The Future of Enterprise ApplicationsAn Intelligent Enterprise RoundtableContinued from Page 2 Graf: Since 1996, we've been executing a major initiative within SAP to componentize our software. We have recognized during that time that integration happens on many levels: on that of individuals through technologies such as portals; on that of information, which we see reflected in business intelligence and knowledge management; and on that of the business processes and the messages themselves through exchange infrastructures. We've taken these levels of integration, put them all together, and added a new level of flexibility through packaged composite applications we call SAP xApps. So on top of the integration technologies that I've just described, you can add a business process that runs across the heterogeneous IT environment. We call the resulting framework an "enterprise services architecture" because it's heavily based on Web services and other standards. When it comes to the problem of managing data, SAP has something unique in the pipeline called Master Data Management. It allows you to create a single virtual database, if you will, of all data to be used in a business process. It helps you synchronize, homogenize, and integrate data that sits, sometimes in redundant fashion, in a variety of systems. Master Data Management is one of the core solutions where I see a lot of innovation, and it will be one of the key enablers for getting away from monolithic architectures. Hensarling: You bring out an important point with the reference to enterprise services: It's not enough to have Web services, the protocols, and the infrastructure. It's more important that the application be designed to provide service-level interfaces as opposed to old-style APIs. J.D. Edwards has been on the path, much like SAP, over a number of years to build out the infrastructure and to reorient our applications to support a service-based architecture that allows for true, flexible integration into a portal. That approach allows the applications to present themselves into Web services or EAI [enterprise application integration] frameworks and handle many different types of tasks, as opposed to just providing APIs behind a GUI screen. IE: Let's switch gears. The pure-play business intelligence (BI) vendors are betting on business performance management (BPM) solutions as engines of growth in the next few years. Are your companies jumping on that train as well? If so, what makes enterprise apps better platforms than BI ones for BPM solutions? Hensarling: BPM is key to customers getting value out of the application they have deployed and are deploying. But this need really plays into the hands of the group speaking here, because we understand and have implemented the business processes, and BPM is really just an instrumentation of those processes to provide key metrics and a view to them for different constituencies. That goal ties back to role-based portals containing key performance indicators that "look ahead" with the application so that users can take action. In contrast, BI vendors are essentially isolated from being able to drive such action. Graf: I agree. I think they're missing a strategic part that prevents them from providing the ability to continuously improve your business: when you execute on a corporate strategy, implement initiatives etc., you certainly want to measure those initiatives' success. Having finished your analysis, you want to make sure your findings can immediately be used to refine your strategy and to further improve the company's performance. BI apps can certainly measure what's going on and help with the analysis, but translating that analysis into action is where they have a very hard time. Also, performance management is not feasible if you don't have an infrastructure in which you can draw data in a very easy way from a variety of systems, regardless of vendor origin. Godwin: I agree that the enterprise application vendors are well positioned because we understand the business processes. There's a great deal of leverage in building planning, management reporting and execution systems on a common set of measures or performance indicators, to enable a closed-loop system. For enterprise vendors, driving performance analysis and planning and what-if scenarios is much more straightforward than for BI solutions providers that don't have an execution system or even an inherent understanding of business processes. Gassner: For the same reason that the enterprise application vendors are well suited to having an analytic platform — because we understand and can complete the full process from the analytic or the KPI [key performance indicator] to the transactional system — we also have an edge in providing true analytic applications. Things like activity-based management, customer behavior modeling, budgeting and business planning are heavy-duty applications that are completely outside the realm of the BI vendors. You won't see those types of true analytic applications from the BI vendors because you need true business process experience to do that. IE: In 2000-2002, CRM and supply chain management emerged as major battlegrounds as enterprise application vendors sought new markets. What will the next major battleground be? Product life cycle management (PLM)? Gassner: The next battleground is enterprise services automation. That's where the major areas of spend and profit are, so we believe that managing the resources that involve delivery of services is the next evolution of ERP. There's also plenty of room for apps focused on special business problems that can be implemented quickly and show high ROI — things like sales incentive management or supplier rating management. Those are large-dollar items and certainly ones that bring high ROI. Godwin: PLM is going to be a very hot area. The vision of PLM is to provide a 360-degree view of the product, just as the vision for CRM is to deliver a 360-degree view of the customer. The product introduction life cycle is compressing; more people are working concurrently on the various activities that are involved in taking a product from concept to product introduction. In that environment, it's critical that all these people are working off the same definition of the product, whether they're putting together a marketing program or dealing with service readiness issues. Engineering departments can't just hand over a product when it's done to the rest of the organization anymore; there's leverage in getting the engineering department onto the central model that the rest of the business is working from. So the engineering and product design process needs a next-generation system that's multiuser, secure, and integrated with the manufacturing, planning, and execution systems. Graf: I think that when you look at the future, you're going to see continued drive towards packaged applications that many of us are already providing. But there's obviously also a drive towards suite vendors, because they offer less risk than niche vendors right now. But what I see as the big area of growth is composite applications, and for a simple reason: A lot of the money goes into integration projects. For example, SAP xApps — the composite applications I described earlier — are integrative in their behavior. They allow you to drive a strategy through specific initiatives into execution, measure their impact, and refine your strategy. Collaborative, closed-loop applications that result in transactions and help improve your overall business is where I see the strongest push. The evolutionary approach toward delivering innovation to our customers without disrupting existing investments — rather, going in with very specific solutions to very specific business problems — has the highest potential in the short- and mid-terms. Hensarling: I would just add that midmarket customers are faced with increasing demands from their customers to take on more of the supply chain responsibility. The opportunity to deliver value to our customers and make them stronger surrounds support for increased accuracy within supply chain execution and real-time monitoring of orders and logistics. By making our midmarket customers more efficient, we make the entire supply chain more profitable.
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