The state of ERP

The world of enterprise resource planning, or ERP, is a complex and varied one.

It's not simply that there are a lot of vendors and ERP solutions available, but rather that the fundamental purpose which underpins ERP is to provide businesses with the ability to enhance workflows, integrate lines of business, share information and streamline operations; that is, to act as a general "enabler" for all functions critical to the successful running of any major company. Given the massive range of industries and markets, and the huge scope of companies within those markets, there are in theory as many ERP solutions as there are businesses to purchase them.

The importance of any ERP system within an organisation will vary depending on the extent to which it can be customised to meet that organisation's needs, but that isn't the only consideration. A system that might be incredibly flexible and customisable may not be as appropriate as a system that is less dynamic but has a long history supporting a particular industry. This is why we tend to see ERP applications and vendors focus on particular market segments and vertical solutions — specialisation is the key to success in ERP, rather than trying to be all things to all people.

Having said that, there is still plenty of competition. Also, with businesses and economies all over the world in the process of extricating themselves from the global financial crisis, many organisations are in the process of examining existing workflows and the systems which underpin them. So as the 2009 calendar year draws to a close, it's a good time to take a look at the top vendors and their vision for ERP.

SAP

SAP brings quite a different and, to be honest, non-traditional approach to ERP. Instead of bringing a range of products to market, each designed to fit the needs of a particular industry, SAP models its solution around core ERP functionality — features that are deemed to be critical to any business regardless of its operational market.

The SAP Business Suite breaks up core ERP functionality into four main areas — Financials, which includes accounting, SCM and corporate governance; Human Capital Management (HCM), which includes payroll and workforce analytics and deployment; Operations, which includes procurement, manufacturing and sales; and Corporate Services, which includes real estate, assets, travel and project management. Of course, each area covers far more functionality than that quick summary — the SAP website has a comprehensive listing.

Rather than treating each major area as a product module to be separately enabled and licensed, the entire Business Suite is made available and licensed on a per-user basis. Customers then work with SAP or partners to customise the solution to meet specific business needs. SAP sees this as "process enablement" — giving customers a starting point with access to all the core ERP functionality necessary to deliver an end-to-end solution regardless of the size of the implementation, without having to purchase a particular "best fit" package.

Outside of the horizontal functionality that is common across all industries, delivering tailored vertical solutions is what lies at the heart of ERP. SAP has penetration across a wide range of markets in the Asia Pacific region, especially consumer goods, retail, telecommunications and banking/finance. Although SAP's traditional customer base is dominated by large enterprises, it does market its ERP solutions at the mid-market (around AU$50 million turnover). SAP's ERP has been implemented by smaller companies with an aspirational roadmap and to guarantee that their supporting ERP infrastructure would scale with the business.

Smaller customers for whom a full ERP implementation would not represent good value have access to simpler business management products — SAP Business One, which is a single end-to-end product and SAP ByDesign, which offers an on-demand SaaS business management solution. SAP is also seeing these products used by companies that already have a large ERP infrastructure, but need to extend ERP functionality to branch offices and acquired businesses. End-to-end web-based solutions are not a major focus for SAP, but specific process requirements are finding a home in the cloud, such as carbon management. These online processes allow businesses to quickly access integrated functionality without incurring the cost of expanding an existing on-premise solution.

By making the distinction between core and value-added functionalities, SAP has effectively removed a major barrier to rapid ERP implementations. Customers are able to deploy a fully-functional end-to-end solution to support critical business workflows and then begin to implement their customisation requirements, for which SAP provides a large number of industry-specific best practises. This approach will be of particular interest to businesses who are looking to get up and running quickly with an ERP solution.

Pros	Massively powerful and scalable end-to-end solution for multinational corporations.
Cons	Low ROI for low-end and core mid-market.
Product(s)	SAP Business Suite, SAP Business One, SAP ByDesign
Phone	1800 287 727
Web	www.sap.com/australia

Openbravo

For many businesses, the prospect of meeting their technology requirements with open source products has a particular appeal. Open source tends to be easily accessible and relatively quick to deploy, and of course the freedom from licensing costs is especially attractive. Additionally, good open source products are supported by a thriving online community, have good interoperability with other commercial products and open standards, and are kept up-to-date.

