ERP: Out in the Cold?
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In one of this month's features, contributor Dick Lee chronicles the struggle for control of the future of enterprise automation that's now taking place.

In one corner we have the front-office team-suppliers and integrators specializing in customer relationship management tools such as sales automation, customer service automation and the emerging category of marketing automation. In the other corner are the back-office boys-the traditional enterprise resource planning vendors.

Shortly after Dick completed his article, Forrester Research released a report that takes a look at ERP vendors and their efforts to profit from the growth of Internet commerce. The Forrester team, headed by Laurie Orlov, concludes that the ERP vendors are on the wrong track and headed for trouble. ERP vendors have been slow to bring even incomplete commerce offerings to market.What's more, ERP strengths don't translate to e-commerce success. ERP apps manage mature internal business processes, like material tracking, order fulfillment and HR, but offer limited value to external customers and partners. And ERP apps are masters of data integrity, but their complex data models impede integration with other apps, especially fast-changing e-commerce situations.

As a result, users are charging ahead without their ERP vendors. The 50 companies the Forrester team interviewed for the report have taken matters into their own hands and built their own commerce solutions, in many cases with limited integration with the ERP system. Users are pessimistic that ERP vendors can deliver high-value commerce capabilities in a reasonable time frame.

Despite the gap between users' e-commerce needs and current ERP offerings, these systems are essential to successful Internet commerce strategies. They provide mission-critical reference information, well-defined business processes and high-value analytical data.

To make an impact in e-commerce, Forrester says, ERP vendors must rethink their Internet commerce plans. Vendors must shift product development away from Web-enabled catalogs and shopping carts. At best, they have a weak position here, based entirely on integration and maintenance savings. They should focus instead on opening up their systems for use by others, making it easier for users to leverage ERP data and processes in their e-commerce initiatives. This will give customers and partners the means to combine ERP data with other sources of information required for Internet commerce.

This "externalization" of the ERP system will be a win-win, accelerating linkage between information-poor commerce sites and data rich, back-office systems. Back-office vendors that "get it" will share in the burgeoning e-commerce market, Forrester says; those who don't will be sidestepped by their own customers.

For more on the study, see Forrester's Web site at www.forrester.com.

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