Five Innovations that Will Change Cities in the Next Five Years

Interessante video da IBM em sua iniciativa de soluções de tecnologia para as cidades (retirado do blog http://asmarterplanet.com)!

IT impact on global trade greater than economic share

O post abaixo saiu ontem na ComputerWorld (http://news.idg.no)!

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IT impact on global trade greater than economic share

Veronica C. Silva
18.12.2009 kl 17:13 | IDG News Service

ICT is estimated to contribute one-fifth to the aggregate global exports in 2009, but the sector’s overall impact on global trade is seen to surpass its economic share.

With global trade expected to hit US$19.5 trillion this year, World Information Technology and Services Alliance (WITSA) chairman Dato’ Dan E. Khoo bets on ICT as an “essential tool” to revitalise cross-border trade and revive the world economy.

In a speech at the recent Asia-Pacific Digital Innovation Summit (APDIS 2009) in Melbourne, Australia, Khoo said: “As a horizontal tool, ICT is an enabler of growth and development for all other industries that collectively contribute to the other 80 per cent of global trade.”

This is despite the prediction of technology research firm Gartner that global ICT spending will dip four per cent in 2009. WITSA noted that spending already reached US$3.8 trillion in 2008.

Ubiquitous

ICT tools such as e-commerce, mobile commerce, Web portals, business matching and customer relationship management systems are bringing a whole new dimension to how other industries operate, do business and reach out to markets, added Khoo.

“For it is ubiquitous in any and every industry, from traditional sectors such as agriculture, manufacturing, medical and education to new ones like biotechnology and green tech,” the WITSA chairman said, describing the presence of ICT.

At the opening ceremony of the Global Public Policy Summit (GPPS 2009) in Bermuda last November 2009, Khoo stressed that people must exert their influence on their respective governments about the benefits of building out the ICT infrastructure through pro-competitive market policies and sound investments.

Following the same line of thought in APDIS 2009, Khoo cautioned governments bent on carrying out protectionist measures to reduce unemployment as well as current account and trade deficits. On the contrary, he said such moves could even hinder global economy recovery.

IBM Acquisition of Lombardi Influenced by Cloud Strategy

Eis um post do blog http://industry.bnet.com!

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IBM Acquisition of Lombardi Influenced by Cloud Strategy
By Erik Sherman | Dec 17, 2009

These days, it seems that almost every tech company is focused on “cloud computing,” as most busily try to recast what they do into a cloud context. But in some cases, companies really seem to get it, and IBM (IBM) is one of them. Except given its long expertise in enterprise computing, IBM really gets it, and much of what it’s doing these days seems designed to strategically dominate cloud computing as a new approach to its traditional markets. The most recent example is its acquisition of business process management vendor Lombardi.

The key is not the size of the market, which market research firm IDC estimates at hitting $3 billion within a few years. It’s also not really the list of clients that Lombardi has, although it is impressive:

According to Lombardi CEO Rod Favaron, the company has about 300 enterprise-level customers with a high percentage shared with IBM. Lombardi has a shockingly impressive customer list, including Allianz Group, Aflac, Barlays Global Investors, Dell, FETAC, Ford Motor, Hasbro, ING Direct, Intel, Maritz Travel, National, Bank of Canada, National Institute of Health, Safety-Kleen, T-Mobile, UCLH, and several governmental agencies.

I’d be surprised if IBM didn’t already have most if not all of these as customers in one form or another. No, the real issue is that this puts IBM even more thoroughly in the business processes of large companies, and that’s the area where it expects the cloud to be huge. That’s why it announced its business analytics private cloud. I think that IBM sees business processes as the most likely candidates for real cloud computing, and it’s working to be there with a full suite of offerings before anyone else. And that leaves you wondering, as it’s massive financial muscle lets it continue its string of 90 acquisitions since 2003, who else will be able to get close and provide not just commodity cloud computing, but a cloud operational suite that offers enough value to entice large corporations and get them to pony up a lot of money. Microsoft (MSFT), HP (HPQ), Rackspace (RAX), and others clearly have their work cut out for them.

ERP’s Paralysis Problem and the Repercussions for Businesses Everywhere

 Eis aqui mais um post sobre ERP´s vindo do blog www.cio.com, e do mesmo autor do post “The Future of ERP” , que reproduzimos aqui no dia 20/11/2009 (Parte 1) e no dia 04/12/2009 (Parte 2).

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Tue, Dec 15, 2009 12:39 EST
ERP’s Paralysis Problem and the Repercussions for Businesses Everywhere
Another ERP survey, another indictment of ERP’s failings to the business. But this one is costly.