Openbravo offers a range of open-source web-based applications for businesses ranging from small to enterprise. It is released under the Openbravo Public License which is based on the Mozilla Public License, and is supported and developed by OpenBravo SL which is based in Spain.

Openbravo ERP comes in four flavours — the downloadable version, which can be installed and maintained in-house with no software cost; QuickStart Edition, which comes as a preconfigured package ready for rapid deployment, and is designed for small businesses with fewer than five ERP users; SMB Edition, which is a single-server solution designed for up to 25 ERP users; and Enterprise Edition, which is a multi-server solution and scales from 25 through to thousands of ERP users. Apart from the freely-downloadable version, all the editions of Openbravo ERP require an annual subscription and are purchased from Openbravo partners. The cost is based on the number of concurrent users and ranges from €400 to €750 (at the time of writing, around AU$650 - AU$1215) per user depending on the product purchased and the number of users (discounts are available for volume purchases).

QuickStart Edition offers core ERP functionality with data and financial management, accounting, sales, CRM, procurement and warehouse management. All these modules come with preconfigured business workflows. The SMB and Enterprise editions have the same feature set, but also include production management, project and service management, and business intelligence.

Openbravo's business model does betray the hidden cost of open source products, which are so often equated with "free". Open source offers significant cost savings and flexibility regardless of the implementation model chosen, but there are always costs in terms of installation, customisation and support. Only businesses with excellent in-house technical resources can implement ERP with little or no additional outlay — everyone else needs to spend money.

The product does not pitch to a particular range of industries, although the available modules suggest a bias towards financial services, retail, procurement and distribution. Vertical solutions are handled by Openbravo partners throughout the world, and in Australia, Melbourne-based Enterprise Intelligence Systems has produced a local flavour of Openbravo for Australian businesses.

Although it is web-based, Openbravo ERP is an on-premise solution and in true open source style it can be installed on a wide range of server technologies. There is no specific hosting option, but as the product requires a fairly basic infrastructure platform, customers can easily deploy to an external host such as an ISP or ISV. Some Openbravo partners may also offer hosting options.

For companies willing to go down a non-proprietary path for their business technology, open source makes a compelling case. There are certainly costs involved and depending on the level of expertise available in-house or via the partner, it can be more difficult to implement change. However, Openbravo ERP offers full core ERP functionality with the ability to implement quickly and see a significant ROI and should be of great interest to the SMB market.

Pros	Easily deployed, simple and affordable licensing model.
Cons	Reliance on partners and specialists could prove costly.
Product(s)	Openbravo ERP
Phone	Enterprise Intelligence Systems – 1300 854 880 or +61 3 9029 1820
Web	www.openbravo.com

Oracle

Oracle's ERP offerings are centred around three major brands — Oracle eBusiness Suite (EBS), PeopleSoft and JDEdwards (JDE). The latter two were brought into Oracle's product range with its 2004 acquisition of PeopleSoft (which in turn had purchased JDE in 2003). Although there is some market overlap, each product has its origins in separate industries, and Oracle has continued to develop each via its Applications Unlimited program without seeking to further blur the boundaries between each product.

The eBusiness Suite has a feature set that makes it suitable for quite a wide range of global industries, and within Australia it has found success in engineering and construction from the perspective of project and financial management, government and health services, high-tech manufacturing and natural resource management such as that found in mining and building industries.

JDE has been a major ERP product in the Australian market for approximately 15 years, and as such has a large and independent partner network which aids in rapid solution installation and uptake. Its focus is centred around consumer goods, manufacturing and distribution, retail property management, oil and gas (both globally and locally). JDE is Oracle's flagship for customers in the mid-market, which Oracle defines approximately as turnover between $100 million and $500 million, although turnover isn't necessarily the best metric for every industry.

PeopleSoft has made its name in the Human Capital Management (HCM) space — which is generally considered to be part of ERP. PeopleSoft is primarily used in service-orientated markets, such as banking and finance, insurance, government and higher education, but it also functions as a horizontal solution in large companies with complex end-to-end HR requirements.

