Trends in enterprise solutions
Fifth Phase - Market Chaos
As business process reengineering efforts gathered steam, software vendors moved aggressively
to increase the breadth and depth of their functionality. Additional vendors entered the market,
resulting in a proliferation of software packages and platforms. As the vendors increased the
scope of their packages, overlaps in functionality and data became more severe. Mobile
computing packages overlapped with work management packages, who overlapped with GIS
packages, who overlapped with outage management packages, who overlapped with SCADA
systems, and so on.
The integration efforts to tie all these disparate packages together became increasingly complex
and costly. The promised "silver bullet" of middleware never materialized, since no single piece
of software could keep up with all the changes and combinations of the different packages, and
the addition of another layer of software compounded the overlap problem.
Internal information flows became disjointed. Although each package knew best how to collect,
organize and exchange information for its own purposes, it often did not match up when brought
together with another package. So even though a "best of breed" package can deliver a key
strategic advantage at a departmental level, inefficiencies may result at a company level.
The complexity of integration, coupled with the high rate of change of each of the components,
has made the "best of breed" packaged software model unworkable as an enterprise solution for
the long run.
Sixth Phase - Enterprise Solutions
Feeding off the issues associated with the integration of multiple software packages, "reintegrated"
software solutions entered the market. Examples include SAP, People Soft, Oracle,
and BAAN. These vendors promote a lower total cost of ownership compared with maintaining
and integrating multiple individual software packages.
These solutions also represent a powerful new concept: the ability to tie together information
from every corner of the enterprise. Once business functions are integrated under a single
information regime, a company gains a new view of itself. Managers can see what's happening
in their own and neighboring departments. Executives can identify operational bottlenecks and
observe how changes in one area affect others.
In order to bring these functions together, enterprise solutions impose a coherent structure from
the top down. Although the systems allow for some degree of customization to permit
companies to configure aspects of the system to reflect how they do business, the flexibility is
limited by their nature as generic packaged solutions. To varying degrees, enterprise solutions
require companies to change how they do business in order to realize the benefits of integration.
The Challenge of Enterprise Solutions
Since an enterprise solution covers the gamut of business functions - from accounting to
engineering - implementation brings cost, complexity and organizational challenges. The
solutions are costly and complex due to their scope and nature. A large company can spend
between $50 million and $500 million implementing an enterprise solution. Perhaps the biggest
challenge, however, is the impact an enterprise solution can have on a company's organization
and culture.
Because an enterprise solution unifies information under one system, adopting the technology
can pull a company's organization and culture in different directions. Enterprise solutions
embody their own version of best practices, which challenges the existing practices of a
company, forcing the company to question almost everything they do. The unified system also
forces the integration of business functions within a company and the sharing of data between
departments, something that has typically never been done before.
Enterprise solutions also present strategic challenges. As enterprise solutions are adopted across
entire industries, individual companies risk losing what makes them unique. If all of your
competitors are rushing to implement an enterprise solution, should you? If everyone is gaining
the exact same advantages in the exact same way, has anyone gained any strategic ground? In
some cases, such as in the petrochemicals industry, enterprise solutions have so revolutionized
the industry that not adopting the technology would be foolhardy. In other cases, if the cost of
implementing an enterprise solution is forcing your competitors to raise prices, and your current
systems are adequate, not immediately implementing the technology might be the best move.
Only careful analysis of your strategy and the competitive landscape will tell.
The Promise of Enterprise Solutions
Enterprise solutions provide an opportunity for a company to rethink their business. If an
industry is undergoing fundamental change, as the utilities industry is today, enterprise solutions
can provide the vehicle for driving organizational and cultural changes. Enterprise solutions can
enable the transfer of power from the center of a hierarchical organization to the periphery,
encouraging a flatter, more empowered structure. On the other hand, enterprise solutions can be
used to impose structure and discipline, breaking down autonomous fiefdoms. Enterprise
solutions can also support geographically dispersed operations, or support an acquisition strategy
to build a global company.
Business process reengineering efforts, when conducted in conjunction with an enterprise
solution, have a much greater probability of delivering the benefits they identify. Example
benefit areas include integrated supply chain logistics, integrated financial management, and
integrated customer service. Integrated business processes, supported by integrated technology,
can drive out redundancies and inefficiencies that in many cases have been caused by system
overlaps and isolation.
In many ways, enterprise solutions embody the promise of the electronic enterprise. In an age of
electronic communications, it's a truism that companies perform better when information is
unified under a central system. But specific benefits will come only when an enterprise solution
functions within the context of the business' strategic, organizational and cultural objectives.
