There are some dynamic changes happening in the way companies manage their business processes. The reason, say some analysts, is a movement toward service-oriented architecture (SOA). For starters, in August 2006 AMR Research's Bruce Richardson created quite a stir when he portended that SOA would lead to "the end of ERP as we know it."
Richardson's bold assertion is based on his observation that large ERP vendors, such as SAP and Oracle, are struggling to make their suites fully Web-serviceable. Web services allow different applications to communicate with each other outside an organization, while SOA is the overall architectural style that allows for shared or reusable services -- which can be communicated in a variety of ways, including via the Web.
With large ERP vendors struggling to transform their applications, Richardson predicts that by 2010 ERP customers will turn to less-expensive offshore integrators to build SOA applications that sit atop their ERP backbone. By then these offshore vendors will begin offering their own business process platforms that will replace "large chunks" of ERP systems, which will have become too costly for customers to maintain.
But while SOA likely will impact current ERP functionality, the result might be that more ERP vendors retool their offerings so they target more business-value processes of a company, according to Steve Jones, Capgemini's London-based head of SOA for global outsourcing.
"I'd definitely expect to see more players entering into the commodity pieces of the ERP market, and equally I'd expect SAP and Oracle to start moving into the split model of 'vanilla' ERP capabilities -- with the services being delivered via the middleware and enabling the business to tailor as it needs without having big upgrade problems," Jones says.
At the same time, manufacturers are changing the way they perceive their IT functions. Traditionally IT departments within organizations, particularly manufacturing, have been product focused -- that is, they only think of ways to alter the IT product rather than changing the actual business processes, Jones says. Now, more companies are pushing their IT departments to be more business driven. In turn, vendors offering SOA-related solutions are developing products to meet more business-service needs, according to Jones. For instance, Oracle Fusion has helped workflow processes at Phoenix-based SUMCO USA Corp., a unit of Japanese silicon wafer manufacturer Sumitomo Mitsubishi Silicon Corp.
SUMCO USA deployed Oracle's BPEL Process Manager solution, a component of the Oracle Fusion Middleware family, to review customer requirements of a particular order. "One of the things we do is we make customized products for our customers, so we receive a request to make a particular product, which needs to go through a variety of people to review the requirements before we decide on whether we manufacture it or not," explains SUMCO USA IT manager Ankit Shah.
So, if a company places an order for 500 wafers with certain specifications, an application engineer enters that data into the BPEL server and then routes that task to specific users within the system based on the workflow chart, says Vasif Pasha, a SUMCO USA software engineer and integration architect.
Trying to move this data around in a multisite facility such as SUMCO with a small turnaround time would be difficult without the SOA solution facilitating the workflow, Pasha says.
Meanwhile, graphic films manufacturer Oracal USA has experienced mixed results with SOA. The Jacksonville, Fla.-based unit of German signage technology company Orafol Europe GmbH deployed an IFS enterprise software system based on SOA in 2003. The system has saved the company time by automating the ordering process with its largest customer, says Todd Smith, Oracal USA's director of technical services.
But its smaller customers have not adapted their software to utilize the system. "They just have not bought into this architecture -- this concept that we can all save money if we just communicate better," Smith relates. He adds that most smaller customers don't understand their business software enough to make the change. If they come around, though, Smith says Oracal and its customers both win by having more efficient operations.