Posted by: Thomas Wailgum in News Topic: Applications Blog: Enterprise Software Unplugged Current Rating: Comments: 9

There’s a growing movement underway to rid the business world of the acronym ERP.

For real.

In fact, executives at SAP—the ones who practically invented the concept and related terminology—are among those leading the charge. (See The Future of ERP for more.)

The reason? ERP is an outdated, almost meaningless piece of IT jargon that crudely attempts to encompass all that enterprise systems have become and will be for today’s and tomorrow’s large, midsize and even small companies, but falls woefully short: No one does just ERP anymore.

Another reason to deep-six ERP is to ensure that there is no future association between next-generation business applications and the long-standing failings of monolithic ERP software deployments. And, of course, to put as much distance between next-gen software and ERP survey results, such as the findings from a December 2009 study conducted by IDC and sponsored by ERP vendor Agresso.

The survey, based on the ERP experience of 214 business executives across a wide variety of midsize and larger industries, found that today’s ERP systems “are not providing businesses with the architectural agility necessary to support businesses adequately in today’s high-change, global environment.”

That’s not too shocking. But what is notable about the results (and what makes them different than your garden-variety ERP study that shows sky-high TCO, or application performance problems, or unfavorable implementation odds), is that this survey actually quantifies ERP system-related failings directly to business disruption—expensive, unpleasant and career-killing business disruption.

“Survey respondents said that the inability to easily modify their ERP system deployments is disrupting their businesses by delaying product launches, slowing decision making and delaying acquisitions and other activities that ultimately cost them between $10 million and $500 million in lost opportunities,” according to the survey report. (That’s a substantial gulf in “lost opportunities,” but we’ll chalk that up to the size differences in companies surveyed.)

That related impact is costly: 21 percent of respondents reported declines in stock price; 14 percent suffered revenue losses tied to delayed product launches; and 17 percent encountered declines in customer satisfaction.

A couple of verbatim responses from respondents should make the hairs on the back of your neck stand up: “Capital expenditure priorities are shifted into IT from other high-payback projects” just to perform necessary ERP changes, noted one respondent. Said another: “Change to ERP paralyzes the entire organization in moving forward in other areas that can bring more value.”

I don’t have an MBA, but I’m pretty sure that paralyze is not a word you want associated with your department right now—or ever.

Today’s business environment is, of course, changing much faster than most businesses can keep up with, and any type of technology that impedes the ability to adapt and be flexible is most unwelcome. Which leads to another interesting data point from the survey: ERP systems are constantly being modified, updated and, well, changed. Just 3 percent of respondents had not made changes to their ERP systems, and nearly half (43 percent) are continuously making changes as needed.

As the sun finally sets on the first decade in the new millennium, it’s high time we say good night to ERP. A new day will be starting soon, and the blemished legacy and failings of ERP’s nearly four-decade-long reign will be a distant memory.

Do you Tweet? Follow me on Twitter @twailgum. Follow everything from CIO.com on Twitter @CIOonline.

The Universal, Entrepreneurial Concept of “Jugaad”

Este post (de 14/12/2009) veio do blog do Prof. Mark Perry (http://mjperry.blogspot.com/)!

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The Universal, Entrepreneurial Concept of “Jugaad”

Nick Schulz at The Enterprise blog points today to a news report featuring a Legatum Institute study about India’s entrepreneurial sector, and a separate related blog post, which both discuss the concept of “jugaad,” a Hindi word describing entrepreneurial ingenuity in the face of adversity, equivalent in English translation to ”making do,” “jury-rigging,” or using a ”duct-tape arrangement.” 

According to the “Our Delhi Struggle Blog,” the concept of jugaad is:

Best illustrated by a common rural sight that people actually refer to as “a jugaad”: a homemade vehicle made by cobbling together a wooden cart with the kind of diesel water pump farmers use for irrigation (see photo below).  Fitted with makeshift steering and braking mechanisms, these jugaad vehicles are used for everything: for transporting people from one village to another, with dozens of riders crammed together tighter than the bundles of sugarcane they are also used to transport; for trips to regional markets; and for transporting the pump itself. Farmers share or rent these pumps, and this arrangement lets the pump actually transport itself to wherever it’s needed next. These vehicles reflect the true spirit of innovation in rural India.

