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April 22, 2003

Delivering Customer Value

With integration becoming more strategic, the enterprise apps business changes

by David Stodder

Let me begin by wishing departing editor-in-chief Justin Kestelyn the best of fortunes as he leaves Intelligent Enterprise and moves on to his new position as chief editor of Oracle Corp.'s Oracle Technology Network. As one of the founding members of the team that brought Intelligent Enterprise into being in 1998, he will be missed.

Justin's parting work is our lead feature: "The Future of Enterprise Applications", a roundtable discussion with strategic executives from J.D. Edwards & Co., Oracle, PeopleSoft, and SAP. Customers and vendors of these systems are under pressure to lower the total cost of ownership while responding to business objectives that demand higher value contribution from these systems.

The roundtable discussion makes it clear that application integration now means much more than plumbing. A solid integration infrastructure is what differentiates monolithic applications from forward-looking systems that are able to adapt to business change. SAP's Peter Graf describes how SAP "recognized that integration happens on many levels." He cites portals, business intelligence, and business processes as some of those "levels." Putting them "all together" created the framework for xApps, which Graf described as "packaged composite applications." Alas, for the vendors, it's only after the hard work of taking integration requirements to heart that building unique value can begin. As PeopleSoft's Peter Gassner notes, "it's an oxymoron to try to differentiate on integration; you want to be a standard on integration so that everybody can integrate with you."

Changing the Game

Integration may not in itself be a differentiator, but it's an enabler that could change the basis of competition — and the competitors. Our two other features discuss how the market is evolving to include IBM and Microsoft in expanded roles.

Joshua Greenbaum's "Build vs. Buy in the 21st Century" describes how this debate, widely regarded as settled in favor of "buy," is opening up again due to the demand for flexible, custom applications. It's pretty simple: Customers crave software that will give them a competitive edge, not merely the same thing that everyone else has. However, to support such mass customization without having to also support a huge number of distinct code bases, packaged application vendors need a standards-based integration infrastructure. Enter IBM. However, as Greenbaum tells us, IBM's posture may ultimately expand beyond that of infrastructure provider to a broader role (particularly through Web services) in defining and delivering the next generation of applications.

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Microsoft, through acquisitions and development, is already well down the road toward a greater role, as Stewart McKie describes in "Conquering the Middle Kingdom". Microsoft is focusing on the small- to medium-sized business market, which presents perhaps the most strenuous challenges in terms of the variety of users and the need to fit economically into computing and budget constraints.

The field of enterprise applications is poised for a leap in innovation. Intelligent Enterprise will do its best to keep you informed and able to make smart decisions about what suits your organization's strategic goals.