Published: 27 September 2001
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...
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