I received a couple of followup questions on the topic of ERP as well as a question regarding whether Best of breed is about to make a comeback, in particular inside the core ERP domain. so instead of getting deeper in talkback land, I figured to post another one on the topic and clarify. I was also told that my posts are too long to read, so I will try to go shorter.
There is no doubt that ERP, which was a key differentiator for companies 10 years ago has become more context for some of the companies today, and for those who had bad implementations, even worse a costly commoditized set of processes (and if they picked a non-SAP product, a costly legacy set of processes). For the companies that know how to use ERP as a strategic asset there is no doubt that a great SAP implementation is a core component of their differentiation. If you ask Niall O'Connor at Apple as a CIO of one of the fastest growing consumer focused brands in the world what was the secret sauce behind their success - and no doubt he will point out the speed of their execution on iTunes, their scaling of supply chains for iPod, and the volume they run through their retail business as great proof points to the amazing role ERP plays at Apple (right behind the genius that Steve Jobs brings to the product design/strategy table). By the way, Apple's implementation of SAP is one of the most inspiring uses of technology in the enterprise. I hope one day to get Niall's permission to share with you some of the stories behind the scense at Apple.
Without a strong core ERP you cannot scale a company and you lose scale even on successful strategy. That is core - that matters. What is context, is a stale implementation that does not allow you to change corporate processes with any agility. What is interesting to ask in that case is what effect does best of breed have on that agility - hence on the value of these application assets. Well, the more applications you have designed separately, the less you can afford any change and the more you invest in the gaps between them. As a matter of fact, I believe Oracle's customers should hear the famous British Tube warning (that is their subway not their TV...) "mind...the gap!!!". If you have not been to the London underground, you will not get the story, but if you have been you know that the tube was badly designed so that there is a gap in some stations between the train and the platform, and yet instead of solving it, there is a big voice that just reminds you not to fall.
Does it mean that you should yank out every thing you have and install one vendor's software and nothing else. Probably not, you should evaluate carefully what makes sense to yank out, and what makes sense to interface, and phase out over time. The close to the core processes the harder it is to live with best of bread. But on the edges, I definitely see things on the boundary line of ERP that will get interesting offers from many vendors. Enterprise SOA was the way SAP designed a way to integrate these offerings by design, not as an afterthought. Vendors that will take advantage of that set of interfaces will not only help the customer spend less on technical plumbing, but more importantly make sure that the systems evolve over time in conjunction with the core engines.
The issue with best of bread is that like most products we buy in life, we can only sense the cost of acquisition, not the full life cycle cost. You pay for best of breed by moving away from buying software and into building systems. I believe that long term the market will always move away from building one off and into buying en-masse. It is just the direction that water and costs flow - downwards. the main issue we have to focus on is simplicity - and that is the gene that I was working on the most at SAP - simplifying our world and our customer's world.
ps. I was told today that someone cheered regarding my departure...I heard that is becoming a more popular sport these days in some parts of Europe. I promised that I will take myself lightly so I decided to link over to that post, but I read it first to see if he had a base in reality to anything he said, but since he must have lived in some distorted reality field, I figured you don't really need to read it...