Enterprise Resource Planning goes personal - IIIT Bangalore

							Enterprise Resource Planning goes “personal” (Economic Times, June 04, 1998)

BaaN Company announced the release of its new ERP product range that includes BaaN Series – the
next generation of ERP software that is modular by design in the BaaN World Conference last week
in Denver, Colorado. The release was accompanied by lots of “pomp and show” including the
addresses by Bill Gates, the CEO of Microsoft and Jan Baan, the CEO of Baan Company. What is of
deeper significance in the announcement is the subtle shift in the very core of ERP software
technology, which many of us in the academia have been waiting for.

“Mainframe ERP” to “Personal ERP”
In the last couple of years, we have witnessed a meteoric rise in the adoption of ERP by the Indian
corporate sector – SAP R/3 from SAP, Baan IV from Baan, Marshal from Ramco and Oracle Apps
from Oracle – have dominated the Indian market. While the benefits of ERP have been enormous,
ERP implementation suffered from the high cost of the software, phenomenal hardware resources
demanded by the ERP software, the high fee charged by the consultants, the long time taken to
implement and the very complexity of the ERP software. These features contribute to what I call the
“mainframe ERP”. Taking a clue from the hardware evolution, academicians have been advocating a
shift to “personal ERP” – like the PC culture, we witnessed in early eighties. The PC culture led to a
componentization of the computer, open standards and the availability of many players who
ultimately brought down the price, took the technology of the individual components to great
heights, made the computers less complex for the end users and ultimately commoditized the market.
The contribution of Microsoft to this subtle shift is enormous.

ERP software had to mature before such a shift is possible. The recent announcement of BaaN
Company deserves serious academic attention for introducing a similar shift in the important ERP
software market which is expected to touch a whopping $ 20 Billion by the year 2002. Such a shift
from “Mainframe ERP” to “Personal ERP” would be accompanied in future by all the attendant
benefits – including reduced complexity, increased maintainability of code, “plug & play” at the
application level and in turn reduced “total cost of ownership” (TCO). Let me explain in detail.

Monolithic architecture to Component Architecture
The shift from the current generation of Baan IV and BaaN V software to BaaN Series is
accomplished by the use of “Object technology”. Objects to software are like Integrated Circuits (IC)
to hardware. They are individually small pieces of code that follow a certain standard way of
interaction with the external world. This permits them to hide their internal complexity to the outside
world and protect their internal function from any malfunction by an external program. In the ERP
context, software objects would contain many of the key business processes. The object software
technology would ensure that the individual objects behave consistently when integrated with other
business objects. In turn the complexity of sophisticated software such as ERP does not increase
exponentially leading to a more manageable code. Thanks to this technology, new release of software
with added functionality can be delivered with fewer lines of code & it is gratifying to note that BaaN
Company has achieved this in their new software release!

Shift to Standards
Every successful software piece attained enormous market acceptability when it embraces standards.
This pattern cuts across the different segments of software business including graphics programs, e-
mail, browsers and even accounting software. ERP is no exception. Application software such as
ERP should leverage the standards set by system software vendors instead of “re-inventing the
wheel” for every part of their software. All major ERP vendors have endorsed this when they shifted
to standard DBMS from Oracle & Informix in early nineties and moved away from their proprietary
DBMS. Baan company has gone one step further in this direction in their new release of Baan Series
by the extensive use of COM / DCOM (Component Architecture Model & Distributed Component
Architecture Model) of Microsoft corporation, a very powerful and fast emerging de-facto standard
in object technology. This provides a solid foundation for further work on Baan Series, releasing
Baan Company to focus their energy on “business processes” and “enterprise architecture”, the
“core competence” of any ERP vendor. Other evolving standards such as CORBA and Java
computing can be accommodated easily, once the standards based technology is internalized by the
development team.

Kill Complexity
What does the technology shift mean for an end user and a customer? The shift towards “Personal
ERP” would lead to a “mass customization” unprecedented in the history of ERP software. In turn it
would also lead to reduced complexity of the software. Such a reduction in complexity would be
accompanied by reduced cost of consultants, reduced cost of training, shorter implementation time
and in turn reduced total cost of ownership (TCO). Reduced complexity also amounts to more
maintainable and reliable code leading to far smoother operational use of the ERP software. This
would take ERP to the Small & Medium Enterprises (SME), a segment that has not been able to take
advantage of the current generation of ERP software. This aspect is particularly important to
countries like India where the prohibitive cost of ERP has so far kept it away from SME segment.

Plug & Play Components
The end users are used to “plug & play” features of Windows 95. “Plug & play” at the system
software level such as Windows 95 itself is a solid achievement in software engineering. “Plug &
play” at the application level is a far more demanding concept. Thanks to the use of COM / DCOM
technology BaaN Series is able to achieve such “plug & play” operation. It was demonstrated by the
seamless integration of MS - BackOffice, MS - Office and Baan Series ERP software during BaaN
World by the development team from Microsoft & Baan. This holds enormous potential for the
future of ERP software.

From ERP to EERP
The shift to “personal ERP” philosophy, use of component architecture and standards based
development would permit the next generation of ERP software to extend beyond enterprise and
move to Extended Enterprise Resource Planning (EERP). This would not only include Supply Chain
Integration but also Customer Chain Integration. With the integration in place, the commercial
transactions can go electronic and EERP can provide the infrastructure for Electronic Commerce, at
least in business-to-business transactions. Electronic commerce has been bogged down by the non-
acceptance of a standard security scheme by everyone. However E-Commerce can be enabled today
with ERP systems such as Baan Series at least in Business-to-business transactions that are taking
place over secure Intranets and Extranets that are well protected by the firewalls. It is indeed
interesting to see the evolution of ERP software in this direction.




(The author is the Director of the Indian Institute of Information Technology, Bangalore (IIIT-
B).These are his personal reflections on the IT industry, more so from an Indian perspective.The
inputs are from journals, magazines, sites, newsletters and newspapers. He can be reached at :
ss@iiitb.ac.in )