Mapping the enterprise software market
The enterprise software market is fragmented and in a state of flux. Identifying the individual categories of business software can be daunting, but most people agree that the enterprise computing market is a muddled blend of enterprise resource planning (ERP), customer relationship management (CRM) and e-commerce applications.
The confusion results from a number of factors. The definition of business software now includes tools that connect suppliers, customers and business partners. Traditionally, enterprise computing was limited to automating internal processes. But the Web expanded the definition of enterprise software to include any application that connects products and buyers. In addition, the line between ERP and CRM companies blurs with every new acquisition and merger. As a result, products overlap and software categories become indistinct. The situation is exacerbated by overblown marketing claims and empty buzzwords. One vendor offers a “portal in a box” while others promise “mission-critical,” “next-generation,” and “end-to-end” enterprise solutions.
Having said that, enterprise applications are united by a concern for content aggregation and data integration. The biggest trend in the business software market is creating the conditions for enterprisewide access to information. Vendors are focused on creating databases that can be used by a variety of business applications. There are three major classes of software applications: ERP, CRM and enterprise portal technology, and each category focuses on creating and maintaining a unified database.
In the mid-1990s, ERP software promised to automate and link the entire enterprise as it shifted from mainframe-based computing to distributed client-server networks. CRM products are currently making the same claim as business computing moves onto the Web. Similarly, enterprise portals are defined as a one-stop-shop for corporate information. In summary, all three classes of e-business software--ERP, CRM and enterprise portal--are positioning themselves as central repositories of enterprise knowledge. Those companies offer a complete e-business platform that stretch from, as one vendor claims, factory floor to Web site.
Database and e-commerce applications complete our taxonomy of the enterprise software market. ERP, CRM and enterprise portal applications rest on integrated databases. Databases are the cornerstone of enterprise computing. E-commerce applications are an important addition to e-business platforms.
Defining the major categories within the software market
ERP software automates a company’s “back-office” procedures (accounting, budgeting, human resources, procurement, manufacturing, logistics and supply chain management [SCM] ). It helps businesses share information both inside a company and outside with suppliers and business partners.
When ERP took off in the mid-1990s, it was part of a larger movement toward business re-engineering. Corporations streamlined internal processes and sought maximum efficiency. That prompted the deployment of ERP software, just-in-time manufacturing and business re-engineering efforts.
The popularity of the Web marked a turn toward customers and CRM applications. Many commentators argue that enterprise computing is on the tail end of a Copernican revolution. The client-server ERP model is giving way to a server-based CRM model in which applications are deployed over the Internet. In the new paradigm, Web-based applications and databases are the platform that promise to unite e-business.
While many predicted that the Internet would spell the end of ERP software, sales held strong in 2001 and even increased. Indeed, the Web is a means for software delivery. ERP vendors such as Peoplesoft and SAP offer their products through portals. They host the applications themselves and customers access the ERP applications over the Internet.
CRM software automates front-office procedures (tools for workers interacting with customers such as help desks, customer call centers, and sales force automation). CRM is an umbrella that places the customer at the center of an organization. It aggregates and analyzes data about customers so every division within a business can act on the information. Customer service is an important component of CRM, but CRM is concerned with coordinating customer relations across all business functions, points of interaction and audiences. The fundamental goal of CRM applications is to achieve a single, unified view of the customer. Therefore, a properly integrated CRM platform shortens the distance between a company’s supply chain and its customers.
Enterprise portal technology is the third category of software that integrates resources for centralized information access. Portals synthesize heterogeneous documents from all over the enterprise and the Web into a single interface.
Some people believe that sophisticated portals will replace Microsoft Windows as the most popular enterprise desktop. Portals bring together business intelligence, document classification, text analysis, group collaboration and the company intranet. Portal software offers data aggregation and knowledge classification along with worker collaboration.
Product suites vs. best-of-breed software
The predominant goal of software vendors is unifying and automating the entire e-business operation. There are, roughly speaking, two ways to achieve that goal: deploying a suite of products that offer “all-in-one” e-business functionality or knitting together “best-of-breed” digital tools into a unified platform.
Through mergers and acquisitions, companies that made their fortune by specializing in one software category, such as ERP or database products, now offer comprehensive e-business platforms. For example, both ERP innovator Baan and database heavyweight Oracle offer CRM software tools.
In a similar fashion, ERP and CRM companies have moved into the enterprise portal market. For example, Siebel, one of the most successful CRM companies, and ERP pioneers such as IBM and BEA offer portal products. Even Brio, originally a business intelligence company, has jumped on the bandwagon and reinvented itself as an enterprise portal company.
The other means of achieving a unified enterprise is through a “best-of-breed” approach that requires buying discrete software modules. Many companies have specialized needs that are not answered by product suites. For example, MarketFirst and Annuncio automate marketing. Their software automatically builds customer profiles, manages campaigns and generates reports that summarize the effectiveness of marketing initiatives. Other companies, for instance, specialize in streamlining the employee recruiting process. Their software might summarize and catalog resumes. While those components are strong, complementary products, they raise the problem of data integration. Sophisticated middleware is needed to connect the various applications.
Most business applications come with application programming interfaces (APIs) that give programs efficient ways of communicating with each other. While APIs facilitate communication between two applications, adding three or more applications to the mix is difficult. Correctly aligning multiple APIs is burdensome. Enterprise application integration (EAI) software offers a solution by functioning as a bridge between various applications within an e-business platform. It translates single-purpose applications into languages that each application can understand.
The e-business platform: putting all the pieces together
Identifying the major categories in the enterprise software market is only part of the puzzle. The following scenario illustrates how the various software tools work together. Let’s trace a customer purchase through the IT system of an imaginary chair manufacturer called Moderne:
- A customer logs on to Moderne’s e-commerce Web site and orders 10 lounge chairs. The customer has a question about product availability and clicks on an e-mail link that connects her to a customer service representative.;
- The e-mail is routed to a customer service representative. In formulating a response to this question, the rep calls up the customer’s record from the CRM software system. After reviewing the customer’s purchase history, the customer service representative notes that the customer ordered 15 chairs last year and still sold out. The customer agrees to double her order.;
- The CRM software queries the ERP system and asks how soon the order can be shipped ;
- Earlier, the ERP system saw that Moderne was running low on lounge chairs. The ERP system asked the supply chain management system whether the necessary parts were on hand to manufacture more. Because Moderne gave its suppliers access to its e-business platform, they saw that Moderne was running low on the parts required to create lounge chairs and shipped replacements.;
- The ERP system passes its cost and schedule estimates, along with the customer’s credit history, to the CRM application.;
- The customer service representative uses the cost and scheduling estimates to calculate a price and a delivery date for the customer.;
Katherine C. Adams is an information architect and free-lance writer, e-mail email@example.com.