Enterprise applications like ERP and CRM systems provide the DNA for successful organisations but their scope and impact is so extensive, and the cost and risk of change can be so high, that they are often viewed as static transactional engines that are altered only when absolutely necessary. Although understandable, this approach has negative repercussions for the business and prevents the full value of these expensive, strategic and under-utilised assets from being realised. At a time when budgets are frozen or shrinking it pays to have a range of strategies and programmes that can be put in place to maximise the business value of existing investments.
These should cover optimisation of the existing implementation, and evolving and improving it via intelligent additions. We should also bear in mind that the current tough times will come to an end, at which point systems will have to be fit and healthy in order to cope with the upswing, so paying attention to the basics now will pay extra dividends later.
KEY FINDINGS
-
Enterprise applications are an easy target for cost-cutting initiatives but inappropriate cost cutting of the core applications that run the business undermines value and increases risk.
-
Breaking down organisational silos, particularly between IT and business units, is fundamental to exploiting the innate value of enterprise systems but requires a collaborative culture and enterprise architecture approach.
-
Applications are in a state of change - restructuring around a series of platforms and tasked with delivering process standardisation.
-
Application extension is not just about adding new functionality but providing tools for insight, analysis, and collaboration.
-
The Software-as-a-Service (SaaS) model brings its disruptive influence to bear on the integration, ERP, and application development areas.
-
Under-utilisation of existing systems is a significant issue - 50% of standard functionality regularly goes unused.
-
Standardisation is a major contributor to unlocking value and reducing costs.
-
Strategic maintenance management can improve operational costs and release resources for value-generating initiatives.
-
The next round of upgrades will be more challenging than normal technical or functional upgrades but is necessary in order to support the quest for business agility.
-
Stability and flexibility appear to be mutually exclusive, but architectural change is starting to provide a solution, thereby providing a business case for additional investment.
-
Service Oriented Architecture (SOA) and Business Process Management (BPM) are edging systems towards the much sought after alignment between applications and business objectives and application agility.
This Report reveals:
-
How to make the most of existing financial and intellectual property investments in enterprise applications.
-
What steps organisations can take to control the cost of maintenance and assess its real value to the business.
-
The impact of Software-as-a-Service on delivery and payment models, and key technology and integration considerations.
-
Where to direct investment in application extensions in order to secure the most effective returns.
-
How technology change around SOA and BPM is impacting the way applications are constructed, accessed, and managed.
-
The role of portfolio management and application consolidation in managing for business value and cost effectiveness.
-
Why increased utilisation of standard components reduces cost and risk to the business.
-
Why enterprise application upgrades are still so challenging and what can be done to ease the pain.
Additional Information
CATALYST
Enterprise applications are functionally mature at the core but remain immature in the value generation area. Technology changes are opening up more opportunities for value maximisation at the business level but are also increasing complexity so that, more than ever, enterprise applications need to be viewed and managed from the multiple perspectives of architecture, process ability, and delivery, under the banner of cost and value to the business.
ANALYSIS
Introduction
Enterprise applications - integrated suites of applications used to run a large part of an organisation’s core business - are highly mature in terms of functionality, with some aspects qualifying as commodity operations because there is little differentiation between the various offerings. They are far from being commodity items in their entirety however because of their role in automating, standardising, and executing the critical operations needed to run a business. Investment in enterprise applications is a consistently high priority for organisations but the unfortunate aspects of their cost and complexity make them a prime target for cost cutting during recessionary times.
While constant evolution could be interpreted as a sign of weakness, it is more an indication of their strategic value and a reflection of the cost and intellectual capital tied up in them. Indiscriminate cutting will undermine value and increase risk to the business; strategic investments to improve efficiency or better manage interactions can release the value from existing investments, and generate new opportunities.
Business Issues
Business has a dynamic and momentum that sometimes defies logic but cannot be ignored and IT plays a critical role in enabling organisations to function effectively. While applications contribute through their transaction, data management, and automated process execution abilities, the key to unlocking their value lies in aligning them with business goals and being able to rapidly and cost-effectively change them in line with business change.
While technology plays a vital part in enabling this, an integrated mindset is also an important consideration, whereby applications, processes, infrastructure, management, people, and business objectives are viewed as inter-related components not siloed projects. A collaborative approach supported by formal methodologies and frameworks such as Enterprise Architecture, Business Management Modelling, Value Management, and benchmarking for health and fitness for purpose are routes towards a better understanding of both costs and value-generation opportunities, and towards enabling more proactive use of IT and enterprise applications to improve the business.
With the world economy scaling down, 2009 may not be the time for wholesale new investment, but strategic spending is advisable to maintain the value of existing enterprise application investments, streamline and improve business operations, and enable organisations to take advantage of fresh opportunities. This can be achieved through application extension; not by loading up on transactional-type functions, but by focusing on “intelligent” extensions - those geared towards providing insight and analysis; enabling group, enterprise, and partner-wide collaboration; improving customer interactions; or driving more efficient processes which can directly affect the amount of business that can be done, or the margins achieved.
Small, focused investments th |
