disintegration of the monolithic mega package peter seddon the department of information systems the...

Disintegration of the monolithic mega package

Peter Seddon

The Department of Information Systems

The University of Melbourne

p.seddon@unimelb.edu.au

Key proposition for today

Monolithic mega packages are disintegrating.

Integration in future will be via via portals, data warehouses, and real-time process integration

Integration via real-time process integration seems highly likely to use web services technologies in a services-oriented architecture.

Plan for this presentation1. Context: Today’s PEAS market

2. The vendor’s world

3. The customer’s world

4. Gartner’s view of Services-oriented Architecture

5. One vendor’s solution to their customers’ integration and tailorability needs: SAP NetWeaver

6. Conclusion

Background

1. Context: Today’s Packaged Enterprise Application Software (PEAS)

Buyer-side In-side Seller-side

$8B 2007?$5Be.g., SAP, i2,

Manugistics, IBS

Supply Chain ERP$20B $26B 2007?e.g., SAP, PeopleSoft, Oracle, IFS, Navision

Enterprise Applicat’n Integration (EAI)

$1.3B e.g., IBM, seeBeyond TIBCO, webMethods

Data Warehouse $1B

e.g., Oracle, Teradata

e.g., Siebel, SAP, PeopleSoft, Oracle

$10B $14B 2007?CRM

Call/Contact Centers (IVR, ACD, CTI)

e.g., Nortel, Cisco, Lucent, Genesys,

Kana (e-mail, WWW)

Source of most estimates: AMR Research, June 2003.EAI from WintergreenResearch © Peter Seddon, June 2003

Overall PEAS Market

2002 $40B2007 $60B?

e.g., PTC, SDRC, SAP$2B 2001

Product Life Cycle Mgt

Procurement

e.g., Ariba, SAP EBP, FreeMarkets

$2B $3B 2007?$3.0B 2007?

Packaged Enterprise Application Market 2003

Other e.g., Hogan, Reynolds, ESRI GIS, Plumtree, Moldflow, MYOB, Lotus Notes,

Exchange

2. The Vendor’s World

Competition

Research and Review

Technology

Sales and Implementation

PackagedSoftware

Developer THE MARKET

Customer

Customer

Customer

Customer

Customer Customer

Customer

CustomerCustomer

CustomerCustomer

SoftwareProduct

CompetitorsProducts

SoftwareReviewers

MarketStandards

NewTechnology

ExternalResearchGroups

Non-Users

IntegrationPartners

Value-AddedResellers

New Ideas / Knowledge /Business process information

New Ideas /Knowledge /

Businessprocess

information

The Vendor’s World (Murphy and Seddon 2004)

Community of stakeholders1. Customers (e.g., SAP: 20,000; PeopleSoft 5,000;

Oracle: 12,000)

2. Competitors

3. Reviewers (e.g., Gartner, AMR)

4. Technology (e.g., web services, portal)

5. Industry partners (upstream & downstream)

Partner Program

CrystalRedwood

ESRI

Mobious

Human IT sales

Alladdin

PortalMultichannelaccess

Business IntelligenceMDM

Service/TechnologyPartners

Powered bySAP NetWeaver…

Life- cycle management

ApplicationPlatform

Security

Partners

Certified

Resell

SAP NetWeaver

OEM

Other

IntegrationBroker& BPM

KM & Collaboration

SAP Financials, 31 March 2004 9,000 R&D staff (= 30% of 30,000 staff) Revenue (first quarter, 2004, €1.6B):

Software 30% Maintenance 40% Consulting 30%

Product revenue: Gross margin 80% Software: ERP 40%, CRM 20%, SCM 20%

The Vendor must Innovate Highly competitive marketplace Regular, e.g., annual, upgrade cycle (just like with

automobiles), and patches New technologies (e.g., web services, RFID, mobile devices) Vendor acts as an innovation amplifier (to improve the lot of

the customer community) Best practice varies from customer to customer (because most

customers’ needs are different), so the notion of software embedding best practice is somewhat misleading. The software offers menus of very good practices.

