FC Data Logistics (Part 2) - an aside prompted by SAP  

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Data Logistics (Part 2) - an aside prompted by SAP

SAP poised to make on-demand CRM play - No big surprise here...

The "business software delivered via ASP"-space has an interesting dynamic these days. The space has latterly become known as "on-demand" software, a term created by either IBM, salesforce.com, or BuildOnline - the jury is still out on that one... Even more recently there has emerged yet another term - "SaaS" - or Software as a Service - just in case anybody was getting the hang of things! :)

There are a limited number of emarketplace and collaboration software providers, founded around the turn of the century, that have persevered and gained strength during the dot-com bust period and the following gradual recovery. Most of these are vertically-oriented to some degree and serve specific industries or geographies.

Since probably 2003 you also see a lot of activity by the major ERP and CRM vendors trying to reach into this space from their entrenched positions within the enterprise. Sort of a "reaching-out" through the firewall trying to capture market share in the inter-enterprise supply chain management space.

There is an inherent tension here between the hubs - which take "honest broker" stances as third party marketplaces for data - and this "reaching out" via the ERP installations - which are an extension of the commercial interests of the business running the ERP. My take on the tension is that there is a economic requirement for both models. Clearly the business systems supplied by the ERP vendors have an important place and clearly they must be open and integration-capable so that business data is free to flow in and out from the supply chain in real time.

And clearly - unless there is to be an incomprehensibly huge proliferation of point-to-point integrations throughout the global supply chain - there is a requirement for hubs to direct traffic, take care of translation and transformation as required, and ensure delivery of data between trading partners. The hubs need to be independent. They should not be associated with any particular commercial interest other than taking care of the logistics of delivering data where it needs to be, when it needs to be there. The complementarity between the hubs and the ERPs comes because, more often than not, the delivery destination for these messages is SAP, or Oracle, or JDE, or Peoplesoft -- you get the drift.

Interestingly, in the last year or so you also begin to see a whole raft of new entrants coming in at the very low end of the functional scale supplying onDemand business applications. This is the result of advances in the technical environment of the web such as maturing J2EE and .NET development environments, and the advent of AJAX toolkits which make it ever easier to develop an entry into the space.

Some of these onDemand applications have been mentioned in this blog in past entries (see the "More Free Collaboration" series of posts). What these guys mostly do not have are the significant functional specifications developed by entrenched hubs over the years. But the creation of what is in effect an ecosystem of small scale challengers has a commoditising effect.

The positive of this effect is that it creates upward pressure on the existing players - meaning that those which continue to innovate rapidly will see attendant rapid growth and will displace those hubs which are only treading water. My prognostication is that the "survival of the innovators" show will be playing out in doubletime across the onDemand space in the months and years to come!

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