Enterprise Solutions

First Published: Hispanic Business
Date Published: October 2004
By Kevin Savetz

Major business-enterprise software makers such as IBM, Microsoft, and SAP have begun aggressively trying to tap the growing mid-size company market amid increasing competition and technological advances. As a result, the array of software options for mid-market companies has blossomed from applications for niche vertical markets to middleware that lets disparate systems work together.

Mid-size businesses are increasingly an objective for software publishers in part because there isn't a dominant vendor. When you think operating system, you think of Microsoft Windows. Yet for business infrastructure software, "No one has really cracked that market yet - there really isn't a dominant vendor," says Joe Wilcox, senior analyst at Jupiter Research.

Large enterprises have generally made their investments in CRM applications, supply chain management software, and servers, so software publishers are looking downward to mid-size businesses that haven't adopted those technologies. Microsoft, for example, spent $2 billion in its last fiscal year on product development and marketing for this particular market, and the company forecasts that in the next four years, the market for business solutions products will be bigger than the market for its Office product.

Applications Go Micro-vertical

On the enterprise side, businesses increasingly want to depend on just one or two software vendors to meet all of their needs. "A lot of companies are trying to reduce the number of technology providers that they work with, so they need to standardize the type of applications and the underlying application platforms," says Albert Pang, director of applications research at IDC. Because of the expense and difficulty of maintenance, it no longer makes sense to support multiple technology platforms or multiple applications. "Companies have been using a hodgepodge of applications from third-party providers or homegrown, internally developed products," which is inefficient, he says.

While finding an off-the-shelf application to support all of a company's business niches might seem unlikely, another trend a proliferation of "microvertical" enterprise applications could mean there's software available no matter how obscure your niche. "Just name the vertical and someone has a solution for you," Mr. Pang says.

"There has been as increase in industry-specific focus," says Bill Wohl, vice president of products and solutions public relations at SAP. "When we can talk to a company in the language of their business, that gives us a distinct advantage."

Ready-made applications can help businesses more effectively deal with increasing regulations and marketplace demands. "We have seen companies more under pressure to deliver technology solutions because their customers require them to do something," Mr. Wohl says. For instance, Wal-Mart has demanded that its suppliers begin using radar-frequency identification. "This creates a cascading round of technology improvements," he said.

Or, a company may choose not to invest in installation of new software at all. Application Service Providers (ASPs) allow a company's employees to access software that a company doesn't own or maintain. Instead, the software is outsourced, available over the Internet. With an ASP, technical support, upgrades, and licenses aren't an employer's problem. The fees for ASP software are typically factored on a per-seat, per-application basis. So, for example, if an employer needs temporary access to 10 seats of CRM software for a short-term project, it can simply be accessed via the Internet eliminating an investment of thousands of dollars in software that might not be used ever again.

Web Services

The way in which enterprise application software interacts with other software also is changing. One area of transformation is "Web Services," a broad term for middleware that assists information exchange over the Internet. "We are in the second generation of taking advantage of Web technology to do business-to-business communication," says Bob Sutor, IBM's director of Websphere Foundation Software.

Like surfing the Web with a browser, standards-based Web Services let applications easily exchange information, shielding users from details of behind-the-scenes information transactions.

"Within your company you may have multiple factories, multiple warehouses. Some use older systems. Web Services better enable the business use of these older systems," Mr. Sutor says.

Web Services work atop existing systems, such as inventory and supply chain applications, to smooth over protocol differences.

When two companies merge, for instance, Web Services can link their disparate inventory systems. "If you've already paid for something, it's near and dear to your heart," he says, adding that Web Services "leverage the applications and data you already have installed."

The benefit of Web Services isn't necessarily limited to internal processes. An enterprise could allow companies in its supply chain to see real-time inventory, employees to look up their own payroll information, and other resource-saving transactions that can add up to bottom-line savings.

Once applications are communicating with one another via Web Services, a business can coordinate those communications.

Process Execution Language

Another area of growth is a standard called Business Process Execution Language (BPEL). BPEL is an XML-based language for standardizing processes: With it, an employer can create a workflow for interconnected applications.

When processing a purchase order, for example, BPEL can automatically run a credit check on one external system, check inventory on another system, and, if necessary, automatically connect to another vendor to order new inventory.

BPEL is a cross-platform standard supported by multiple vendors. It "assigns what people are doing in IT much more closely with what people are doing in business. There have been other attempts to standardize workflow various proprietary systems from Microsoft and IBM. This, most people would agree, has the best chance of success," Mr. Sutor says.

"If you're not already looking at Web Services and service-oriented architecture, prioritize where you should start. Look for one or two pilot projects," Mr. Sutor advises. If a company already has started to deploy those, he advises going to the BPEL system.

As more companies start to support BPEL in products, companies that "have begun experimenting with Web Services really should think about how those services can become more interdependent," Mr. Sutor says.

Still, while Web Services and BPEL hold promise, there is significant room for them to mature and improve. For example, criteria specific to a certain industry or geographic region can prevent BPEL workflows from being adopted on a horizontal basis.

Ultimately, says SAP's Mr. Wohl, "The concept that solutions can mature to the point where they can seamlessly integrate into each other is a promise that we all in the industry are working on."

Articles by Kevin Savetz