Here’s another fine example of Indian jugaad ingenuity:

Of course, jugaad is not unique to India and is a universal philosophical outlook that applies whenever entrepreneurs are trying to solve problems with what they have, not with what they wish they had. For example, here are some fine examples of American ”Redneck-jugaad,” see more pictures here and here:

A smarter approach to enterprise architecture from IBM

Interesting video about Enterprise Architecture from IBM. I thank this hint to Schindlwick, from http://twitter.com/EA_Consultant!

Four Quadrants of Innovation

O post abaixo foi publicado no Continuous Innovation Group da rede social LinkedIn!

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Sunday, December 06, 2009

Four Quadrants of Innovation

Incremental versus Disruptive
by Hutch Carpenter

I recently wrote up a post, “Innovation Perspectives – No Shooting Stars.” In it, I discussed the issue of organizations myopically focusing on only disruptive innovations to the exclusion of more incremental or sustaining innovations.

In doing more research on the subject, I began thinking about the dynamics that apply when a firm pursues different kinds of innovation. A post by Venkatesh Rao, Disruptive versus Radical Innovations, was very useful for distinguishing between disruptive and radical innovations.

Building on that, I wanted a framework for delineating innovations based on their technology and business impacts. Because they’re not necessarily the same. The four quadrants below describe the dynamics for innovations according to their technology and market impacts:

In each quadrant, there are different rationales and issues that apply. Let’s take a look.

Existing Tech, Manage Existing Market

The lower left quadrant represent innovations that leverage existing technology, and service existing customers. This is every day innovation. The block-n-tackle innovation that keeps companies nimble and operating at rates above industry averages.

Example? See how Wal-Mart improved the fuel efficiency of its vehicle fleet:

“Wal-Mart has taken a number of steps, including the installation of diesel Auxiliary Power Units on all its trucks, and applying aerodynamic skirting. On the tire side, Wal-Mart is working with super single tires. and is testing nitrogen-filled tires and an automatic filling process to maintain constant tire air pressure.”

Improving the customer experience is also a critical opportunity. In an era of social-media empowered customers impacting your brand, the consequences of failing to improve the customer experience are higher than ever.

But this quadrant is the one often pooh-poohed by many in innovation. I like the way PriceWaterhouseCoopers puts it in this blog post:

“An unintended consequence of the Innovators Dilemma has been that companies have begun believing that unless they were pursuing a strategy of seeking disruptive innovations, they were somehow losing out.”

Wal-Mart’s efforts have paid off. The retailer has held relatively strong during the Great Recession, as seen in its stock price. And Toyota famously gathered over million ideas a year from its employees to emerge as a global leader in the automotive industry.

Existing Tech, Create New Market

In this quadrant, existing technology is leveraged to create a new revenue streams. This is the quadrant where the following phrase applies:

“Good artists borrow. Great artists steal.”

The simple application of a technology that serves one purpose toward a different purpose can be disruptive from a market perspective. It’s not a large technological leap. It’s the intelligent application of what’s already at hand.

Twitter is a great example. The technology itself is…simple. Web form. Subscription model. Limit to 140 characters. Yet it’s revolutionized the way people share and find information, causing Techcrunch’s MG Siegler to compare it to a modern day Walter Cronkite. All for a simple little web app. Here’s what WordPress founder Matt Mullenweg says about Twitter:

“Whether the Twitter team intended it or not, they’ve built a killer and highly addictive reader platform with dozens of interesting UIs on top of it.”

The thing with these innovations is that they are very much a market-determined disruption. This isn’t some sort of EUREKA! the moment the technology is rolled out of the labs. It takes the market to say that it’s disruptive.

Clayton Christensen (Innovator’s Dilemma) types of innovation will often fall in this quadrant. Existing technologies applied in new ways to address the lower end of the market.

Venkatesh Rao has a great perspective on this quadrant:

“In fact, in most documented cases of disruption, the disruptive innovation was a minor/incremental change and well within the technical capabilities of the incumbent (and was often taken to market by a renegade spin off from the original company).”

This quadrant is the best one for producing organic growth for companies. It has lower risk, but produces meaningful revenue growth.

Radical Tech, Create New Market

If any one quadrant defines the popular view of innovation, it’s this one. And that’s not without good reason. In the previous quadrant, existing technologies are applied to new markets. Well, existing technologies have to come from somewhere. That’s this quadrant.

This is the cool stuff that the press writes about. Check out AT&T’s Technology Showcase for a great example of some of these new technologies.

Amazon’s Jeff Bezos has done well in this quadrant. His latest innovation, the Kindle, is an example. It includes a new “electronic ink“. Ability to read text aloud. It’s incredibly thin profile.