ERP implementations are traditionally large, expensive and slow, so Oracle offers Business Accelerator, a process by which certified partners or Oracle Consulting can rapidly deploy a preconfigured ERP application, which is useful for companies that need to quickly implement or expand an ERP solution — within a week rather than a few months. Additionally, all of Oracle's ERP solutions are available as hosted or managed on-premises online solutions via Oracle On Demand, which offers both the ability to quickly deploy new systems but also to reduce costs during a system migration.

Although Oracle is continuing to develop its ERP brands internally, it is also bringing core ERP functionality like financial management and HCM into industries where it doesn't have a strong presence through the targeted acquisition of market leaders. Of course, this can lead to integration issues with existing products so Oracle offers middleware integration via the Oracle Fusion suite of products, and will support integration with some competitor products like SAP.

As an ERP vendor, Oracle offers a very wide-ranging suite of products. Although it offers rapid deployment scenarios, it's unlikely to appeal to smaller enterprises. However, Oracle's presence across so many industries and the constant acquisition of technology solutions in new markets make it a compelling choice for mid-market all the way up to large global enterprises.

Pros	Excellent vertical solutions and constant industry innovation.
Cons	Low ROI for SMB.
Product(s)	Oracle eBusiness Suite, JDEdwards, PeopleSoft
Phone	1300 366 386
Web	www.oracle.com/global/au

Sage

Sage is a company that has grown over the years primarily through acquisitions, so it now operates globally through a vast array of partners and subsidiaries, with many products under the Sage umbrella. Sage's customer base lies firmly in the small to mid-market and it has a very strong presence in Australia, with a vertical solution footprint in healthcare, hospitality, construction, public sector, financial services and real estate.

Due to its long history of acquisitions, Sage has a large number of ERP products in its portfolio that are already designed to fit a particular market in a specific region. In Australia, Sage is represented by Sage Business Solutions (SBS), which is a subsidiary of Sage Software Australia. SBS's main ERP products for the Australian market are Accpac ERP and ERP X3.

The latest version of Sage Accpac ERP (version 5.5, also called Accpac Extended Enterprise Suite) is designed for SME customers and provides accounting, financial management and business intelligence, as well as e-commerce, retail and warehouse management. Accpac can be further extended with modules developed by third parties and it has out-of-the-box integration with Sage CRM, and it can be deployed as either an on-premises or hosted solution. There is also a version called Accpac Pro for enterprise and SMB which gives customers access to the underlying source code, allowing them to make fundamental customisation to suit their business needs.

Sage ERP X3 is designed as a direct competitor to Oracle and SAP for mid-market customers and offers end-to-end ERP functionality — manufacturing, inventory, sales, purchasing, finance and CRM. ERP X3 targets businesses who are expanding rapidly, both locally and internationally and accommodates from 100 to 2500 users. It is preconfigured for use in a number of countries including Australia, NZ, USA, UK and China, and is up-to-date with all the regional currencies and financial legislation. It also has a multilingual interface for local users and due to its web-based SOA can be accessed using a web browser or mobile devices so that international deployments are not held up by infrastructure requirements on the premises. It is relatively platform-agnostic and will work with both Microsoft SQL and Oracle databases.

As with licensing and support, the implementation of vertical solutions based on ERP X3 is a process handled by local resellers and partners. However, Sage does provide a development toolkit as part of ERP X3 which allows customers to integrate custom solutions and add-ons without breaking the ability to patch or update the main system. In Australia, SBS is making a strong push for ERP X3 to customers in chemical manufacturing, pharmaceuticals, medical equipment and wholesale distribution verticals.

Sage's ERP products are built firmly to meet the needs of SME customers, and they are not trying to be all things to all people. The company's experience in the small and mid-market make them a serious contender, particularly in the realm of accounting and financial services.

