Enterprise applications Toolkit

Extended ERP: The path of least resistance?

Sally Whittle ZDNet.co.uk

Published: 12 Dec 2003 12:10 GMT

It might surprise you to learn that the world's leading supplier of supply chain software isn't i2, Ariba or even Manugistics. In fact, sales of SAP's supply chain software outstripped all these companies in 2003. Now the German software giant, together with the other big enterprise software vendors, is muscling in on the customer relationship management market.

Hays Logistics had been using SAP to manage its business for three years when it signed a contract to manage distribution for fast-food giant KFC. The deal, involving shipping £400m of goods each year, meant Hays would need new software to handle telesales, order taking, marketing and customer service. Hays decided against using a niche CRM product, instead using a CRM module from SAP, says Nick Ensor, Hays' SAP programme manager. "We didn't even consider best-of-breed," he says. "Buying from SAP offered what we needed, at a good price, and it was simple."

Extended ERP
Hays' decision to implement SAP over more specialised applications might seem unusual given the reputation ERP has acquired as being expensive and unwieldy. But it's just one example of what Giga Information Group calls 'extended ERP' -- extended enterprise software suites incorporating functionality that was previously limited to best-of-breed suppliers such as supply chain management, procurement and customer relationship management. Giga found that of the 60 percent of companies rolling out CRM this year, 26 percent had bought the software from their ERP supplier.

The advantage of extended ERP is that it overcomes the integration headaches associated with best of breed. "Integration is a key issue for companies that want to cut IT spending," says Erin Kinikin, a research leader with Giga. "Vendors like JD Edwards or PeopleSoft offer a coordinated application that blends front- and back-office processes in a way that's very attractive, particularly to smaller companies."

Real-time information
That's certainly the experience of Sven Christiansen, a small office furniture manufacturer based in the West Midlands. The company uses the Microsoft Axapta ERP suite for everything from accounting to procurement, logistics and stock control. "We can get more or less real-time information from the system, and if we make a change to a customer record in one part of the system it changes everything down the line," explains Stuart Brown, the company's IT manager.