And it’s paying off. Amazon reports that the Kindle set a new sales record this November. Which points to the Kindle as a strong new revenue stream down the road, and a new source of sales for Amazon’s book sales. A home run in this quadrant.

These types of innovations are important for maintaining the long-term growth rates of companies. They provide needed growth, replenishing changes in existing markets.

Which leads us to the final quadrant…

Radical Tech, Manage Existing Market

There are times a company’s business is under attack, and it needs to address changing behaviors in its market. Innovations in this quadrant share the high risk profile of the previous quadrant, but they have a defensive nature to them. They don’t seek to find new opportunities, they seek to address changes in customer behavior.

Hulu strikes me as an example of this. A joint venture of NBC, Fox and ABC, Hulu lets users view shows on computers. This initiative addresses the emerging market shift away from televisions to viewing on all sorts of devices. It’s a better answer for this shift than the music industry initially had for the proliferation of MP3 songs on various P2P sites.

Gary Hamel has noted the increasing volatility of markets across the globe. Customers have better access to information about new options, and are willing to shift their spending more quickly. With this dynamic, expect some increase in activity for innovations in this quadrant.

Companies Need a Portfolio of Innovation Opportunities

In a recent Accenture survey, 58% of executives said their organization is looking for the next silver bullet rather than pursuing a portfolio of opportunities. When I hear that, I think first of the upper right quadrant (radical tech, create new market). These types of innovations are incredibly important, and should be part of a company’s innovation efforts.

But there’s really a good basis for expanding that view to look at the other types of innovation: technology vs. market, disruptive vs incremental.

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Hutch Carpenter is the Director of Marketing at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

Top Ten ERP Software Predictions for 2010

Previsões para o mercado de ERP-Enterprise Resource Planning para o ano de 2010 apontadas pela empresa Panorama Consulting (http://panorama-consulting.com), especializada em avaliação de ERPs!

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Top Ten ERP Software Predictions for 2010

Posted by Eric Kimberling on December 7, 2009 · Leave a Comment 

A new decade is upon us and the ERP software industry looks quite different than it did at the start of the decade.  Ten years ago, the enterprise software space was booming, IT budgets were flush, and companies were replacing accounting systems left and right in preparation for Y2K.

In contrast, the decade closes with depressed IT spending levels, revenue contraction among many ERP vendors, and uncertainty about the future.  However, there are several things to be optimistic about.  Below is our ten predictions for the enterprise software space in 2010.

ERP Software Predictions for 2010

1. Diligent focus on ERP software benefits realization and ROI. Long gone are the days of spending like it’s 1999 and hoping for the best.   CIOs and COOs will continue to face pressure to prove that every dime of investment in ERP systems is justified and generates a solid return on investment.  Look for more deliberate spending, more phased rollouts, buying licenses only as they’re needed, and hesitancy to invest in more expensive advanced enterprise software modules.
2. SMBs to get back into the ERP software market. The bright spot in any recovering economy is usually small business (SMBs).  As the economy emerges from the recession, SMBs will look for small business software to automate their operations and scale for growth.  In addition, large software vendors such as SAP and Oracle will continue to focus on the SMB market to reinvigorate their revenue growth in software license sales.
3. Increased adoption of Software as a Service (SaaS) at SMBs. While SMBs may lead the charge in their small business software investments, it may be difficult for them to make the necessary investments.  Given that tight credit markets will likely continue into the new decade, many SMBs will look to SaaS ERP software to help them minimize up front capital IT costs.
4. Lots of ERP SaaS talk, but not as much action at large organizations. Larger companies, on the other hand, are likely to consider SaaS options, but are much less likely than their SMB counterparts to commit to these deployment models.  As software vendors expand hybrid solutions combining the benefits of SaaS with the flexibility of traditional ERP (e.g. Oracle’s On Demand and SAP’s Business By Design offerings), larger organizations will continue opting for non-SaaS options that more commonly reduce cost and risk while maximizing business benefits in the long-term.  They will, however, be more inclined to leverage SaaS for some niche functions, such as Document Management Systems (DMS), Human Resource Management Software (HRM/HCM), Product Lifecycle Management (PLM), and Customer Relationship Management (CRM).
5. Increasing focus on organizational change management and ERP benefits realization. As demonstrated by the exponential growth in Panorama’s organizational change management practice, companies are directing much of their ERP software investments to areas that ensure they implement effectively and get more out of their existing enterprise investments.  The need to more effectively manage organizational and business risk will likely result in a continuation of this trend in 2010.
6. With ERP software, it’s still a buyers’ market. Even in the most optimistic scenario, overall 2010 enterprise software spending will not return to pre-recession levels.  This means ERP software buyers will remain in the driver’s seat, which will be reflected in aggressive software pricing and shared benefits implementation models, such as that introduced by Epicor late this year.
7. Enterprise software risk management. As CIOs and executive teams remain on the hot seat to prove the value of their investments, risk management will be the name of the game.  Look for more ERP implementations to leverage organizational change management and independent oversight of software vendors to help mitigate business risk.
8. ERP software vendor consolidation. Vendor competition was fierce before the recession and is even more so now.  Dozens of smaller vendors are starved for cash and unable to fuel R&D and other product innovations without infusions of capital.  Add the fact that larger vendors have cash and some have grown successfully via acquisition to date (e.g. Oracle and Infor), and continued vendor consolidation looks inevitable.
9. Focus on integration rather than major ERP package enhancements. Given corporate aversion to risk, companies are going to be less likely to bet on entirely new products or risky upgrades.  As a result, vendors are more likely to invest in incremental product enhancements and tighter integration between modules rather than revolutionary changes to their software.
10. Niches, low-hanging fruit, and business value. Look for companies to be very deliberate about how they invest in enterprise software, the risk they’re willing to take, and how they manage implementations.  If executives aren’t convinced that their enterprise software investments will deliver measurable business value, they won’t invest in it.  Areas that deliver immediate value are priorities for the coming year.

