BPM Is the Next Big Thing in ERP


In Should You Expect More Innovation in ERP? I wrote about the news - or lack of same - that came out of Microsoft's mid-March Convergence user conference (if you weren't in New Orleans, you can get a flavor for the conference at this Microsoft Web site.) My post ended with the questions:

"Is there anymore innovation likely in ERP?
"Or has ERP reached the commodity status of application and Web server software?"

I have been doing ERP analysis for almost 20 years, first at the then Datapro division of McGraw-Hill, for a long time at IDC, and more recently as an independent market researcher. My involvement goes back much further than that, in fact, if I count the research I put into bringing some ill-fated, very proprietary Data General "ERP" products to market in the mid 1980s (back when it was still called MRP) or switching the GE Model 58 COBOL accounting system to a Honeywell minicomputer in the early 1970s.


In other words, this ERP stuff - like me - has been around a long time. SAP was founded in 1972. Parts of what is now Sage and Infor are almost as old. The Great Plains part of Microsoft Business Division launched in 1981; the other parts might predate it. So what's left to do? The best Microsoft could say at Convergence was:

Over the next two years, customers can anticipate a series of major new releases of every one of our ERP and CRM products, accompanied by regular incremental upgrades such as feature packs and service packs that really fine-tune existing releases and make them even more cost-effective More than that, though, they can count on an unrivaled level of support in tools, training resources, and the formidable knowledge base of our 10,000-plus partners to give them the confidence that they have everything they need to succeed.

That's not bad, by the way, but it illustrates why the answer to the question "what's next for ERP" is: Tie all the pieces of ERP together better.


Of course it is also important that ERP suppliers keep up with changes in accounting standards and tax codes and manufacturing regulations and purchasing best practices no matter what the industry. In fact, such content orientation is the more important value-add in ERP today than rocket-science code.


But the real need in ERP is to make the pieces offered by all the suppliers I mentioned above work together better, whether they are in different divisions of one company or at your customers' and suppliers' sites. The original ERP concept did not do a very good job of taking the customer/supplier angle into consideration. The assumption was that you would use this software only within your four walls. For 10 years now all the suppliers mentioned above and more have been trying to overcome that design restriction with integration strategies and partner development efforts and other bolt-ons.


Now the leaders - including Oracle, which I didn't mention - are taking a different approach. Instead of trying to "own you," the customer, they want to own your processes. Instead of trying to iterate on the ERP idea, where there is very little iteration left to do, they are all aggressively developing (or acquiring) business process management (BPM) functionality to integrate their software with other brands. In the case of Oracle, they will probably even use BPM to integrate their own brands together better.

That's Microsoft's real message for 2009.