FRAMINGHAM (03/20/2000) - This will be a big year for enterprise applications - you know, enterprise resource planning (ERP), supply-chain management (SCM), customer relationship management (CRM) and so on. The Y2k financial drain is over, and e-business is in.
I mean, if we're going to use the Internet to conduct new forms of online business with our customers, suppliers, business partners and employees, we're going to need a lot of software at the back end. If we're going to work as part of a virtual team of companies to bring an e-service to our customers - say a digital exchange for buying our kind of products - aren't we going to have to know who our customers are and what they've already bought? (CRM.) Aren't we going to have to know what we have in stock? (ERP.) Aren't we going to have to know when our critical components will be at the receiving dock? (SCM.)In a global survey of 12,000 companies, International Data Corp. found that the penetration of such major applications in companies of all sizes will nearly double this year. In the U.S., penetration will jump even higher.
Of course, most (80 percent to 90 percent) companies don't have these applications in place. They plod along with departmental applications, point products and patchwork systems that somehow keep the business running. Long planning and implementation times, highly publicized disappointments and the need to reshape corporate cultures to support enterprisewide solutions have kept many companies - especially small and midsize firms - from taking the plunge.
E-business will change all this. And I believe I have data to back me up.
In the same survey, we looked at companies that classified themselves as early adopters to see if we could use their profiles to predict the enterprise applications market as a whole. By correlating their adoption of Internet technologies and e-business practices with their adoption of enterprise applications, could we predict when the laggard companies would follow?
The answer: Because the world is adopting Internet technologies so quickly, most laggards will be only about a year behind the early adopters in putting employees online, building commerce into their Web sites and launching extranets. In the U.S. at least, this will, in turn, drive increased sales of ERP systems and call center software among laggards as they catch up to early adopters, creating what I call market "bounce" - companies will have to catch up just to stay in business. The explosion of digital marketplaces will only add pressure on all companies to have their inventory and support systems in place.
There will be somewhat less need for laggards to catch up with early adopters in deployment of knowledge management systems and data warehouses, and none in SCM.
The bottom line? If your company has put off installing one of these enterprise applications, you may soon have to revisit that decision. With ERP and call center systems, you may need not only to revisit the decision but also to implement the systems quickly. If you want to analyze the business, you'll need data warehouses and knowledge management, but they aren't critical. If you want to cut operating costs, you'll also automate your supply chain, but you can do that one day at a time.
The good news is that these enterprise applications are getting Web-enabled and redeployed in versions for smaller companies. They're also some of the first offerings available from application service providers.
Of course, if you've already gone through the discomfort of fitting your organization to one or more of these applications, you have a competitive advantage in the e-business space.