ERP system is far from a mature technology.
That at least is the opinion offered by James Edwards of Deloitte Consulting in Toronto and Mike Turner, vice-president, enterprise solutions for Tivoli Systems Inc. in Austin, Tex.
The duo, who were on tour to promote Jump Start Tivoli for SAP, a new management tool and services combo that is supposed to ease ERP implementation and improve management, agreed that people are only now developing an understanding of what ERP entails.
“We’ve only just started. Systems management at the moment is still growing up. There is still a lot more value to be driven out. We will be working until we maximize that,” Edwards said.
According to Turner, a lot of that yet-to-be-realized potential involves integrating more non-IT practices with IT itself.
“The key that you will see is we will be bridging things – bridging the IT processes and the human side of IT. When you talk about service delivery, a lot of times it is just about linking and getting alignment within the company. That’s probably the next phase, and that is certainly ripe for a services provider to come in and help.”
Turner said many of these changes will come as businesses become truly efficient. “We coined a phrase a few years ago for where systems management meets process automation: we call it systems automation. I think that’s the next step, automating more of the systems processes we have today.”
“The networked economy – the back-end supply chain — and the opportunity to really automate that, is probably an area that is also futuristic because if you look at companies that are successful in the networked economy…they know how to automate the back end using maybe 10 vendors, and it is really weird. It changes the business model dynamic.
“Instead of you carrying inventory for a product, you have a supply chain that supplies the services and the products so you, as a vendor, actually shift your business model from being a manufacturer to being a financial services company. It actually is a different business model and managing the supply chain is a key part of squeezing out profits as a financial services company,” Turner explained.
In controlling the supply chain, the key issue is management.
“You are increasingly relying on the IT infrastructure to run your business and drive the business value of your company. Without having tight control over the management of that infrastructure, you don’t know what data is being passed, you don’t know what response time you are generating, and you lose control of that information,” Edwards said.
For that reason, IT shops should start thinking about dealing with application service providers (ASPs). “That’s probably a bigger concern or a threat to internal IT than a consulting firm, in that the ASP is truly trying to rent you the services of an SAP or a Peoplesoft,” Turner said.
“Think of it as a long-distance service provider: if you’re unhappy with your service, you just make a call and switch. In the future, you will see a lot of ASPs using service as their differentiators, and that probably is a threat to the internal IT organization.”
Both Edwards and Turner said ASPs will only offer standardized service offerings, such as payroll and accounts receivable, and that IT shops will still be required to run the key business processes.
They also said every company won’t have to deal with the ASP issue – at least right away. “Like any true paradigm shift, the first customers of that model will be the small- to medium-sized businesses, not the global 1000 companies that we tend to sell to,” Turner said.