Does the World Need Another ERP Suite? iCAP Thinks So

ERP software is not exactly a hot topic any more–or is it? The conventional wisdom is that the ERP market is a “mature” one, dominated by a well-defined list of vendors that have just about tapped out anyone and everyone who is remotely interested. ERP news is largely about new versions and enhancements and, in recent years, about acquisitions–hostile and otherwise–and the occasional major glitch or faux-pas in implementations.

So, you might be thinking, what might compel a company to launch a new ERP product today? Does the world need another ERP vendor? Yes, according to Carlos Aguado, CEO of CAP Computer Consultants/iCAP International.

iCAP is a 23-person, privately held company, which grosses about $1.8 million per year in revenue, located in Kensington, Maryland. Most of that revenue, until now, came from its services/staffing business. But in 2001, iCAP decided that the aging ERP systems in place today are no longer capable of serving business needs that have changed substantially over the past decade. Aguado says that the “established” ERP market is “software that has been around for 15 years or longer. It’s old technology. These systems do not have the graphical user interface that accommodates the population of people who actually use these systems. Today, the major vendors are trying to make their software do Web services, because the customers want their workers to be able to talk to their systems not with EDI but with real, interactive sessions, and they want to be able to communicate with other vendors in their supply chains. So every ERP vendor is trying to do this, but it very costly to build this capability on top of old technology.”

A recent white paper published by iCAP summarizes this position by arguing that all first-generation ERP vendors are currently racing to convert their systems to object-oriented, Internet-based, Web browser-native paradigms, “a task that is a daunting effort for these older packages, whose internal source code is, fundamentally, unsuited to the Web.” The company also maintains that these systems do not have the ability to make use of the native functionality of the Web browser, with true integration between the ERP application source code and the “object-oriented JavaScript code engines that allow Web browsers to become a functional extension of the ERP application rather than a newer form of a ‘dumb terminal’ that simply presents old screen formatting in a new way.”

Terms like “Web-enabled” and “browser-enabled,” says Aguado, simply mean using the Web browser to present in a prettier way text that was originally designed for older, green-screen terminal sessions. True conversion of these again ERP platforms, he maintains, will take several years to complete for those vendors who are embarking on that path.

With this in mind, iCAP set out to build a completely new browser-based ERP suite called Ximple, and, after looking at several possible platforms for the product, chose the iSeries using WebSphere.

In 2004, Aguado says, the company made the decision to focus its product and marketing efforts on the first of what will ultimately be several vertical market segments: the wholesale industry. Other industries will follow later this year, but Aguado was not willing to announce which ones at this time.

Aguado purports that Ximple is the market’s first completely Web-based ERP solution that offers customers the option of implementing the software as a Web service over the Internet or as a drop-in solution that can run on a server. “In both cases, all end-user and administrator access to product screens is done via a Web browser.”

Ximple, with an entry-level price tag of $12,500, requires an AS/400 or iSeries server with at least 600 CPWs of raw performance, 1 GB of main memory, OS/400 V5R2 or higher, and WebSphere Express 5.1 or higher, and, and is comprised of several different modules:

• Accounting: with integrated General Ledger, Accounts Receivable, Accounts Payable, and banking features (all of which are Sarbanes-Oxley compliant).
• Warehousing: for management of warehouse activities and the tracking of shipping and receiving. This module can also be used to create pick tickets, packing slips, and shipping documents, and can be integrated with a variety of hand-held, wireless devices.
• Order Entry: for filling and shipping order according to inventory availability, with a direct link to the Accounting and Warehousing modules, and an account and data item query capability.
• Administration: for configuring and maintaining high-level system parameters.

With the object-oriented design architecture of Ximple, says Aguado, “it is now possible and practical to integrate just-in-time information and real-time data into a functional digital dashboard, customized for the individual employee, and available when and where needed–on the laptop, PDA, or cell phone. Further, related information in the Ximple database can easily be accessed using intuitive, drill-down techniques through the graphical user interface.”

Although Ximple runs on the iSeries, current platform users do not necessarily constitute the prime targets that iCAP is after. iCAP’s target base is much broader, and the company is going after what Aguado says is the $1.8 billion spend in the wholesale portion of the ERP software market. “Much of our target market is Windows and Unix,” he says. “In fact, our target is any company that requires a modern, flexible, and powerful ERP system.”

The primary competitors that iCAP seeks to displace are J.D. Edwards users who are not moving to the Oracle Fusion suite, Lawson supply chain users, low-end SAP users who cannot move forward, and users of Microsoft‘s Great Plains and other manufacturing packages who may be disenchanted. In addition, Aguado says iCAP is after “anyone who really loves the iSeries and needs to upgrade.”

Many ERP vendors will, of course, argue that they are not, as Aguado claims, several years away from being able to lay claim to having a fully integrated ERP that can utilize the native capabilities of the Web browser for both data management and presentation. Native is in the eye of the beholder, and there are many ways to get Web functionality. The issue for iCAP is whether or not its arguably sophisticated Web interface will be enough to entice users away from other vendors to an entirely new system, especially given the commitment of time and resources (not to mention software and hardware costs) to implement. Pulling customers off Windows and onto the iSeries is a neat (but difficult) trick, and one IBM should encourage.

iCAP boasts fast implementation and ease of training, of course. The company also offers a set of translation services to work with clients to help them through the migration process, including a set of generic APIs that will take data from the previous ERP and move it into Ximple format.

But the big impetus for migration will come, Aguado believes, if companies will honestly examine the total cost of ownership (TCO) of the two options: staying with their first-generation ERP software, or moving to a true browser-based ERP system. “The plain truth is that first-generation ERP applications have neither the flexibility to add or change functionality, nor are they capable of full Web functionality. The first-generation ERP applications, with their legacy code burden, thick-client desktop paradigm, and extended, server-driven support infrastructure, is simply too great a financial burden for the average organization. The size and composition of the IT workforce needed to support first-generation ERP systems is excessive. Conversion to a single midrange computer, like IBM’s high-availability, secure, and dependable i5 system will go a long way toward reducing infrastructure costs.”

Such arguments are, in fact, compelling. But it’s not clear that those who create (and slash) IT budgets are always willing to factor in the fuzzy factors involved in such a cost justification.

Discussions like this always seem to remind me of the question I’ve faced for years now: should I, one more time, spend another several hundred dollars to patch up my 1997 Chevy Astro cargo van (with nearly 130,000 miles on it) and buy another 25,000 to 50,000 miles of transportation for me and my Newfoundland dogs, or should I call it quits on the maintenance, sell it for its book value of about $2,500, and buy a new van? Like many CIOs, I started mulling this about three years (and 50,000 miles) ago, when I opted to invest a couple grand in a new transmission. Since then, I’ve replaced the alternator, put on new brakes, and bought new tires. And I’m still driving the same old van. My friends and family keep talking to me about reliability and peace of mind–and a few even bring up the question of appearance and status (or the lack thereof). I admit that my old “Newfmobile” is old, is rather ugly, and it makes me nervous on long trips–but it’s my old trooper and I feel a strange sort of attachment toward it. After all, we’ve been places together. At some point, of course, I’ll have to admit that my van simply isn’t doing the job any more and that continuing to pour money into maintenance isn’t too bright, and that reliability and peace of mind have value, even if I can’t put a price tag on them.

Have first-generation ERP users reached that point? iCAP believes so. We’ll see. And those of us who love the iSeries are hoping, as Big Blue must be as well, that iCAP’s target market–especially those companies currently running on other platforms like Windows and Unix–will hear the message, find it compelling, and come over to the iSeries.