Despite Criticism, ERP Vendors Satisfying Their Customers

ERP suppliers in general are taking a lot of criticism in the economic downturn for under-delivering functionality, overcharging for subscription maintenance, and moving too slowly to software-as-a-service (SaaS). But do you feel that way about your ERP supplier? Probably not. IT Investment Research among IT users, analysts and ERP suppliers finds that ERP suppliers are like politicians. Everyone distrusts “pols” in general but says “my local guy is OK.”

What Is ERP?

ERP has three characteristics. ERP at least includes (1) basic accounting and purchasing/inventory-management functionality, and (2) some industry-specific functionality [e.g., material requirements planning (MRP) and bill of materials processor (BOMP) in manufacturing]. Further, ERP software is (3) architected as a suite with all modules or services running on the same underlying application middleware.

That’s just a minimum. ERP suites also include other cross-industry functionality [(e.g., human resource management software (HRMS)] and industry-specific extensions (e.g., plant maintenance features to complement the MRP and BOMP). If a software package does not have the three numbered characteristics, it is not ERP but specialized standalone business software.

ERP Architecture

Just as basic ERP functionality can be extended, the architecture underlying ERP can vary as well. For example, an ERP suite might support distributed databases or support only simple file systems. One might use a sophisticated transaction monitor and another only a rudimentary application server to control the logic. An ERP system might allow multiple types of user interfaces or only an ultra-thin browser-based client. Architecturally, ERP suites are also adopting other new technologies to complement the three-tier basics of logic/data-management/client.

Carl Lehmann, former Gartner ERP analyst and senior vice president, Strategy for ADX, which specializes in supply chain integration and e-commerce, says “A persistent challenge that inhibits ERP return on investment (ROI) is that customer, product and supplier data governed by these (ERP) modules can differ greatly. Additionally, inaccurate and/or erroneous data entry prohibits the benefits from cross-functional processes flows... Master data management (MDM) is the technology approach to solving this. MDM gives the control of what intelligence can be derived from, and how best the data may be applied, to business professionals -- not data-based administrators or other IT technologists.”

Ned Lilly, president and CEO of ERP supplier xTuple, notes how architectural decisions made in the development of his company’s product “let end users create new screens and menu options without coding.” The reason is that the procedural language and logic reside in the database with xTuple. According to Lilly, “the database does the heavy lifting.” xTuple 3.2, announced in January 2009, also includes a screen builder for customized system dashboards; this also reduces the need for a development.

Even 20 years after object oriented (OO) technology emerged, not all ERP products have converted (and many that did were not successful). IFS split the difference; it waited until OO technology matured but it has now fully re-architected. Rick Veague, the CTO of IFS, explains: “In the late 1990s such concepts were great but (the Object Management Group’s) CORBA standard wasn’t making it (in the market). So IFS moved over to Java and built out our middle tier using JEE.” Suppliers that continue to use traditional modular architectural approaches — and the enterprises that use their products — still have to consider which operating system to deploy, the database brand, the physical client on which the UI will run, and so forth. An OO-based architecture reduces such concerns.

One of the major criticisms of ERP suppliers relates to maintenance fees. But adding such new technologies as MDM and OO and re-architecting is one of the uses ERP suppliers make of the maintenance revenue stream they receive from you. Often a subscription maintenance fee is an upgrade license fee as well. This helps makes the argument that — if your ERP supplier does offer this arrangement — you are getting your money’s worth.

In addition, note that xTuple is available open source — as the PostBooks project — and it is therefore possible to avoid a maintenance fee altogether. Another open source ERP project to consider comes from the Apache Open For Business (OFBiz) community. One of the co-creators of OFBiz is Hotwax CTO Dave Jones, who says: “Basing the design on Java and higher level languages and tools lets us implement a service-oriented internal design with a process-oriented external design.” That one-two approach is the most modern ERP architecture. Hotwax is a service provider that specializes in OFBiz.

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