Is ERP dead? Well, not really. At least not in the enterprise HR market. Net yet anyway. cryptic enough?)
The truth is that there isn’t anyone out there looking to compete with Oracle and SAP over the enterprise HR market for core HR systems. Everyone is building bolt-on type applications, and the truth of the matter is that even Oracle and SAP have long acknowledged the emergence of SOA and SaaS.
Oracle is a bit behind with the completion of Oracle Fusion middleware recently, but SAP’s netWeaver platform has a healthy and solid spate of partners. In theory, these platforms should allow any partner vendors to integrate processes and data into the ERP suite of applications, extending the reach and robustness of the ERP. Rather than assuming that the ERP can do it all (like we once did), Oracle and SAP are building core applications to house the most critical and core of employee HR data. While they still have the ancilliary modules, they also have the expecation that clients might want a specialized point solution.
Oracle and SAP’s service oriented architecture (SOA) in Fusion and NetWeaver allow a foundational technology to attach alternative “best in class” solutions. If you talk about Oracle these days, you’re probably talking about Fusion. Similarly with SAP and NetWeaver. By building these technologies, they have surrendered to Software as Service (SaaS) vendors and acknowledged their rightful place in the future enterprise suite of applications.
So when is the future? It’s actually not anytime soon. There has been significant growth in the SaaS market, but to attach these vendors to SOA takes major technological upgrading. Not only are most vendors not ready, but clients don’t have the stomach to upgrade systems enterprise wide. The last big push in IT spending was around Y2K, and we’re starting to see spending increase again. As companies upgrade their application infrastructure, we’ll see some early adopters, but not a major push to SOA for several years.
From a strategy implementation perspective, it’s a bit dissappointing to think that true best of breed application integration might be several years away. Today we are able to integrate the employee experience into a single portal, but true workflow and process integration is dependent on platforms like Fusion and NetWeaver. To put it into 3 words, “I can’t wait!” (was that 4 words?)
6 responses to “SOA and SaaS – The Future of Enterprise HR”
SOA and SaaS – The Future of Enterprise HR May 22, 2006 on 3:00 am | by Systematic HR Is ERP dead? Well, not really. At least not in the enterprise HR market. Net yet anyway. cryptic enough?) The truth is that there isn’t anyone out there looking to compete with Oracle and SAP over the
Dubs –
Great article. Let us pause for a minute and go back to those go-go- years of 2001 / 2002. With the dot bomb having burst the whole idea of a distributed application set was called DOA. PeopleSoft, Oracle and SAP all proclaimed that all IT “partners” wanted was a single unified backplane and one vendor to deal with (the “one throat to choke” theory of vendor management). Here we are, a mere 4 years later, and Oracle and SAP both are tacitly acknowledging that they can’t be everything to everybody, and that “best of breed” and “distributed computing” are here to stay.
Once you give in to that argument it is just a matter of time before the big two face serious issues. Would Siebel be part of Oracle if it wasn’t for Salesforce? Likely not – they would have gone down market more effectively and kept their preeminent position.
There are an increasing number of guys like me who understand that they are no longer in the cost / risk maintenance game and that the old “nobody ever got fired for buying IBM” mentality is starting to go away (hopefully for good). As that happens, the ERPs will move to where I (humbly) predicted eventually have to go: integration platforms, analytics, warehousing and the services that go with them.
Thanks for letting me take that trip down memory lane.
SOA is a great idea in systems design with significant potential business benefits, but those business benefits ONLY accrue if (1) the defined services are sufficiently granular to be useable in many different places, (2) the defined services are sufficiently robust to meet the needs of all users without modification, and (3) the data semantics of the defined services are agreed upon by all users. Imagine a Web service called manage person name which handles creation (e.g. when the person in question is first recognized by the organization as a person of interest, which could be a prospect, an applicant, etc.), update (e.g. when someone marries and makes changes to their name, presentation (e.g. in the language of the user and with the cultural context/name structure of the person in question and with the appropriate protocol/format for the destination device), etc. To achieve granularity at this level, Oracle or SAP or anyone with non-SOA software is facing not just a software rewrite but, in most instances, a complete remodeling of the underlying business processes however gradually done. To achieve sufficient robustness, the relevant Web service designers must consider every possible person name structure globally (this has been addressed already, with considerable effort, by the HR-XML Consortium, but only as to person name and a very few other person attributes) as well as all possible presentation formats and protocols. To ensure that all users of this Web service are able to make sense of it, they must all agree to the underlying semantics of person name, something that’s a lot easier said than done. Unlike previous “generations” of technology, e.g. from mainframe to client server to Web-based, moving to SOA really does require rethinking/remodeling the underlying problem domains, something that has never been done before by any major HRM software vendor on so grand a scale as is promised by Oracle and SAP. Just imagin the migration workload, e.g. to address the management of historical data, to bridge between non-SOA and SOA versions of the underlying data design while you’re bringing up parts of your organization on the new data design while still running parts on the old? I’m a strong support of SOA. From old-fashioned callable subroutines to fully managed Web services — the real work is in the domain modeling, and that’s a much scarcer skill than software development.
SOA very well could be the future. As with any technology implemented at any level, process and adoption by the user community is critical. In this case, the user community could be vendors and consulting organizations that will take up the baton.
As Naomi stated:
There seems to be a disconnect in several levels of HR:
HR Strategy < ---> HR technology
HR Technology < ---> HR Process
HR Process < ---> HR Strategy
Adoption and Change Management to all of the above
Part of HR’s redefinition of itself must be to understand how all the strategy and tactical processes work with technology if HR is ever able to truly move forward with utilizing technology to get ahead. Unfortunately the skillset of transcending process, technology and strategy don’t always exist in corporate HR. As I said in the post, the technology is probably not truly ready for prime time, but as Naomi hinted, great implementation of the technology might lag even further behind that.
“Nobody ever got fired for buying IBM”
Plenty have been fired for buying ERP systems after they went over time, over budget, or became a write off after a totally failed implementation.
Just had to comment on that. I think that mentality has already gone away. I see confusion, angst, trepidation and downright fear among some who face the monumental decisions before them now: upgrade, implement new, ASP, or outsource: how do I decide?
Dubs,
excellent post and comments. Here is the otter contrarian comment…
1. Your argument only stands up when a “best of breed” vendor can offer a significant business advantage over the core “ERP” vendor, at a lower cost with a sustainable integration strategy. What was a leading edge niche play a couple of years ago soon becomes core ERP.
2. Very few of the US BoB and SaaS plays have been able to scale outside the US.
3. I expect many BoB plays to be quashed between improving ERP functionality and enterprise mashups.
4. There is a space for the BoB guys, but they need to run faster now than ever before. SAP especially has been in a platform building phase, but watch out when Apps develop start exploiting these newer technologies.
5. Software companies need to be profitable. More than a few of the HR bob guys are dying or walking wounded.
6. With 500 000 records on SAP alone, ADP is a bigger SaaS player than most. Watch this space, it will be much more than payroll.
7. Authoria, Success Factors and a couple of others will thrive, but many will not.
8. I think you need to compare HR with the supply-chain- procurement space of 5 years ago. Where is commerce one, i2 and so on today?
9. Being prettier than SAP is not a sales argument anymore
10. SAP and others will drive a new type of ISV, building solutions in tandem, not in isolation. Some of these will be funded by the likes of SAP. Think Virsa x 100.
interesting times!