ERP is Dead, Long Live ERP
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Peering E d i t o r : C h a r l e s Pe t r i e • p e t r i e @ s t a n f o r d .e d u
ERP is Dead, Long Live ERP
Paul Hofmann • SAP Labs, Palo Alto
S
ome mature information technologies, such runs on PCs or laptops.
as enterprise resource-planning (ERP) sys- I see big technology and business model
tems and relational databases (RDBs), are changes coming for ERP. New technology trends
now undergoing commoditization, much like such as high-performance computing, perva-
what happened in the automotive and chemical sive connectivity, Web services, and SOA will
industries over the past 15 years. This trend is affect the front end as well as the back end of
accelerated by reduced IT spending because of ERP. For convenience, I use ERP as synonymous
slowing economic growth. for back-end business apps because ERP is the
In such an environment, market leaders in main, and most important, back-end applica-
computing, networking, and telecommunications tion. Indeed, most analysts consider new apps,
need to increase investment in disruptive markets such as supply-chain management (SCM) to be
and business models. Growing in a down market an extension of ERP.
will require innovation; leaders must pick the
right breakthrough technologies from current Reliable Back-End Business Apps
trends, including high-performance computing, ERP systems are the well-structured, reliable IT
pervasive connectivity, Web services, and ser- backbones that run the financials, human re-
vice-oriented architecture (SOA). sources, and logistics of Fortune 500 companies
Software makers face many business chal- worldwide. ERPs are large and complex — SAP
lenges in this situation, aggravated by software- ships more than 300 million lines of code in
as-a-service (SaaS) players moving into front-end its business suite, for example — but they use
enterprise applications. Yet, various technologies proven technologies to reliably execute well-de-
do have the potential to fuel innovations as the fined process flows in the form of very secure
future of ERP applications unfolds. transactions. The resulting data are stored in
RDBs and can be automatically monitored and
Current Situation audited to check for standards compliance, in-
Information technologies and systems typically ventory levels and values, and so on. ERPs can
mature and undergo commoditization as a con- scale to automate the millions of transactions in
stant stream of new technologies and applica- the retail banking business. The technology is
tions with disruptive potential emerges. Some mature and changes at a slow rate. Indeed, an
15 years ago, for example, PCs and high-per- ERP’s average lifecycle is about 15 years.
formance Windows NT and Unix servers re-
placed IBM’s water-cooled computers. The first User-Centric Front-End Apps
business applications for accounting and finan- In contrast to the structured back-end ERP, en-
cials ran on mainframe host computers, but terprises also employ highly agile and adaptive
standardized client-server ERP products with front-end software for customer-relation man-
company-specific adaptations replaced these agement (CRM), mobile maintenance, call-cen-
tailor-made legacy host applications. The typi- ter applications, email, project planning, and so
cal ERP system runs databases and applications on. This user-centric software, which often runs
on back-end servers while the user interface on mobile devices, uses lightweight technologies
80 Published by the IEEE Computer Society 1089-7801/08/$25.00 © 2008 IEEE IEEE INTERNET COMPUTINGERP is Dead, Long Live ERP
such as Ajax, scripting languages, might happen, we must examine tuned down to avoid overheating.
the Resource Description Framework some key technology trends that are Also, compilers can’t currently deal
(RDF), and representational state relevant for ERP. with locality and distance. The MIT
transfer (REST). These applications Computer Science and Artificial In-
are collaborative, interactive, and High-Performance Computing telligence Laboratory’s Multicore
exception-driven. High-performance computing is Computer Project is pursuing a vi-
Rather than predefined business one of the most important technol- sion designed to address that chal-
processes that must be audited later, ogy megatrends. By 2010, we’ll see lenge by bringing space into the
they feature ad hoc, informal pro- 10 to 100 cores per server along digital abstraction.1 This highly
cesses that are highly variable. These with 100-TByte memory available interdisciplinary project intends to
front-end applications have very for business apps. The big driver find a way to digitize space and re-
short life cycles — like throwaway for high-performance computing is think all layers of computer science
software — and consistency isn’t the multicore parallel computing. This (operating system, hypervisor, and
foremost goal. Consider the Google will change the IT landscape like the so on) in light of this abstraction.
window of the Web: rather than a PC’s introduction did to the comput-
time-wise consistent picture, search er landscape, which was dominated Web Services and Multicore
results show snapshots of the Net by water-cooled host machines. Business applications will be in big
from different times. Search results So far, software and hardware trouble if they don’t take advantage
with content from the Super Bowl producers have lived in close sym- of multicore. A logical place to le-
and CNN are always up to date, for biosis. Each new software release’s verage it is in Web services, which
example, but papers at .edu domains appetite for performance has been offer a natural granularity for par-
generally take a while to be included fulfilled by faster computers with allelization of business software.
