Multi-Enterprise Capabilities Are Not About Labels But Required Capabilities
Guest Post By
Bob Ferrari, Executive Editor, Supply Chain Matters blog
I read a rather insightful Gartner First Thing Monday commentary published at the end of August which was penned by Jim Shepard. This commentary which was titled: Multi-enterprise Commerce Is Still a Problem Searching for a Coherent Solution, was a follow-up to a "storm of responses" to a previous commentary suggesting that multi-enterprise commerce might be the replacement for some current installed ERP systems.
Shepherd's observations are rather important, namely:
- "There was virtually no argument with the ideas that an increasing amount of business activity occurs between companies, and that systems like ERP aren't well-designed to support it. The issue is whether we need to replace ERP systems with some new application designed to manage complex, multi-entity value chains, or whether we need lots of additional applications and services to enable the interaction between our existing ERP systems." Shepherd observed from the responses from end-users that the multi-enterprise commerce problem was characterized by a very high rate of process variability. While ERP systems are touted to eliminate such variability through process and data standardization, end-user feedback was that data standardization was rather challenging in a multi-enterprise commerce environment.
- Shepherd notes lots of feedback received from end-users representing multiple industry settings who noted that they have successfully brought multi-enterprise commerce together by integrating B2B services, sourcing, demand management and logistics best-of-breed software with their existing backbone ERP systems. End users whose business models were entirely reliant on outsourced manufacturing and services found ERP systems almost impossible to use.
These recent observations made by Gartner should not be a surprise to readers in the Infosys client community since many of you are on the journey toward achieving multi-enterprise commerce. The reality of today's B2B commerce capabilities are indeed a landscape of best-of-breed technologies that enhance key business processes. This has come about primarily from the increased influence of business focused or supply chain functional teams who must respond to the pressures of the market or to market opportunities, and candidly cannot wait for the development cycle of the ERP vendor to stay current with today's fast-paced B2B and B2C process needs. While many ERP vendors are closing the functionality gap, it has taken many months, and many of the changes require upgraded platforms and augmented technology. Many companies cannot tolerate the disruption or expense involved in a major upgrade of the ERP technology and application stack. They opt instead for laser-focused and manageable change targeted at key strategic business processes, which provide for more manageable change targeted at specific strategic capabilities.
The make-up the "systems of innovation" or "systems of differentiation" was described by Gartner in its 'pace layers' methodology of applications maturity outlined a few months ago. According to Gartner, "Developing a paced layered application strategy requires deconstructing your portfolio into individual applications and identifying the specific business processes that each application supports." In essence, since the business dynamics of global supply chains and multi-enterprise commerce are so dynamic and fast-changing, companies need to understand what are their core business process needs and augment these capabilities with technology that is best designed to both support that business process yet remain flexible for end-users in their ability to quickly and easily re-design the particular business process.
The other change that has come about is that many of today's best-of-breed applications have acknowledged their market success lies in the ability to co-exist in a backbone ERP or legacy system environment and therefore provide enhanced integration capabilities that make all systems work together in an ecosystem of information enhancement and business intelligence.
IT and business functional readers, along with Gartner can continue to ponder whether multi-enterprise commerce is a problem searching for a coherent solution. I believe that the argument is not about finding a new "label" for systems development but rather the reality of a highly dynamic and fiercely competitive environment found in many industry supply chains today with a requirement to constantly adapt. Companies should focus on the processes and systems that will both differentiate them from industry competition with the flexibility and capability to change that process without major disruption. The label does not matter as much as differentiated capability and adaptability.
What's your view? Is the debate about "new labels" or is rather about capabilities that often span a single backbone ERP system?
