ERP MARKETERP Dragged Into Front Office
Richard Karpinski
If e-commerce places the customer at the center of the enterprise, the
integration of back-office ERP applications with sales, customer service and
other front-office apps is inevitable.
But that doesn't make it any easier for IT managers who have to wrestle with
all the challenges that accompany such a radical change.
Vendors are promising to bridge the two worlds with integrated products. The
latest is PeopleSoft Inc., which last week agreed to acquire customer
relationship management (CRM) vendor Vantive Corp. But experts say the
typical IT manager's messy enterprise application infrastructure won't be
simplified by vendor consolidation alone.
"The good news for PeopleSoft or Vantive customers now is that they can
have all their requirements met under one roof," said Cassandra Millhouse, an
analyst for Ovum Ltd., which dubs the integration of front- and back-end
apps a move toward "universal business applications." Millhouse added that
the easiest way for a company to achieve integration is to buy all its
applications from one vendor.
Even when you're finished integrating the front and back-office apps, the Web
makes it necessary to extend those apps out to customers in the supply chain
as well, which introduces even greater integration challenges, Millhouse said.
Gartner Group estimates that 80 percent of enterprises are focused on internal
integration projects today. But that trend will reverse within five years, with
only 20 percent of projects focused internally and 80 percent aimed outside
corporate walls.
A growing group of vendors are leveraging Web-native technologies,
especially Extensible Markup Language (XML), to move data-and,
increasingly, business processes-across the enterprise and out into the supply
chain.
In coming weeks, enterprise application integration (EAI) vendors, including
Active Software, OnDisplay and start-up NetFish, will roll out new products
for trading partner integration (see story, www.internetwk.com/eai.htm).
Last week's $433 million acquisition of Vantive by PeopleSoft had been
expected. Both companies have been struggling in recent quarters and faced
renewed threats from larger competitors, most notably Oracle, which is
aggressively integrating its ERP and CRM applications.
PeopleSoft and Vantive already have begun the integration process. The
companies' products integrate today via Vantive QuickConnect for
PeopleSoft, a package built with the help of integrator KPMG and EAI
vendor Active Software. The combined company will detail further product
integration early next year.
"Integration is an important thing to customers. They want an integrated
enterprise solution wrapped around the customer," said Baer Tierkel,
PeopleSoft's
senior vice president of business strategy and development. Companies "want
to begin an enterprise relationship with a customer, have it hit their financials,
be managed by their employees and expose the entire supply chain."
Ameritech Library Services (ALS), a longtime Vantive customer, is rolling out
PeopleSoft distribution and financials modules internationally. It had to
custom-build interfaces between the two systems, and sees "great advantage"
in a common data store across both products.
But that won't happen without some effort. "Once there's a massive data store
between the two databases, I'm sure we'll go through some pain to make sure
all of our customizations [to the individual products] are still in place," said Ed
McCracken, CIO of ALS.
Analysts said ERP/CRM integration is a critical starting point for e-commerce.
"Companies would like to have an integrated front and back office that's all
around the customer," said AMR Research analyst Rod Johnson.
Traditionally, packages for sales force automation or call centers are chosen
by a company's business groups, which often opt for best of breed.
"When a company gets tied to separate data models for ERP and CRM, it's a
nightmare," Johnson said. "As companies switch from trying to achieve
operational efficiencies to more e-commerce or customer-facing strategies,
integration to the back-office becomes critical."
No ERP vendor has hit a CRM home run yet. Oracle is perhaps furthest
along, with CRM pieces today and a full, Web-based offering in Oracle CRM
11i, due in April. SAP, after several false starts, has been developing CRM
functionality as well, including a new module for telecom carriers released last
week. Baan, meanwhile, acquired CRM software maker Aurum in 1997.
"We strongly believe as an e-business you want to have out of the box a
product with a single database instance and a single data center so you can
make changes quickly," said Mark Barrenechea, senior vice president of
Oracle's CRM products division. "It's a simple question: Can you add a
product or service to your Web site over the weekend? Amazon can. Can
you?"
The U.S. Department of Transportation is using Oracle's CRM
products-initially commerce server functionality but soon call center support as
well-to Web-automate all of its transactions with the public. The fact that the
department was already using Oracle Financials "was clearly a factor" in
buying Oracle CRM as well, said David Kleinberg, the DOT's deputy chief
financial officer. "We needed quick-to-deploy, compatible products," he said.
KPMG, whose CRM practice has worked closely with Vantive, Oracle,
Pivotal, Siebel and other vendors, sees two factions of users, said Doug
Holden, KPMG's global partner for customer management solutions.
"Some users are very committed to the value of the integrated enterprise, and
to some extent will trade off deep functionality to have really clean integration,"
Holden said. "Another group wants deep functionality, and they're willing to
pay for integrating the best of breed."