Gartner Research

The Transition to ERP II: Meeting the Challenges

Published: 27 September 2001

ID: G00101237

Analyst(s): Brian Zrimsek, Yvonne Genovese, Bruce Bond


Management Summary The next act in the evolution of enterprise resource planning (ERP) is under way. As enterprises grapple with transformation from a focus on internal resource optimization to a new focus on process integration and external collaboration, the value of the traditional ERP paradigm is being questioned and the very understanding of ERP is undergoing a transition. A business revolution is occurring -- enterprises are transforming themselves from traditional, vertically integrated organizations into multienterprise "recombinant entities" that execute core-competency-based strategies. This will render the majority of today's ERP applications not only obsolete from an architectural standpoint, but also inadequate from a business relevance perspective. The result is the emergence what Gartner has termed "ERP II," which expands beyond enterprise-centric optimization and transaction processing to a new focus on improving enterprise competitiveness. This is accomplished by forging strategies and deploying applications that enable the enterprise to share information and collaborate in communities of interest -- to participate in collaborative commerce (c-commerce), the "glue" of virtual enterprises and the emerging model for e-business. As ERP vendors cope with the redesign effort, technological issues and vertical-industry initiatives, their customers will see greater value from ERP systems -- but will also see further retrenchment in the ERP technology market. User enterprises, for their part, must plan to evolve to ERP II, but the rules of the game are different and more complex with than they were with traditional ERP systems. This Strategic Analysis Report examines the evolution and shortcomings of traditional ERP systems, and defines the features and functionality of the ERP II model that is emerging to address today's business environment. It also examines the drivers behind this transition, and the challenges it will pose to both vendors...

Table Of Contents
  • Management Summary
  • Introduction: What ERP II Is, and What It Is Not
    • ERP II Emerges
    • ERP II Defined
  • Factors Driving the Rise of ERP II
    • Traditional ERP Hits the “Trough of Disillusionment”
    • The Net-Liberated Enterprise Emerges
    • C-Commerce Becomes the New Business Model
  • The Challenge for Vendors
    • Product Enhancements and the R&D Balancing Act
    • Componentization and the Shift From Master to Partner
    • A New Focus on Industry Domains and Process Integration
  • The Challenge for Enterprises
    • Balancing Single-Vendor-Centric Customization vs. Best-of-Breed Integration
    • Managing Deployment While the Rules Are Changing
    • Dealing With the Resource Squeeze
    • Balancing Technology Investments
  • Planning for the Evolution: Action Items for Enterprises
  • Acronym Key

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