Pros	Excellent products for SMB and mid-market, both locally and globally.
Cons	Products do not scale into upper mid-market/enterprise.
Product(s)	Sage Accpac ERP, Sage ERP X3
Phone	+61 2 9921 6500
Web	www.sagesoftware.com.au www.sagebusiness.com.au

Epicor

Epicor has a large global presence in the manufacturing and distribution sector as well as speciality retail. In Australia there is also a focus on aged care services and professional/financial services.

Epicor's customer focus varies depending on the market segment — small businesses and mid-market are targeted in the service industries, whereas in retail Epicor deals with tier one and two retailers as well as tier three in a SaaS environment. The cloud-based option is particularly strong in the US market rather in the Asia Pacific region, where Epicor is seeing most of its customers opt for on-premises implementations. Although Epicor has provided some vertical solutions based on SaaS in Australia (particularly in regional aged care) it does not provide its core ERP products as a hosted solution.

Epicor's most recent ERP product release is Epicor 9, announced in October 2008. It features core ERP functionality as well as end-to-end deliverables such as CRM, supplier relationship management, governance, risk, compliance and field servicing, amongst others. In keeping with Epicor's traditional development platform, Epicor 9 offers very tight integration with Microsoft's suite of client, server, database and productivity products. Although Epicor works very closely with Microsoft, the vendor does offer customers flexibility in terms of client software, browser interface and database storage options.

One of the guiding features of Epicor 9's development was to give customers the ability to change the way the product works without having to modify the source code. Epicor has seen a trend in ERP over the years whereby customers who have heavily customised a product to meet their specific needs have then been hampered in their ability to receive support or migrate to a later version, resulting in protracted and expensive redeployments.

Epicor 9 makes use of a custom service-orientated architecture called Epicor Internet Component Environment (ICE). Part of the SOA is Epicor Everywhere Framework, which stores all user interface parameters as XML and allows customers to bring the functionality of the ERP interface to a wide variety of platforms such as mobile devices and VoIP systems without the need to deploy different applications. Additionally, this approach allows Epicor to expose the underlying business intelligence workflows to the customer at the user level, allowing customisation without the business running the risk of becoming locked out from future upgrades. This also gives Epicor customers the flexibility to make quick changes as their business evolves without having to engage developers and testers or go back to the vendor for support. Development of the first generation of this product was started as a complete ground-up redevelopment in 2003.

Epicor has done an excellent job of delivering a dynamic and highly flexible ERP environment, and any business that operates in a fast-moving industry should consider it strongly for any ERP engagement.

Pros	Strong support for retail, highly flexible and dynamic ERP platform.
Cons	Not a value proposition for small businesses.
Product(s)	Epicor 9
Phone	+61 2 9927 6200
Web	www.epicor.com/australia

Microsoft

The Microsoft ERP product range is built on top of the Dynamics platform, which is also used for its CRM solutions. Although the Dynamics platform is built and maintained by Microsoft, specific ERP products have been brought into the product range through a process of acquisition and further developed.

There are four main Dynamics ERP products — Dynamics AX (previously Axapta), which is a solution for the upper end of the mid-market and the low end of enterprise; Dynamics NAV (previously Navision), which offers end-to-end ERP vertical solutions for core mid-market customers, as well as those just entering at the lower end and is handled strongly by Microsoft partners; Dynamics GP (previously Great Plains Software), which is a simpler accounting and business financial management package; and Dynamics SL (previously Solomon), which offers project management and accounting functionality to small businesses. Dynamics ERP has strong market penetration in retail, manufacturing and local government.

Because Dynamics AX represents a significant on-premises investment, it is targeted primarily at customers who are looking to standardise on a Microsoft platform. Although it has received a lot of media attention recently due to Microsoft's acquisitions of third-party IP to bolster the product, Dynamics NAV and GP are the flagship products due to Microsoft's traditional focus on the mid-market. Both these products have large install bases and a wide partner network. Despite its popularity, Dynamics GP is a simpler solution with a horizontal focus, whereas NAV is a full ERP product with many implementations as an industry-specific vertical solution.