We are optimistic about the coming year and can’t help but wonder if the economic recession exactly what the enterprise software market needed.  ERP failures, cost overruns, difficult software vendors, and lack of business benefits had become too frequent, but these lean times will not allow for these trends to continue.

So what does this mean to clients and other companies considering ERP software investments in the coming year?  The companies that choose the right software for their organizations, best manage business and organizational risk, implement effectively, and position themselves for benefits realization will be better positioned headed into the recovery.  This will require companies to more effectively assess vendor viability during their ERP selection processes and leverage ERP software implementation best practices more than they have in the past.

Here’s to a prosperous and successful 2010!

From Layers to Slices: Redirecting EA Dimensions

Gostei muito deste post do Janne J. Korhonen, editado no blog http://www.ebizq.net! Ele consubstancia nossa metodologia da Arquitetura-Governança-Crescimento (ver   http://www.creativante.com.br/lettericia/blog/2009/45_2009.html) como uma ferramenta cada vez mais robusta para interpretar a organização e a dinâmica das empresas que se apóiam fortemente em TICs.

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From Layers to Slices: Redirecting EA Dimensions

By Janne J. Korhonen on December 6, 2009 12:57 PM 

An enterprise architecture framework provides tools and methods to structure, classify and organize the enterprise architecture through a coherent set of views on relevant EA artifacts and their relationships. Enterprise-class description frameworks such as TOGAF or Zachman Framework distinguish several architecture layers and architecture views to disentangle the vast complexity and reduce the number of artifacts per model.

EA frameworks typically recognize three or four architectural dimensions that are used to structure architecture products. These dimensions typically include:

• Business Architecture
• Information Architecture
• Information Systems Architecture
• Technology Architecture

In many cases, these architectural dimensions are viewed as layers of the enterprise architecture, as depicted in Figure 1.

Figure 1. Layering the Enterprise Architecture by architectural dimensions.

This hierarchical approach is based on the tenet of ‘IT follows business’: business processes and organizational structures follow the strategy, are implemented in and supported by information systems, which, in turn, are supported by technical infrastructure. While this mindset may be useful in categorizing IT artifacts, it falls short in aligning IT architecture with IT strategy and with business architecture artifacts such as vision documents or business models. The technology dimension may also be missed in business architecture; high-level IT decisions need to be made in consideration of both business and technology.

Lindström et al. (2006) surveyed the concerns of Swedish CIOs and how well enterprise architecture frameworks supported these concerns. According to their study, the most notable disharmony between the CIOs prioritized concerns and the foci of EA frameworks lies in the lack of support for issues related to the IT organization. IT organization-related issues such as IT governance, IT procurement and development processes, and IT project portfolios should be better incorporated in the EA models.

The EA Grid by Pulkkinen and Hirvonen (2005) recognizes this need and addresses not only the artifacts but also architectural decisions at different organizational levels. The framework layers the enterprise architecture by three decision-making levels (Enterprise, Domain and System) that are crossed by the four widely accepted architecture dimensions (Business, Information, Systems and Technology). While I highly resonate with their overall approach of building the EA framework on architectural decision-making, I am in some disagreement with their interpretation of levels and how the grid is populated.

