Business Optimization is the new mantra that IBMers are all now chanting in unison. The IBM chain of logic goes something like this:
- ERP and CRM applications (such as JD Edwards) did a good job of automating processes but a point of diminishing returns has been reached.
- Business Intelligence (BI) has enabled a much deeper understanding of how businesses really work. It has largely been used so far to report on past activity.
- The next great leap forward will come from using the information BI provides to use predictive analytics to optimize decision-making and to react in real time.
Business Optimization is a goal to achieve, is not something you buy. Not surprisingly, many of the things that IBM sells are needed to achieve it such as Cognos, InfoSphere, DB2, servers, services and eventually SPSS. Is IBM’s new view of the diminishing role of applications colored by the fact that it does not sell any of them? While bias is certainly present, the core argument seems to be basically sound.
Even though Oracle has become one of the world’s top two application vendors, it seems to buy into much of IBM’s logic. Oracle uses the term Business Process Optimization to say essentially the same thing.
Oracle is certainly not giving up on applications. It is investing heavily in a next generation application suite called Fusion Applications. When I have asked senior Oracle executives about what the essential difference will be between Fusion and existing applications the answer has netted down to “fully embedded BI”. Exactly how Oracle plans to pull this off remains completely unclear compounded by the ever-receding date when the first Fusion Application modules will arrive.
Our experience at Andrews Consulting Group seems to support the thought that opportunities for improvement through information technology are indeed shifting away from making incremental improvements in applications. As a company that helps JD Edwards customers move up to new releases, this is a little painful to admit. Sadly, it seems as if each wave of new features seems to offer less dramatic benefits and tends to appeal to a narrower segment of the community.
We have therefore shifted our own business to focus on finding ways to make BI more affordable and useable. Those curious about how we are doing this should visit our RapidDecision website.
Future postings will explore further how Oracle, IBM and the other major IT vendors view the future of applications and the new phenomenon that most are calling Business Optimization. A major shift is in progress in information technology. We will do our part to help the JD Edwards community understand what it means to all of us.