in the index, and updates at some more powerful processors. They’re well-suited to use multicore,
science sites take about two months multithread processors effectively.
to appear in Google searches. No More Free Lunch Business applications will be able
Enterprises clearly couldn’t accept Soon enough, this will change forev- to parallelize service execution by
such inconsistency for accounting or er, and software companies won’t be detecting the scope for parallelism
human resources. In fact, one of the able to take advantage of Moore’s law automatically. They should also be
big contributions that ERP systems for “free” any longer. The aggregate able to achieve scalability via dis-
have made to corporate productiv- processor performance will jump tributed instances of individual logi-
ity is a globally consistent view of a orders of magnitude, but the clock cal services.
company’s financials and inventory speed of each single core will max
at any time. out because of the heat that would be SOA and Web Services
Front-end applications’ limited generated by further increases. Let CIOs Sleep Better
reliability can lead to the loss of data Software must take advantage of Big corporations typically spend
and transactions, but that isn’t gen- the massive parallelism that multicore between 1 and 5 per cent of their
erally a big deal for Web applications. chips offer or else it won’t run faster revenue on IT. Maintenance is a pri-
If Amazon.com loses an order, for on the next-generation chips. Recog- mary cost factor because necessary
example, the user can simply reenter nizing this fact, software companies updates tend to be expensive as IT
it. Most of us didn’t even realize that are now talking to chip and hardware engineers must adapt all past cus-
Amazon was down for several hours producers to understand how to design tomizations and add-ons to work
on 15 February 2008. for multicore processors and parallel- with new versions. Given that test-
ize applications to increase perfor- ing, alone, after such updates costs
Relevant mance on future multicore chips. the Fortune 500 companies billions
Technology Megatrends Many open questions face re- of dollars, it would be preferable to
The flagship of the new generation searchers and developers, including partition ERP systems into smaller
of front-end software, Web 2.0 rep- how to program multicore. Off-chip building blocks. Updating ERP busi-
resents the fastest growing and most memory bandwidth is a big issue. ness functions separately would lim-
innovative part of the IT industry. How can you guarantee cache co- it complexity, and reduce ownership,
How can business software providers herence across, say, 1,000 cores for innovation, and maintenance costs.
bring together these disparate front- symmetric multiprocessing (SMP)? SOA lets developers partition and
end and back-end technologies and Energy also enters as a new con- decouple applications. It provides a
architectures? To understand what straint as cores might need to be bridge between incompatible tech-
JULY/AUGUST 2008 81Peering
nologies, thus increasing interoper- tional functionality and gluing the tomer bill at any time by adding cus-
ability — a topic that’s high on the services together into larger build- tomer master data (address, rate, and
list of things that keep CIOs awake ing blocks. Such languages will also so on) to the usage data accumulated
at night. bridge the ERP and Web 2.0 worlds. by a given thread.
The key is to invite the best brains to The thread agility of some concur-
Adapt or Die program business apps by running rency platforms, such as Microsoft’s
Business processes become less static dynamic scripting languages on the Robotics Studio with its concurren-
in the fast-changing business world. ERP stack. cy and coordination runtime (CCR)
A shorter software life cycle would Dynamic scripting languages and decentralized software ser-
let companies adapt applications to also offer the benefits of high- vices (DSS) features, support busi-
changing business environments performance computing to a broad ness applications with long-living
without having to wait for new up- community of software developers threads. Threads can go to sleep on
dates and for their IT departments to without knowledge of implementa- disk and be executed at any time
implement the changes. It currently tion details. The Multicore Asso- later in memory. Such concurrency
takes several months to change busi- ciation’s Multicore Communications platforms enable massively parallel
ness software — often longer than it API (MCAPI) working group propos- computing: as one simulation of the
takes companies to change the busi- es a Ruby API for its MCAPI stand- US pharmaceutical supply chain il-
ness processes. ard (www.multicore-association.org/ lustrated, they can handle more than
Web services are ideal for letting workgroup/comapi.php). 5 Tbytes of data created each week.2
developers adapt ERP to fast-chang- ERP will need a multithreading
ing business processes. Web services Real-Time ERP stack for massive real-time service
can be orchestrated to create multi- One way to rejuvenate ERP would be execution, like at Amazon and Goog-
service business processes that con- to add a real-time stack for massive le, as well as for connecting to sensor
nect via SOA to the robust, reliable parallel real-time service execu- networks, complex-event processing,