I would identify four levels as shown in Figure 2, in line with the governance model outlined before. In my next blog post, I will outline what artifacts and what architectural decisions would pertain to each level by each dimension.

Figure 2. EA framework layered by decision-making levels.

References

Lindström, Å, P. Johnson, E. Johansson, M. Ekstedt & M. Simonsson (2006). “A survey on CIO concerns-do enterprise architecture frameworks support them?”, Information Systems Frontiers, Vol. 8, No 2. February 2006.

Pulkkinen, M. & A. Hirvonen (2005). “EA Planning, Development and Management Process for Agile Enterprise Development” in System Sciences, 2005. HICSS ‘05. Proceedings of the 38th Hawaii International Conference on System Sciences – 2005.

The Future of ERP (Part II)

 Eis aqui a parte II da matéria sobre ERP, cuja parte I transcrevemos (do blog www.cio.com) neste blog aqui no dia 20/11/2009!

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The Future of ERP (Part II)
Got Data? Making Sense of It All

From Thomas Wailgum
 

Since the dawn of automated, electronic capture of corporate financial, operations, supply chain, HR and sales information data—what’s become, more or less, ERP—companies have cumulatively spent billions, if not trillions, on managing and trying to extract value from their vast data repositories.

Missed Part I of The Future of ERP? Read it here.

Accenture’s Jim Hayes, the global managing director of its Oracle practice, says companies know what they want to do—they see the value of business intelligence and analytics output for their users—but they’ve often been stymied. “We know how to do transaction processing. We know how to close the books, capture orders, do pricing, allocate stock and support business with ERP,” he says. “But the real promise was: How could we take this data and turn it into information? A lot of clients were asking about how we could help them unleash the value of that data. And then the [economic] meltdown happened. All of the sudden, there was a dramatic shift to: Cost reduction.” And many of those “unleashing the value” projects, he adds, have been put on hold.

Enterprises today are deluged with terabytes of data: their own internal data; customer and partner data; as well as new “unstructured” data flows—from Internet-based social networks and mobile devices. But guess what? We ain’t seen nothin’ yet. During the next five years, Gartner predicts that the amount of enterprise data will grow by a jaw-dropping 650 percent. And the vast majority of that data will be unstructured, meaning not included or tied to any particular database, Gartner points out. This head-scratching growth, noted David Cappuccio, Gartner’s chief of research for the infrastructure teams, in a CIO.com article, “is going to cost us dearly if we don’t pay attention.”

Philip Say, vice president for SAP Business Suite, says that this area is, in fact, “one of the most exciting areas of innovation” going on at the company. “The depth, the volume, the detailed sophistication of all the data being generated—from enterprise systems, e-mail and other corporate systems—it’s as if we’re reaching a point where it’s almost unmanageable for the end user and there’s no question for the enterprise,” Say adds. “As we look to the future, this is one of the more vibrant areas SAP is investing in.”

Say points to the acquisition of Business Objects and those analytics applications, tools and developers working on solving this challenge. He also notes SAP’s new in-memory tools and techniques that aim to manage huge chunks of enterprise data in fast, intuitive and easier ways than in the past. “This is ushering in a new definition of what we mean by ERP,” Say adds.

But all of this unstructured data could also be a huge opportunity for other, non-traditional ERP players to move into the market. For example, the unstructured data market is virtually owned and operated by Google. What about a Google play in the business applications space? At the Gartner IT Symposium 2009, CEO Eric Schmidt made no secret of the fact that Google has designs on the enterprise market space. Schmidt thought that the enterprise business for Google can be a multibillion dollar one—terming it “humongous.” The 11-year-old company has its sights set on Microsoft; it has recently made its hosted Google Apps suite more enticing to large government users by announcing plans to tailor its cloud computing services for various federal agencies, according to a Computerworld.com article. Google Wave has taken dead aim at the collaborative apps space (hello, Microsoft Sharepoint), and Android is going after the mobile space by extending the enterprise into portable devices. Still, for many CIOs, at least now, Microsoft is the devil you know, rather than the one you don’t.

Jon Reed, an independent analyst, SAP Mentor and blogger at JonERP.com, has trouble envisioning Google building an ERP suite or acquiring an ERP company—”that’s extreme,” he says. However, “if a Google type of company can present a way of pulling together all this unstructured information in a cloud-based environment, and then somehow connect that to a structured platform—uniting the unstructured and structured information—then that’s a big, big thing,” Reed says. “Think how pathetic these big companies are right now. They have no visibility into that.”

