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A company software portfolio founded on Service Oriented Architecture (SOA) principles could provide more flexibility and less cost and risk. What do you say? Send us your comments here

In the never ending debate about ERP versus best-of-breed solutions, and the value of enterprise software generally, a recent article in MIT’s Sloan Management Review casts more doubt about the idea of a single enterprise system to manage the supply chain.

The problem is complexity. The greater the scope of a single dominant system, the greater the complexity of stitching the entire system together across multiple processes.

“These massive [ERP] programs, with millions of lines of code, thousands of installation options and countless interrelated pieces, introduced new levels of complexity, often without eliminating the older systems (known as “legacy” systems) they were designed to replace,” says Cynthia Rettig, in the Sloan Review. “In addition, concurrent technological and business changes made closed ERP systems organized around products less than a perfect solution: Just as companies were undertaking multi-year ERP implementations, the Internet was evolving into a major new force, changing the way companies transacted business with their customers, suppliers and partners.”

Notes the Wall Street Journal’s Ben Worthen, “ERP systems are supposed to simplify business by giving companies systems with which store and track all their information– everything from employee records to customer orders to product inventory. Yet according to one study cited in the article, 75% of ERP projects are failures — they either never worked, didn’t work as intended, or were so unhelpful that different business units went out and bought their own alternative systems."

Some observers actually predicted this eventual state of affairs. In the late 1990s, an analyst at Forrester Research urged CIOs just implementing ERP at their companies to already consider their migration strategies to the next thing.

“In the end, ERP systems became just another subset of the legacy systems they were supposed to replace,” Rettig writes.

Can SOA Come to the Rescue?

In theory, a company software portfolio founded on Service Oriented Architecture (SOA) principles could provide more flexibility and less cost and risk.

In an SOA-based structure, different applications from ERP vendors, best-of-breed providers, and internally developed solutions, can interact at a more independent level, increasing flexibility and reducing complexity. The system does not have to work as a single, integrated whole, but, to use a perhaps overused analogy, more like a series of interchangeable Lego blocks that can be changed over time without disturbing the connected parts.

“The hallmark of Service-Oriented Architecture — one might reasonably argue its entire raison d’être — is the fundamental modularity of its software business processes” Rettig adds. “A self-contained business process adopts parts of the functionality from multiple enterprise applications to automatically complete a set of tasks. For example, a single business process might begin with an order from a customer on the Internet in a web services system and send it to manufacturing in an ERP system. The same business process would set up delivery in a logistics system and then send all the relevant information to billing in an accounting system as well as a customer relationship management system. Companies would build (or purchase) business modules for their core processes.” (ERP vendors like SAP, Oracle, Infor, Microsoft and others have all been building SOA-based platforms for their enterprise solutions.)

That sounds like a much better world than the one most companies find themselves in – but getting there won’t be easy. First, among both ERP and best-of-breed vendors, there is wide disparity in the level of real SOA-ness in the solution technology base. Second, most corporations themselves are simply very early in the SOA journey. Rettig cites recent research that found only 6 percent of companies have made it to the more advance levels of SOA infrastructure – a percentage SCDigest suspects is actually exaggerated. (See Is Service-Oriented Architecture (SOA) Technology the Wave of the Future?)

And by the way, Rettig also cites the mountains of evidence that the IT function is too often disconnected from the business – as if that’s a surprise.

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