Dynamics licensing follows the traditional per-seat approach, which integrates with a customer's existing Microsoft licence model. The per-seat metric is also how Microsoft defines its target markets. The upper end of Microsoft's current ERP ambitions seems to be around the 500-seat mark, so it's not looking to compete directly with the likes of Oracle and SAP at the top end of town. Its focus is strongly on SMB and the mid-market, while making further inroads into the enterprise space with Dynamics AX.

The advantage of the Dynamics platform is that it integrates seamlessly with existing Microsoft client, server and productivity applications which tend to dominate in most business environments. This makes a compelling case for Dynamics as a horizontal solution, because it enables customers to leverage off existing skill sets, reduce training and integration costs, deploy across a wide range of devices and take advantage of a vast network of partners and developers. Particularly for small and medium businesses, there is a definite advantage in minimising the amount of on-premises technology by different vendors, in terms of user familiarity and infrastructure compatibility, and Dynamics should be a serious consideration for any business or existing Microsoft customer looking to implement on-premises or hosted ERP.

Pros	Tight horizontal integration, excellent features for SMB and mid-market.
Cons	Products do not scale into upper mid-market/enterprise.
Product(s)	Dynamics AX, Dynamics NAV, Dynamics GP, Dynamics SL
Phone	13 20 58 (Australian callers only), +61 2 9870 2200
Web	www.microsoft.com/en/au

TechnologyOne

While there is certainly a range of core ERP functionality that extends horizontally across industries, the strength of an ERP solution lies in its ability to meet the specific needs of its customers and to have a thorough understanding of their business processes. Brisbane-based ERP vendor TechnologyOne is an excellent example of an ERP solutions provider with vast experience in very particular vertical solutions.

TechnologyOne's ERP solutions are not built around specific product brands, but rather around a constantly-evolving software platform. The latest build, Connected Intelligence, was redeveloped from the ground up using Microsoft .NET technology and was released in 2005. A major new version of the product is released every six months, giving customers access to the latest technology and embedded best practices, and all customers have historically been able to migrate to the latest version (or the latest platform) with full compatibility and no additional licensing costs.

TechnologyOne's ERP platform is available as both on-premises and hosted implementations, but the vast majority of its customers (approximately 95 per cent) choose on-premises to capitalise on existing technology infrastructure. Although the solution is platform-agnostic, TechnologyOne is seeing a trend towards infrastructure standardisation on Microsoft technologies, particularly Windows Server and SQL Server.

TechnologyOne's primary areas of focus are government (local, state and federal), higher education, managed services, health services, financial services, utilities and community services, and each of these markets are offered end-to-end vertical solutions which have been developed from the ground up with the interests of those particular markets in mind. This incorporates such functionality as HR/payroll, SCM, business intelligence, asset management, student and curriculum management, budgeting and content resources management.

TechnologyOne does not target businesses in the retail, distribution or manufacturing industries, and its focus is on businesses that have an annual turnover from AU$100 million at the low end to around AU$2 billion at the high end.

A unique aspect of TechnologyOne's structure is that it has no network of partners or resellers. All the R&D, sales, marketing, implementation and support is done in-house. This offers certain advantages to customers who have a single point of contact for all queries and an individual relationship with the vendor. However, it is also a difficult business model to pursue which is perhaps why it is so uncommon, particularly for a business of this size. Partners and resellers do offer extra layers of marketing, expertise and support, but TechnologyOne's view is that removing these extra business layers produces better customer relations and ultimately a better product.

TechnologyOne's approach is both innovative and rigid. Medium to large enterprises in any of their areas of expertise should strongly consider it when planning any ERP work, but businesses outside the markets covered by this vendor will need to look elsewhere.

Pros	Outstanding vertical solutions and business/support model.
Cons	Vertical solutions are maintained rigidly, no room for SMB.
Product(s)	TechnologyOne
Phone	+61 7 3377 7300
Web	www.technologyonecorp.com

NetSuite

Unlike other major ERP vendors, NetSuite's solutions are completely cloud-based on-demand services, with no on-premises options available. NetSuite operates across a wide range of industries, including agriculture, retail, IT reselling, e-commerce, manufacturing, distribution, marketing and advertising, and has a presence in a number of countries including Australia and the Asia Pacific region, although its biggest presence is in the US.

