METAbits – April 2003

Published in April 2003

The Year of the Data Administrator

2003 may turn out to be the year of the data administrator. This much-maligned position is showing new life as organizations find themselves in lose/lose situations over data privacy, low-quality
customer data, and knotted data integration. Even industries notorious for pinching pennies (e.g., retail, insurance) are, at minimum, exploring the relevance of enterprise information
management strategies
. At maximum, CEOs are fully supporting and urging CIOs to align information management with business needs and directions via information management programs that
range from aggressive management of metadata to reorganizing IT around information management principles. Doug Laney

Enterprise Applications’ Data Appetite Causes Information Constipation

Million-dollar investments in ERP, CRM, and SCM largely remain frustrated by an inability to generate aggregated, timely information out of these “data jailhouses.” Most painful
is that highly coveted 360-degree customer views are blocked by a lack of integrated data across legacy systems and discrete front-office applications. Moreover, the pace of business increasingly
dictates a unified, real-time view of info across systems. During 2003/04, IT and business processes will become even more codependent, with the “pragmatic” real-time enterprise becoming first a
reality and then a necessity. Aaron Zornes

Measuring Data Quality: Divide and Conquer

Through 2002/03, we believe the recognition of information as part of the IT portfolio will prompt leading organizations to fashion custom indicators and a scorecard for measuring data quality.
Data quality is a composite of characteristics including accuracy, consistency, completeness, entirety, breadth, depth, precision, latency, scarcity, redundancy and integrity – each a bit more
measurable than “data quality” itself. Doug Laney

Oracle Prepares for the War in the Midmarket

Prior to YE02, Oracle announced a special offering of preconfigured and preinstalled application software for the European mid-market. It delivers financial accounting, order, and inventory
management and purchasing functionality. However, Oracle’s fulfillment will be handled only via partners. This offering comes at a time where SAP is readying its low-end Business One ERP system,
PeopleSoft is attacking the market via solution centers, and Microsoft is busy integrating its acquired Navision software within its Business Solutions. There is no doubt: 2003 will be the
year of marketing wars for the European ERP mid-market
. Ruediger Spies

Just-in-Time Customer Data Integration:
“Not Your Father’s Master Customer Info File”

During 2003/04, organizations will begin managing customer information as a valued corporate asset by developing customer data integration (CDI) strategies to facilitate CRM efforts. Through 2005,
proliferation of disjointed data and cacophonous technology choices will impede creation of an enterprisewide customer information master file (CIMF). While strategic CDI
implementations will initially support internal information (customers, employees), by 2006/07 such collaborative infrastructure will enable real-time data integration throughout extended
relationship management (XRM) processes (partners, suppliers). Early adopters are also benefiting from the commonality and insight gained via CDI to embark on enterprisewide sharing of product,
supplier/partner, and employee data (a.k.a. enterprise information integration – EII). Aaron Zornes

Web Services Trends:
“ASP Reincarnation” and “Karmic Disintermediation”

The opportunity to decrease transaction costs is encouraging companies to consider outsourcing of non-core business functions. This is leading to a reincarnation of the application service provider
(ASP) concept, albeit on a more granular business-function scale. Just as e-commerce startups attacked established industries via disintermediation of the distributor role, now karma comes home as
increased fragmentation of B2C relationship chains will shake up industries due to a dramatic increase in the number and specialization of narrowly focused companies. Even more
applications and business processes may be outsourced as IT groups race to learn new programming disciplines to help manage and integrate such partner relationships. Aaron Zornes

Simple CRM No Match for Complex Sales

Traditional CRM technologies can automate and optimize straightforward sales cycles that match inventories to customer needs with standard terms. However, we find they have little to offer complex
sales processes involving product configuration/design/integration, teams of individuals, legal issues, and partner/supplier commitments. We expect that, to address complex sales process needs,
technologies will surface in 2003/04 that comprise extended relationship management (XRM) collaboration facilities and process workflows for those participating in the sales
activity (e.g., partners, employees, customers, suppliers). Doug Laney

Shared Warehouses: The Tricks Are in the Details

An emerging trend in logistics outsourcing is the concept of shared or public warehouses. But it is a mistake to believe that industry-oriented warehouses guarantee success. To optimize and average
out seasonal fluctuations for manpower, space, movement capacities, and IT resources, it is recommended to have customers from different vertical industries with different seasonal
. A second cornerstone is the use of a sophisticated “client-aware” warehouse management system to ensure customer privacy and prevent mix-ups of goods between different
customers. Ruediger Spies

