrentRelease

NextRelease

Pro

ject

Fu

sio

n

Source: Oracle

Lawson/Intentia: Path to technology convergence

• Lawson and Intentia announced merger two weeks ago

• Both have proprietary architectures:

» Lawson 4GL generates COBOL and RPG

» Intentia introduced Java version in 1999, but it is not J2EE compliant

• Common direction is WebSphere and J2EE code

• Landmark project will produce a blueprinting language that generates J2EE code, UI, and schemas

» Promises dramatic code reduction and higher quality

Lawson’s Landmark strategy

Construction architecture

Execution platform

Lawson application design technology tooling built on Eclipse

J2EE, SOA

Program model

Lawson brand Signature features

Source: Lawson Software

Recommendations

• Stay current on releases to keep migration options open

» Consider alternatives if on older, customized products

• Consolidate disparate ERP applications

» Improve reporting capabilities

• Negotiate to reduce maintenance costs

• Use Web services for integration, but wait for proof points on business flexibility

Paul Hamerman

phamerman@forrester.com

Ray Wang

rwang@forrester.com

www.forrester.com

Thank you

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