back end, thus adding easy-to-use tion, like those used at Amazon and real-time billing, and so on. Intro-
additional functionality. Google. Many future ERP enhance- ducing a multithreading stack for
ments will also need real-time data business applications will take ad-
Two Birds; One Stone processing — handling hundreds of vantage of future quantum leaps in
Web services can take advantage of thousands of events per second to, chip performance by transitioning to
multicore computing. At the same for example, integrate sensor data, Web services that naturally partition
time, they let us build applications deliver business intelligence, run the software into parallel threads. It
that adapt easily to changing busi- complex event processing, or com- isn’t obvious how to transform exist-
ness environments. plete real-time billing (phone com- ing ERP platforms to multithreaded
Web services can also help as- panies) and meter reading (utilities). models, execute suitable primitives
semble full-blown business appli- in multiple threads, add a new mul-
cations that will initially be for the Multicore Is ticore stack, or reengineer the ex-
small-and-medium business market. a Disruptive Innovation isting platform. Many companies,
Yet, assembling complex apps from Decentralized real-time information including SAP, have these types of
Web services won’t be easy. How will storage is an immediate application projects under way. Regardless of
users find the right services from of multicore multithreading. Consid- how it is accomplished, transform-
among hundreds or perhaps even er, for example, the billing process at ing existing business applications to
thousands in a repository? Technolo- most telecommunications providers. multithreaded models will be a very
gies such as semantics will help to At the end of each month, it takes challenging task.
discover and orchestrate these ser- days to build the customer bills by
vices. When prefabricated services searching through and aggregat- Mobile Computing
don’t deliver the desired function- ing data from the massive amounts Pervasive connectivity and ubiqui-
ality, developers will have to adapt of customer usage data stored in tous device-to-device connectivity
them and glue the services together huge RDBs. Defining one thread per is yet another megatrend. Estimates
to use them as bigger building blocks. customer lets the providers add us- suggest that there are some 2 billion
Dynamic scripting languages such as age information after each call. The mobile users worldwide — more than
Ruby will play an important role as threads can be distributed because 20 percent of the Earth’s population.
they enable modifications to services they’re independent of each other, Wireless and embedded computing is
in a declarative way, defining addi- and the provider can trigger the cus- becoming mainstream as handhelds,
82 www.computer.org/internet/ IEEE INTERNET COMPUTINGERP is Dead, Long Live ERP
wearable systems, appliances, cars, will be able to use Web services to veloped by SaaS vendors. The high
medical implants, and other devices orchestrate new business software. operating margin for companies such
with considerable computing power Dynamic scripting languages such as Salesforce.com, WebEx, Workday,
continue to make our lives easier, al- as Ruby will play an important role and Amazon (in its role as business
most without our noticing. in adapting raw Web services to us- service provider) comes from the fact
Ubiquitous and mobile com- able building blocks and building that they have no incremental costs
puting will connect the Internet to add-ons for classical ERP. once they’ve built the software and
objects that move along the sup- ensured that it runs on the platform.
ply chain and throughout everyday Long Live ERP Open source companies have shown
life. (We’ll be able to Google our lost Business software companies will that, even for software installed on
keys.). Mobile phones will dominate push the edge of the classical large- premises, the revenue doesn’t have
among Web-access devices, spurring scale online transaction processing to come from selling the applications
myriad user-centric apps running (OLTP) ERP as they continue to run but rather from offering the services
on dedicated hardware. The iPhone larger numbers of transactions in to install, configure, and run them.
and SAP’s collaboration with RIM areas such as banking and govern-
to access enterprise apps via Black- ment. With an ERP that handles mil- Getting More Strategic
Berry are just the beginning. The lions of transactions per second and On the customer side, IT departments
traditional model of Web access via writes about 2.5 Tbytes per second to will need to focus less on running
a browser running on an Intel chip disk, Deutsche Postbank has reached data centers and more on how to
with Microsoft Windows is losing the limit for bank retail business strategically support their compa-
importance. Most new Web users
will be using mobile phones to ac-
cess the Web. I think that’s why Mi- Dynamic scripting languages such as Ruby
crosoft would like to buy Yahoo, and
it’s another reason that lightweight will play an important role in adapting
open browsers such as Safari are
likely to see tremendous growth in raw Web services.
usage among developers.