EAI: Risking Spaghetti Code Outside the App

Linking enterprise applications is a requirement for organizations of all sizes. But many companies do not opt for a long-term approach to EAI and develop many point-to-point connections among
different applications, basically externalizing internal spaghetti code to the infrastructure layer. Companies are advised to make a strategic assessment and redirect their EAI
efforts by taking into consideration the long-term effect of near term “quick fixes.” Ruediger Spies

Unfulfilled CRM Promise: The 360-Degree View

The saying that CRM systems enable a “360 degree view of a customer” is still unfulfilled. CRM systems do not have the depth of information needed to know everything about the costumer’s
transaction history. CRM systems concentrate on contact management, call center organization, segmentation, marketing, and campaign management, but there are many other things buried in ERP and
other operational systems that never make it to the CRM information chain (payment behavior, DSO, credit risk management, reclamation, wrong deliveries, delivery accuracy, etc.). A true
360-degree view can be achieved only with tight integration between administrative systems and CRM systems
. One system (vendor) alone is not able to handle the 360-degree promise.
Ruediger Spies

Who Can Manage the Real-Time Enterprise?

Many vendors (especially ERP, CRM, SCM, and analytics vendors) claim to be able to deliver the ultimate software to manage an enterprise in real time. But what does real-time management mean if the
travel expenses and other booking are done only at the end of the month? What about the link between real-life events (in a warehouse) and administrative ERP systems? The only company that could
claim to have all components (i.e., vs. providing integration to other vendor components) for real-time enterprise management is Invensys/Baan. Traditional Invensys delivers the shop-floor
components (with Foxboro, Wonderware), and Baan delivers the administrative components directly linked into the shop-floor control systems. The bottom line is that everybody
talking about real-time enterprise management needs to explain what “real time” means in context. Ruediger Spies

Early Market Leaders in XRM

Currently, although vendors like PeopleSoft, SAP, and Siebel are closer than others, the market offers no inclusive commercial platform for operationally, collaboratively, and analytically
managing all relationships with all major business partners
(e.g., partners, employees, customers, suppliers [PECS]), across all channels and touch-points (e.g., storefront, Web, e-mail,
telephone) and throughout the entire customer life cycle (i.e., extended relationship management – XRM). By 2004/05, businesses with stove-piped relationship management applications will suffer
expensive, ongoing application integration efforts to coordinate them. Aaron Zornes

ERP Upgrade – Reasons Not To

Since many European enterprises do not perform timely ERP upgrades, META Group dug deeper to ask why. Typical reasons are: 1) time and cost related to upgrades (86%); 2) loss of specific developed
business processes (35%); 3) potential interrupt of system support for the business (34%); and 4) invisible added-value. Reasons 2 and 3 should trigger alarms in IT organizations, because they
signal that proper contingency planning is not being done. Ruediger Spies

ERP: Why Upgrade?

Many enterprises postpone ERP upgrades until vendors no longer support the installed release. Recent European META Group research rates the prevalence of reasons for ERP upgrades:
upgrading to newest version of ERP infrastructure (75%); optimization of business processes through new ERP functions (65%); no vendor support for used release (61%); additional vertical functions
(58%); consolidation (54%); and usage of additional cross-enterprise business processes (52%). Ruediger Spies

ERP in Central Europe: Still Not Mature

The ERP market is often seen as a mature market. But the latest META Group research shows that more than a quarter (28%) of enterprises above 200 employees in central Europe do not yet have an ERP
system. Just 48% have completed an ERP project, while 18% plan for an upgrade or extension. This demonstrates that there is still opportunity in the ERP market and that vendors
focused on the mid-market (SAP, Oracle, PeopleSoft, Microsoft) will see returns from their efforts. However, margins in the mid-market are much lower then in the large-enterprise business.
Consequently, the go-to-market-model must change to an indirect sales model with resulting lower margins for the vendors. Ruediger Spies

Used by permission of Doug Laney, META Group, Inc.
Copyright 2003 © META Group, Inc.

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Doug Laney

Doug Laney

Doug Laney, Vice President and Service Director of Enterprise Analytics Strategies for META Group is an experienced practitioner and authority on business performance management solutions, information supply chain architecture, decision support system project methodology, consulting practice management, and data warehouse development tools. Prior to joining META Group in February 1999, he held positions with Prism Solutions as a consulting practice director for its Central US and Asia Pacific regions, as a methodology product manager, and as a consultant to clients in Latin America. With data warehouse solution involvement in dozens of projects, his field experience spans most industries. Mr. Laney's career began at Andersen Consulting, where he advanced to managing batch technical architecture design/development projects for multimillion-dollar engagements. He also spent several years in the artificial intelligence field, leading the development of complex knowledgebase and natural language query applications. Mr. Laney holds a B.S. from the University of Illinois.

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