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This Is Not Just ERP, This Is Two-Tier ERP
ERP now has the chance to come of age
Dec. 15, 2012 02:00 PM
The rise of Big Data and the monolithic systems that are now being built on increasingly cloud-based data models is a reality we cannot ignore.
This reality has popularized discussions relating to the core component mechanics of many firms' IT stacks.
Key among these technologies is ERP, or Enterprise Resource Planning to afford it its full moniker. The term can be taken to be a relatively broad expression as it encompasses software applications that oversee the management of suppliers, customer service, order tracking and all manner of demand and supply-related indicators...
... or to put it more simply, ERP systems look after companies' "systems of record" data.
"Indicators" being the operative word, as key performance indicators (KPIs) are used by organizations to appraise and evaluate the accomplishment and success of a particular business activity in which it is engaged.
So far inside the brief history of Enterprise Resource Planning there haven't been too many upsets. Most of the mega brand IT vendors from IBM to HP to SAP to Oracle all have a finger in the ERP pie and Microsoft is even in there too with its Dynamics product.
But for CIOs and the software application developers who connect the synaptic nerves of new deployments, a new subset of ERP (or extension perhaps) is surfacing.
SaaS-focused business management software company NetSuite is creating something of a new paradigm in the ERP space by rolling out a "two-tier" version of ERP that integrates with Oracle. The new offering works to amalgamate on-demand services with on-premise transaction systems.
The two-tier model is intended to allow customers to preserve on-premise ERP investments in Oracle (or indeed in other systems), while equipping global subsidiaries with what is promised to be a more flexible cloud-based ERP/financials system. The end result (in theory) then gives headquarters the real-time visibility it needs, at a lower price.
Given the heavyweight maneuverings going on over at SAP inside its ERP mothership, it is interesting to see NetSuite take what appears to an arguably more deft approach to coupling technologies in this space to augment and expand upon current offerings rather than simply trying to compete on the basis of speed, processing power, performance and general all round rocket power.
The firm is essentially bringing its OneWorld and SuiteCloud Connectors to Oracle and using connectivity technologies from IBM Cast Iron, Informatica, Dell Boomi, Celigo and Pervasive Software.
The concept behind the two-tier ERP twist is that it (in theory) enables subsidiaries to tailor ERP to their own special needs and support their local accounting requirements. It is also supposed to ensure that a remote subsidiary doesn't end up with a burdensome, hard-to-maintain on-premise ERP deployment.
Here's the developer proposition: keep the investment in the existing Oracle E-Business Suite system at the corporate level, but empower subsidiaries and divisions to innovate with a second ERP system that gives them more agility and better total cost of ownership.
NetSuite asserts that this two-tier approach has the advantage of being able to cut deployment time (and costs too) instead of installing on-premise ERP in each smaller division or subsidiary company.
Of course, NetSuite's major shareholder is Larry Ellison so it is also interesting to see the company playing this subtle two-tier approach rather than the usual Oracle "absorb, acquire, assimilate" approach.
Craig Sullivan, VP & GM of international at NetSuite, argues that a new era is dawning in this space and that ageing ERP is a drag on business agility. "The web enables business to go global instantly - reaching many millions of customers in a year or two, whereas it used to take a decade or more to make that type of progress."
Sullivan points to Groupon as an example of the kind of disruption that the Internet enables. The "fastest-growing company in history" grew to revenues of $700+ million in 2010 from $30 million in 2009 - a stunning growth rate of 2,241%.
"This would have been unthinkable just five years ago," says Sullivan. "With the dramatic growth in emerging markets, businesses are looking to quickly tap opportunities in the space of months, not years - before their competitors get there. Outdated ERP, unable to react to and take advantage of change, restricts the agility that is crucial in our increasingly online world."
This new (and it is comparatively) new approach to ERP comes at an interesting time. NetSuite contends that modern demand for real-time information and "boundless flexibility" point to just one answer: the cloud.
As cloud-based intelligently managed and intelligently separated (let's be polite here and say "tiered" rather than separated) ERP now has the chance to come of age, will we grasp this opportunity inside corporate enterprises? Will new cross-functional workflows and reporting processes come about as new sales channels are added and firms are suddenly able to enter new markets as they improve collaboration between internal and external systems?
NetSuite (and Larry Ellison) thinks so. Don't dismiss it without proper analysis.
This post was first featured on CIO Enterprise Forum.
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