Enterprise Resource Planning (ERP) - Impact Of The Internet On Erp Systems

As early as 1994, SAP began working to upgrade its flagship R/3 product with Internet capabilities; the move reflected SAP's desire to compete with increasingly popular "intranets," the in-house data networks similar in structure and appearance to the Web that were adopted by many corporations. However, despite these early efforts toward integration with Internet technology, SAP found itself lagging behind rivals in the late 1990s. For example, PeopleSoft unveiled a series of self-service, Internet-based applications in 1997. Also, database giant Oracle Corp., which diversified into ERP software in the late 1980s, became the first ERP vendor to move its client/server applications to the Web that year. According to a July 2001 article in BusinessWeek Online, upon receiving the news in early 1999 of SAP's less than desirable position, CEO Hasso Plattner, "reacted like a man shot out of a cannon. In a matter of days, a series of frenetic brainstorming sessions yielded a brand new strategy, which he personally christened mySAP.com. SAP's array of software programs would be made Net-ready before the end of the year, and millions of office workers from Berlin to Bangkok would tap into the Net and their own companies' networks on computer screens with SAP's logo on them." Plattner believed mySAP.com could become a major online gateway for businesses, reaching the business masses in the same way online services provider America Online (AOL) had reached consumer masses.

What SAP eventually realized, however, was that making its products compatible with the Web was not enough to reposition itself as a business systems leader in the rapidly evolving ERP market. The firm also needed to reconsider its tradition of developing all of its own software in-house and seek out partnerships as a means of gaining quick access to new technology. For example, the firm began using Commerce One Inc.'s business-to-business (B2B) software when it created a U.S. subsidiary, known as SAPMarkets, to build and operate e-marketplaces. SAP also forged an alliance with Siemens AG to offer mySAP.com via Siemens's mobile devices.

While SAP was undergoing its metamorphosis, competitor PeopleSoft also continued working to stay abreast of cutting edge technology. In 1999, People-Soft paid $600 million for Vantive Corp. to gain access to CRM technology for the first time. The firm also began licensing procurement software leader CommerceOne Inc.'s BuySite application. PeopleSoft released PeopleSoft 8, a suite of e-business applications that was designed to put all the back-end and front-end operations of a business on the Web, in 2000; by the end of the following year, roughly 1,500 clients had signed up for the new package.

J.D. Edwards also spent the late 1990s and early 2000s retooling itself. The firm made its first acquisition in 1999, paying $12 million for The Premisys Corp., a sales automation software provider. The firm also purchased supply chain software provider Numetrix, eventually adding supply chain functionality to its OneWorld suite. J.D. Edwards also pursued deals with Siebel Systems Inc. for access to its CRM applications and with Ariba Inc. for B2B e-commerce technology. Although the alliance with Siebel Systems eventually proved fairly fruitless, the firm did eventually acquire CRM technology via its September 2001 purchase of Youcentric Inc. Late in 2000, the firm unveiled OneWorld Xe, which used the Web's extended markup language (XML) technology to allow clients to electronically connect to business partners using other platforms and software applications.

According to an October 2000 article in Internet-Week, what companies like SAP, J.D. Edwards, and PeopleSoft were doing entailed "the Webification of enterprise resource planning software, a migration long promised but only recently realized. The core ERP applications, which until recently meant back-office functions such as accounting, human resources, payroll, and fulfillment among others, are expanding to embrace strategic functions such as e-business relationships (EBR), supply chain management (SCM) and e-commerce services." According to many industry experts, however, adding front-end applications and Web functionality to their products only scratches the surface of what ERP vendors must do to stay afloat in constantly shifting e-business landscape. Although many firms have moved toward developing a comprehensive end-to-end enterprise management system that fully integrates all business functions, several analysts argue that such a system has yet to be developed.