Adds Accenture’s Hayes: “We will we look back five years from now, and realize that the unstructured data [issue] was another disruptive force that will have to be reckoned with.”

The Future of the Supervendors

Behold the Supervendors! It sounds like something out of a Transformers movie—There’s OptimusOracle, IBM-Bot, MicroScream and MegaSAP. (Don’t ask whose “side” they’re on.)

High-tech juggernauts Microsoft, IBM, SAP, Oracle and HP (collectively known as “MISOH”) have reshaped the enterprise software industry with bold, strategic and expensive acquisitions that have led to massive consolidation. As a Forrester Research figure below shows, in the ERP space, SAP and Oracle outpace the other vendors

Oracle, in particular, has never shied away from making a splashy purchase (leading one financial industry observer to call Oracle the New York Yankees of the enterprise software industry). With $8.8 billion in cash on hand and “good deals” still to be had, one can expect Larry Ellison & Co. to make more shrewd acquisitions.

Forrester principal analyst Paul Hamerman, in the report The State Of ERP 2009: Market Forces Drive Specialization, Consolidation and Innovation (subscription required), is confident the consolidation trend will continue for Oracle and its peers. Here’s why: To boost recurring revenues (from new customers and maintenance fee streams); to eliminate the competition (see: Oracle’s hostile PeopleSoft acquisition); to establish a presence in new markets (to get into new industries, vertical plays, customer segments or geographies); to complement platforms and services (in which IBM would buy ERP applications); and to find “technology gems” (i.e. “undercapitalized software firms with valuable intellectual property”), Hamerman writes.

Are there still enough enterprise software firms out there to acquire? While the number has dwindled since the turn of the millennium, there are still more than a dozen targets available. (See Forrester figure below.)

Acquisitions aside, how will the cadre of ERP vendors approach the future? Like those robots in the Transformer movies, the “MISOH” cartel and other traditional ERP entities will have to change their “shapes,” and alter their strategies to stay with the times (and already have, to some degree). That means embracing—rather than resisting—on-demand and SaaS-based computing software-delivery models. And you can bet you’ll be seeing fewer and fewer “cloud computing” rants from Big ERP execs, like this one that Oracle’s Ellison gave in fall 2009.

For example, in an odd 2008 interview with ZDNet, Lawson Software CEO Harry Debes proclaimed that the SaaS industry would “collapse” in two years. In the interview, Debes also noted that Lawson was a happy Salesforce.com user. In fall 2009, during an interview with CIO.com, Debes stands by his comments, saying that the feedback from Lawson’s customers at the time, which was that they did not want a SaaS solution, “was compelling.” That’s changed. And today, Debes says, “I’m a very big fan of cloud computing,” though his on-premise business still has a bright future, he contends.

Industry leaders SAP and Oracle are feeling the heat—from NetSuite, Workday, Salesforce.com and other vendors offering solid alternatives. SAP’s on-demand Business ByDesign mid-market offering has, for all its technological promise, been a bit of an enigma. SAP stumbled out of the gate, at least from a marketing perspective—execs either overpromised and underdelivered or did a poor job of managing customers and partner outsized expectations: limiting the service to a relative few of its customers. That said, SAP has added new features and enhancements (integrating tools from its Business Objects acquisition, for instance). If all goes according to plan, 2010 will be the “coming out” party for Business ByDesign.

For Oracle, its next-generation Fusion Applications Suite is either going to be a competitive game-changer or a money pit for its customers. But again, like Business ByDesign, questions still surround Fusion Apps as we enter into 2010. According to a recent report by 451 Group analyst China Martens, those include: How will Oracle price Fusion Apps licenses? Oracle has said the apps will be “SaaS ready,” but what does that actually mean? How will the Sun Microsystems acquisition impact Fusion Apps? And what will happen to Oracle’s existing customers who choose not to go the Fusion Apps route? (Oracle declined numerous requests for an interview about the future of Oracle’s ERP offerings.)

“Each time Oracle or SAP talks about their SaaS ERP endeavors, it’s as though they’re putting a little more meat on the bones of their projects,” writes Martens in her November report on SAP and Oracle. “There’s plenty more fleshing out to do before it’s possible to judge whether we’re looking at swans or turkeys.”

As the decade wound down, many vendors finally uncovered their ears to hear what their customers were actually saying. But there’s another, more powerful set of masters to serve: shareholders. As such, the future of ERP will be dictated not only by customer wants and needs but also vendors’ ability to satisfy shareholders, grow margins and pay dividends. It’s not personal, after all. It’s just business.

CIOs: Bringeth the ERP Analytics!

