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Is BPM the Beginning of the End of ERP?

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From Scott Cleveland's blog, where Jan Baan, the CEO of Cordys, is quoted saying: 'The successor of ERP is BPM....ERP is becoming the model of complexity. It has become too complicated.'  So is BPM the beginning of the end of ERP?

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  • Wider adoption of BPM is certainly not the end of ERP, but it signaled the beginning of a long, slow tail of utility. New business process will be architected more discretely, but wherever ERP fulfills specific functions adequately without huge maintenance costs, the "if it ain't broke, don't fix it" will still apply for most enterprises.

  • No. ERPs evolve though towards a SOA based organization, that is a suite of services.
    BPM may play a role in the service orchestration in the sense that one can choose the ERP service components and orchestrate them with a BPEL tool, provided they are WS compatible.
    Ideally, service component from different providers should be employed if they use similar information models and ESB. It will take time though.
    blog at http://it.toolbox.com/blogs/ea-matters/

  • Enterprise Resource Planning systems are a great theoretical solution for large or complex businesses that have multiple systems or data sources to manage and integrate. Many businesses evolved to a level of complexity by fast growth, acquisitions, mismanaging IT spending, no coordination across functional groups and/or business units, the lack of any real good standards across different best in class solutions and the list goes on and on. The reasons are good and the problems created are real. ERP was presented as an enterprise solution to the complexity with all kinds of planned benefits. I have found that solving complex enterprise problems is rarely, if ever, simple and taking on the entire problem, in many cases, doesn’t make solving it any easier. In my experience, implementing one solution for many problems in a business will take time, resources and money to solve and lots of each. With this approach any business will be lucky if they come close to the intended benefits, on time and within budget.

    BPM offers businesses the opportunity to target a specific pain point and develop a specific solution for that problem. At the same time, every business can plan the long term view of data management, systems integration and establish standards. As each of the largest pain points (or opportunities) are implemented, they will be moving closer to the long term solution. At the same time, they will be getting benefits along the way and have a better chance of managing implementation cost.

    So is BPM the beginning of the end for ERP? We will certainly see.

  • Probably the reverse. The ERP vendors (SAP, Oracle and now include Salesforce.com) are adding compelling BPM capabilities - so why would you need a standalone BPM vendor?

  • Is BPM the Beginning of the End of ERP? Not really – though it does depend upon how you define BPM.

    Let’s say that 20% of the entire activities of an enterprise are automated. So the remaining 80% of activities are manual.

    [Bear with me here. Industries vary in the extent of automation, and so do organizations of course, and every organisation is looking to automate whatever it can - but these 20:80 proportions seem to be typical right now.]

    Currently, it is ERP systems that are delivering the lion’s share of the 20% of activities that are automated.

    Let’s define ‘Skinny’ BPM as BPMS, workflow, SOA and other automation solutions.

    Whereas ‘Whole’ BPM is about a framework for enterprise process management that covers 100% of the activities of the enterprise. So ‘Whole’ BPM underpins business transformation, continuous improvement, governance and so on.

    ‘Skinny’ BPM is slowly challenging the dominance of ERP as the automation platform. ‘Skinny’ BPM fits best where the automated activities are rapidly evolving and the source of competitive differentiation.

    ‘Skinny’ BPM will undoubtedly grow – but there are limits to how far it will encroach on ERP, which is engineered to deliver standard tasks at the lowest transaction costs. And that’s the bulk of what is automated.

    The good news is that it’s not a zero sum game. ‘Skinny’ BPM may take some chunks out of ERP, but, over time, it will help drive up the overall level of automation across the enterprise.

    ‘Whole’ BPM is about orchestration across the broader enterprise canvas. ‘Whole’ BPM is about identifying a pipeline of automation opportunities, then planning and delivering them successfully. ‘Whole’ BPM is agnostic about the best mix of automation – its focus is on enabling business-led projects that leverage the full array of automation capabilities.

    So ‘Skinny’ BPM does pose some challenges for ERP. But the ERP vendors are smart, so we’re seeing a meld of automation capabilities and the disappearance of ERP as a monolith.

    ‘Whole’ BPM doesn’t challenge ERP at all. It just aims to increase automation and deliver performance improvement – whatever the automation mash-up.

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