The core NetSuite product is comprised of four main modules, one of which is Accounting/ERP. This offers a range of core business financials such as general ledger and budgeting, and ERP functionalities such as order and supply chain management, HCM and business intelligence. Due to all of NetSuite's products being built on the same platform, ERP customers can extend any single product with extra functionality like CRM, web presence and e-commerce to create a complete end-to-end solution.

NetSuite products are developed using NetSuite Business Operating System (NS-BOS). NS-BOS is accessible by partners, ISVs and customers, and is the core platform for the development of vertical ERP solutions. All NetSuite products, including the development environments, are hosted on the SuiteCloud platform, which consists of the physical datacentre and hosting environments. There is also a strong developer network and an online store called SuiteApp.com, which features third-party applications and add-ons that enhance NetSuite functionality for specific industries and markets.

Cloud solutions have a major attraction in that apart from appropriate internet bandwidth, companies do not need to deploy on-premises infrastructure in order to implement a full business solution. Of course, many companies are reluctant to give over the security and storage of their critical data to an external host, but enough are reconsidering due to the significant cost savings on offer.

Apart from the functionality on offer from its product range, NetSuite is pushing the cost-saving factor in a big way. There are a large number of case studies about its featured customers around the world available online, and many of them are promoting the savings that particular company made by moving away from an existing on-premises ERP solution (for example, SAP), in terms of both removing the requirement for expensive infrastructure and/or saving on licence fees.

For large enterprises with multiple geographic locations and site offices, either through expansion or acquisition, NetSuite has the OneWorld solution. This takes the core NetSuite modules — ERP, CRM, Ecommerce and Business Intelligence — and expands them to meet the needs of a multinational so that a company can manage all its workflows using a single NetSuite account. Global Accounting/ERP accommodates multiple currencies, tax rules and regulations to ensure compliance across all spheres of operation while maintaining unified reporting and data transparency.

NetSuite's approach is highly innovative and dynamic. A complete move to the cloud may still be something that many companies are unwilling to consider, and it is possible that the recent trends in on-premises server and datacentre virtualisation across all industries may make the potential cost savings of an SaaS solution less immediate. One option for existing Oracle EBS customers is to take advantage of the OneWorld for Oracle solution, which allows businesses running EBS to expand ERP functionality while still taking advantage of their existing on-premises investments.

Pros	Excellent range of flexible, on-demand functionality.
Cons	No ability for on-premise storage/redundancy.
Product(s)	NetSuite Accounting/ERP
Phone	+61 2 9464 6100
Web	www.netsuite.com.au

Conclusion

The best ERP product is not necessarily the one with the most modules, or the best integration, or the most opportunities for customisation. Rather, it's the product which offers the best fit for your business and your industry. That might sound like an obvious statement, but so often technology is brought in to support business workflows in the misguided expectation that it will act as a magic bullet, creating efficiency and increasing profits. Of course, a good ERP system will enable this outcome, but it is designed to inform a company's decision makers so that inefficiencies can be identified, gaps in communication can be plugged and workflows optimised, so that the core business is freed from these anchors and everyone can get on with their jobs. ERP is the means rather than the end.

For small businesses and the lower end of mid-market, Sage and Microsoft offer the most appropriate products. Both have a wide network of partners, but given the value of interface familiarity when deploying new systems and the available horizontal product integration, Microsoft Dynamics is a compelling choice. For business with access to good technical resources, Openbravo is also well worth considering.

For core mid-market, all the vendors have something significant to offer. This is where each vendor's experience in your specific industry and the ability to deliver a vertical solution is of critical importance. As mentioned earlier, it's not about which product is the most impressive, but rather which is the best fit.

At the upper end of mid-market and stretching away into enterprise, Oracle and SAP are still the big names and their products certainly carry a lot of weight and experience. Having said that, companies that need to be able to implement change quickly or operate in a dynamic and shifting industry would do well to consider Epicor and NetSuite. Additionally, TechnologyOne is an almost overwhelming choice for businesses within its scope.