Sure, traditional on-premise vendors face pressure to diversify their software delivery mechanisms. But CIOs face an equal amount of pressure—maybe even more—as the new millennium dawns. “Rapid proliferation of SaaS solutions inside the organization requires strong CIO leadership in coordinating data, business process and meta-data integration strategies,” writes Ray Wang, Altimeter Group’s partner for enterprise strategy, in a August 2009 blog post.

In particular, the business is crying out for easy-to-digest, highly usable and meaningful analytic data on enterprisewide business functions. A 2009 IBM study of more than 2,500 global CIOs found that “leveraging analytics to gain a competitive advantage and improve business decision-making” is the top priority for CIOs. A whopping 83 percent of survey respondents reported that BI and analytics—”the ability to see patterns in vast amounts of data and extract actionable insights”—as the way they will enhance their businesses’ competitiveness.

Inside too many businesses today, a paradoxical data situation exists: While the struggling economy has forced businesses to attempt to cut costs and “do more with less,” that often means leaving this data store largely untapped, which creates the risk of “more is less,” notes a July 2009 Aberdeen Group report (registration required). “The ability to provide better decision support with integrated enterprise data is an important factor in turning data into actionable intelligence,” write the Aberdeen analysts. “The synergistic relationship between ERP and BI can indeed be the perfect storm, igniting improved performance and visibility.” (For more on this, see ERP and BI: A Match Made in Heaven, If You’re in Data Hell.)

After four decades, billions of dollars and many huge failures, Big ERP has become the software that no business can live without—and the software that still causes the most angst. See: Why ERP Is Still So Hard

ERP analyst Hamerman writes in the Forrester report that embedded analytics represent a key functionality in the future: “Rather than having to leave the application and launch separate reporting and analytics tools, ERP applications are moving toward embedding analytics within the context of the application itself,” he states. “This can be seen in a number of products including Epicor 9 and the yet-to-be released Oracle Fusion Applications.” Plenty of enterprise vendors are targeting these fertile grounds (some estimates top $100 billion). IBM, for instance, is making a huge push into the analytics market, using the combination of its SPSS acquisition and its hardware, software and services business lines.

So how are CIOs dealing with the ERP and BI demands? Nectarios Lazaris, CIO for Woods Bagot, an architectural design firm with offices in Dubai, Bangkok, London and Hong Kong, seems like he’s coping the best he can. “We need an ERP system to do a lot of predictive forecasting, and output different [project] models and business scenarios for us,” Lazaris says. He describes the complex process of how Woods Bagot vies for new business and how these global projects typically run their course—covering structured and unstructured data from all over the globe and how best to “visualize” that data.

Is he getting that now? “With a great deal of difficulty and I guess a lot of skepticism in the output,” he says. In fact, Lazaris laments that users still sometimes have more affinity for Microsoft Excel than the ERP system (which he declines to name). “Sometimes [as the CIO] you have to take it on the chin from your users,” he says. “You go back, you try to talk to the account exec at your ERP vendor, and you try to get it across that you hope the next release is better. But [my] people will say: Why can’t an ERP system be as powerful as Excel, which is ironic.”

The future of ERP, this is not. But it just might be the reality for too many CIOs as 2010 dawns.

Talkin’ ‘Bout the Next Generation

More than any time in its nearly four-decade history, change is swirling in the air of the ERP ecosystem: new software-delivery models, new licensing arrangements, new user-interface offerings, new support options, new emphasis on value. All of this change is a very good thing, analysts say. “Now, it’s all about the value,” says Accenture’s Hayes. “With all of these different future trends out there, CIOs need to be more adept at describing the value: Here’s the TCO and here’s the revenue uplift; here’s the day sales outstanding improvement; here’s the business value we’re going to get by using this application.”

It’s not that companies are cutting spending on ERP-related systems; in fact, quite the opposite: ERP investments still top the list of corporate IT investments and in 2009 were almost “recession proof.”

It’s just that the recession and years of questionable return have forcefully introduced a new strategy: Leave the commodity ERP processes to the back office (such as payroll and HR), but make damn sure that front-line users are freed from the banality and inflexibility of the Ghosts of ERP Past.

Industry consultant Reed sums it up this way: “‘Empower me. Give me the tools to create differentiating processes that allow me to define myself from my competitors. And make sure that it’s easier for me to do, so I don’t have to hire 100 programmers. Give me the building blocks to put that together quickly, so that it’s just humming in the background, and leave me free to focus on what makes us better than other companies.’ That’s what customers are expecting now and really want.”

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