3. The Customer’s World

e.g., an annual cycle

Implement the system

Go live

Use the

system

Improve the

system

Product life: 10 years plus?

The Customer’s World

Factors affecting benefits after go live, a longitudinal not cross-sectional model (p.29)

P3

P2

1a. Fit between the ES software and organizational needs

3. Conventional IT implementa-tion success factors, e.g., top management support, sufficient resources, etc.

1b. Institutionalization of ES improvement programs

2a. Knowledge management

2b. Sound change management

Increasing Net Benefits from ES

P1

P5

P4

Operational Benefits

Managerial Benefits

Strategic Benefits

IT infrastructure Benefits

Organizational Benefits

Operational Benefits Operational Benefits

Managerial Benefits Managerial Benefits

Strategic Benefits Strategic Benefits

IT infrastructure Benefits IT infrastructure Benefits

Organizational Benefits Organizational Benefits

1. Achieving and maintaining ongoing fit

2. Organizational learning

Integration

2

4

3

1

Shang and Seddon, 2003

Davenport et al. (2002): % Orgs achieving benefits (n=163)

1

Figure 1: Four Strategies for Achieving Fit with Packaged Enterprise Application Software (PEAS)

Preparedness to change Organizational Processes

Preparedness to change the software

High Software Modification & Enhancement

System Exploration

Low

Process Replication

Process Modification & Enhancement

Low High

2

Shang and Seddon, 2003

Configuration (parameters in tables) Screen masks (e.g., 3 screens into one) Workflow programming Extended reporting User exits ERP programming (e.g., ABAP/4) Interface development Code Modification (= Customization)

Source: Brehm, Heinzl, and Markus, “Tailoring ERP Systems: A Spectrum of Choices”, 2000

Funkies

ABAPers

Tailoring options in PEAS

Need to Institutionalize On-going Improvement

“The greatest single mistake that is made across the board is that firms get to Day One and “go live” and then break up the team. The business people who became engaged throughout the implementation think “its over”. …People break up, and the engine stops. Except that in days 2 through 10,000, business keeps moving… and changing.”

(Wilderman, Sapphire 2002)

3

One customer’s integration needs (the rationale for EAI)

ERP legacy~15 systems

ERP non-SAP~25 systems,

different versions

Technical systems

Trading

CollaborativeEngineering

e-Sales

SAP R/3~30 systems,

Versions 3.11 - 4.6B

E-Procurement10 units

SAPMarketsEnterprise Buyer

Professional Edition

4

Focus for the remainder of this presentation (the link is web-services technology)

P3

P2

1a. Fit between the ES software and organizational needs

3. Conventional IT implementa-tion success factors, e.g., top management support, sufficient resources, etc.

1b. Institutionalization of ES improvement programs

2a. Knowledge management

2b. Sound change management

Increasing Net Benefits from ES

P1

P5

P4

Operational Benefits

Managerial Benefits

Strategic Benefits

IT infrastructure Benefits

Organizational Benefits

Operational Benefits Operational Benefits

Managerial Benefits Managerial Benefits

Strategic Benefits Strategic Benefits

IT infrastructure Benefits IT infrastructure Benefits

Organizational Benefits Organizational Benefits

1. Achieving and maintaining ongoing fit

2. Organizational learning

Integration

2

4

Shang and Seddon, 2003

4. Technology Trends: Gartner’s view of Services-

oriented Architecture

Charles Abrams and Yvonne GenoveseResearch Directors, Gartner

Sapphire Conference, New Orleans, May 2004www.sap.hr/download/nw/Gartner-SAP NW WorldTour.pdf

5. One Vendor’s Solution to Customers’ Integration and

Tailorability needs:SAP NetWeaver

Integration Key integration goals for SAP are to:

Provide single sign-on via the portal Use data warehouse to achieve archival data

integration Support cooperation between heterogeneous

systems, even from different vendors, and across organizations (using XML) for real-time integration.