The Mobile World automation with existing systems. nies’ businesses. For instance, Intel’s
Will Conquer from the Front End Automating big banks, such as Ci- IT chief architect Gregg Wyant is
Pervasive computing will accelerate tibank, will be a future challenge for responsible for all IT-related innova-
mobile usage of lightweight business large-scale OLPT ERP systems. tions, and he is currently overseeing
applications in the front end. Mo- Thanks to these mega ERP appli- Intel IT’s plan for consolidating from
bile devices bring together Web 2.0 cations and the long life cycle, we’ll 117 to 8 data center locations world-
computing and front-end apps. Take, see ERP for a long time to come. Af- wide. All big corporations push vir-
for example, Ajax and Safari, which ter all, some chemical companies still tualization to take advantage of high
business-application companies as use 30-year-old host COBOL software performance computing and cheap
well as consumer-application compa- running on IMS for parts of their ac- large-scale information stores. Run-
nies use to create software as diverse counting, such as calculating inven- ning their many (legacy) back-end
as mobile CRM, mobile maintenance, tory values for chemicals produced applications in virtual environments
and mobile inspection (quality, safe- in complex networks of interlinked will help companies reduce costs and
ty, sanitation, etc.) for hotels, retail, bills of materials. risks and gain manageability.
hospitals and airlines.
Web services and multicore are Disruptive Business Models Information Workers
among the most important enablers The classical ERP revenue stream Will Take Over
for these developments. Web ser- is changing as disruptive business In addition to hardware and software
vices and SOA will not only help re- models are emerging. Business soft- consolidation, IT departments will
duce maintenance costs for classical ware makers currently derive their undergo another big transformation
ERP but also make it more flexible revenue from license sales, profes- as companies need less support from
so that it can adapt to fast-chang- sional services, and annual mainte- them. Business process (or ecosys-
ing business processes. Expert busi- nance. In the future, they’ll have to tem) experts will adapt their corpo-
ness users and ecosystem developers look to the new business model de- rate apps with the Web services they
JULY/AUGUST 2008 83Peering
find at service parks such as Sales- take advantage of massive power on
force.com’s AppExchange or SAP’s the back end, enterprise IT is likely
Enterprise Service Repository.3 to be in for radical changes.
For the next step, Web-scale archi-
tectures like those offered by Google References
and Amazon will see wide use not 1. A. Agarwal et al., “The Angstrom Mul-
only for consumer applications but ticore Computer Project: Bringing Space
also for cloud computing and busi- into the Digital Abstraction,” presented
ness-process outsourcing. Amazon at the 1st Ann. Industrial Affiliates Pro-
Services already runs the e-business gram Conf., MIT, 2008.
for America Online, Target, and oth- 2. J.R. Williams et al., “Modeling Supply
ers. Amazon handles inventory and Chain Network Traffic,” RFID Technology
runs fulfillment and customer ser- and Applications, S.B. Miles, S.E. Sarma
vices. For example, visitors to Tar- and J.R. Williams, eds., Cambridge Uni-
get.com will see the familiar Target versity Press, 2008, p. 87; www.cambridge.
bull’s-eye logo, but Amazon is making org/catalogue/catalogue.asp?isbn=97805
it work (www.seomarketingresearch. 21880930.
com/reverse-outsourcing/). 3. C. Petrie and C. Bussler, “The Myth of
Open Web Services: The Rise of the Ser-
vice Parks,” IEEE Internet Computing,
I n the near future, we’ll see ERP
systems run in the cloud even for
multibillion-dollar companies. In-
May/Jun 2008; http://www-cdr.stanford.
edu/~petr ie/on line/peer2peer/ser v ice
parks.pdf.
tel, for example, intends to achieve
a net present value of US$550 to Paul Hofmann is vice-president of research at
650 million and overall cost-avoid- SAP Labs, Palo Alto. His research inter-
ance savings of US$1 billion or more ests include IT productivity, supply-chain
through its data center efficiency management, artificial intelligence, se-
program (www.intel.com/it/apr.htm). mantics, and Web services. Hofmann has
The three underlying tenets are: a PhD in Physics from Technical Uni-
standardizing processes and design versity at Darmstadt, Germany. He is a
specifications, increasing compute member of the IEEE and has written sev-
utilization, and reducing data cen- eral books on supply-chain management.
ters through consolidation. Contact him at paul.hofmann@sap.com.
One day, some ERP instances (or
even one) will be available as SaaS
for the Fortune 500 companies, al-
though that will take a while. After
all, it took Unix about 35 years to
make it from inception to running
shop floors, planes, power plants,
and so on.
But two strong forces are com-
ing to bear. From the bottom, the
economics of multicore technologies
are making SaaS and cloud comput-
ing the inevitable winners. From the
front end, Web 2.0 for the enterprise
will let smart people script services
for special purposes that connect to
the cloud and run on mobile devices.
With people expecting ERP at
their fingertips, using their PDAs to
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