disintegration of the monolithic mega package peter seddon the department of information systems the...
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Disintegration of the monolithic mega package
Peter Seddon
The Department of Information Systems
The University of Melbourne
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.