Siebel: Universal Application Network (UAN) PeopleSoft: AppConnect, process modeler Oracle: single global schema

SAP NetWeaver “Turning the Enterprise Services Architecture Vision Into Reality”

We look forward to building on our long-standing relationship with SAP to deliver real business value to our customers.

“SAP NetWeaver™

Co

mp

os

ite

Ap

pli

ca

tio

n F

ram

ew

ork

PEOPLE INTEGRATION

Multi channel access

Portal Collaboration

INFORMATION INTEGRATION

Bus. Intelligence

Master Data Management

Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker

BusinessProcess Mgmt

APPLICATION PLATFORM

J2EE

DB and OS Abstraction

ABAP

Life

Cy

cle

Mg

mt

With full-fledged access to SAP NetWeaver, customers can harness the productivity and power of Microsoft .NET to connect, customize, and enhance solutions.

“……

Portal: User access to any system

Portals

Exchanges

Applications

Portal server

SAP’s Integration Solution: XI Exchange Infrastructure (uses XML messaging)

EnterpriseHub

Public Marketplace

Business Unit Hub

ExtendedE-Services

Enterprise

Enterprise Integration Inter-Enterprise Integration

ApplicationComponent

SharedServices

CRMCRM

ERPERP

LegacyLegacy

Private Exchange

cServices

Supply ChainPartner

SCMPLM

SEMSEM

Internet Sales

E-Proc.

Source: Plattner, Tech Ed. Los Angeles, Nov 2001

SAP NetWeaver “Turning the Enterprise Services Architecture Vision Into Reality”

We look forward to building on our long-standing relationship with SAP to deliver real business value to our customers.

“SAP NetWeaver™

Co

mp

os

ite

Ap

pli

ca

tio

n F

ram

ew

ork

PEOPLE INTEGRATION

Multi channel access

Portal Collaboration

INFORMATION INTEGRATION

Bus. Intelligence

Master Data Management

Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker

BusinessProcess Mgmt

APPLICATION PLATFORM

J2EE

DB and OS Abstraction

ABAP

Life

Cy

cle

Mg

mt

With full-fledged access to SAP NetWeaver, customers can harness the productivity and power of Microsoft .NET to connect, customize, and enhance solutions.

“……

Configure (considerable flexibility in some cases) Industry solutions, e.g., 20% code different SAP Netweaver is based on open standards such as Java,

XML, and web services (rather than proprietary ABAP and RFC) for customizing Use of Java (and ABAP) would not be important if customers

did not need to add or modify code Componentization and xApps

Tailorability

SAP NetWeaver “Turning the Enterprise Services Architecture Vision Into Reality”

We look forward to building on our long-standing relationship with SAP to deliver real business value to our customers.

“SAP NetWeaver™

Co

mp

os

ite

Ap

pli

ca

tio

n F

ram

ew

ork

PEOPLE INTEGRATION

Multi channel access

Portal Collaboration

INFORMATION INTEGRATION

Bus. Intelligence

Master Data Management

Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker

BusinessProcess Mgmt

APPLICATION PLATFORM

J2EE

DB and OS Abstraction

ABAP

Life

Cy

cle

Mg

mt

With full-fledged access to SAP NetWeaver, customers can harness the productivity and power of Microsoft .NET to connect, customize, and enhance solutions.

“……

“Visual programming”

Tailoring through Composites & xApps

Hasso Plattner, Just-retired-CEO, SAP Sapphire Conference, New Orleans, May 11-13, 2004: “The Future of Enterprise Computing”

Yvonne Genovese, Sapphire, May 2004

6. Conclusion

Key proposition for today

Monolithic mega packages are disintegrating.

Integration in future will be via via portals, data warehouses, and real-time process integration

Integration via real-time process integration seems highly likely to use web services technologies in a services-oriented architecture.

Thank youPeter Seddon

p.seddon@unimelb.edu.au