i2, the supply chain software firm, took a legal pot shot last month at German company SAP. Lawyers for the US firm slapped a writ on SAP alleging its software infringed seven i2 patents.
Such spats are not unusual in the fiercely competitive software industry in which it is often difficult to distinguish between the look and feel of rival offerings. For a company such as i2 there is a lot at stake. As an independent ploughing its furrow in a niche area it can only survive by convincing customers it has clearly superior products to those peddled by the likes of SAP and Oracle. Any hint that an ERP system such as SAP is as good as a best of breed product spells trouble for i2.
It’s not good news for supply chain managers either. Who wants to invest money in software that is the subject of a lawsuit?
Customers of the losing company have to ask themselves whether their software will continue to be developed and supported to the same degree as it was in the past, once legal costs have been taken into consideration.
But arguments like this could be a thing of the past if a relatively new idea called services oriented architecture (SOA) catches on. Ironically, SAP is a keen proponent of SOA and made much of it at a recent series of customer roadshows in Europe. It’s a simple proposition. Instead of stitching a lot of software systems together, why not create an interface that allows users to access applications as a series of services?
Under the new regime, driven by business events as they happen, businesses won’t need to run their own software because it should be possible to access i2 software as easily as SAP or any other company’s programs.
‘It’s a matter of replacing spaghetti with lasagne,’ says Paolo Malinverno, vp of research at adviser firm Gartner.
He points out that with only 25 per cent of invoices in Europe being presented electronically SOA could have a big impact, cutting the cost of processing each invoice from E37 to E3. But how are European companies taking to SOA? Two retailers that Logistics Europe spoke to when the SAP roadshow hit the UK said they didn’t have the time to deal with future technologies.
I’m sceptical and cynical,’ acknowledged Brian Scott, head of business systems at leisure products retailer Halfords. ‘With 56 people in systems I tend to trust a small number of suppliers who know about my business: we can’t afford the time for a two-hour seminar.’
In 2003, Scott began a four-phase, five-year programme to replace 123 applications systems with just two, SAP/Novasoft and Manhattan PkMS warehouse management. The project had added urgency because Halfords’ then owner, Boots, insisted that Halfords move off its mainframe system as a precursor to being sold.
‘Retail is a simple business made complicated by computers,’ says Scott. ‘I like functional headroom. It feels like I’ve bought a 40-room mansion and I am living in three rooms and a kitchen.’
Halfords has not yet formally evaluated the benefits of a project that has just one more year to run, but Scott says he has met the 12 hard cash benefits that Halfords was looking for in a capital project that absorbed more investment than any other in recent years.
It was a similar story at Alpha Airports Group which runs airport shops and catering operations and which recently embarked on a project managed by Ciber Novasoft, to upgrade systems in its warehouses, stores and at head office.
‘The systems we had were similar to those on the Ark,’ quips Martin Cook, group IT director. ‘We moved from Noah’s system to a simple integrated application set.’
‘We are out to put our business in a far better place. Store and head office systems were not integrated. Maintenance and support costs were rising for a system that was built for a smaller business than we had become.’
Alpha Airports had particular problems. Its airport outlets are small and replenishment is a challenge because stock rooms are some way away. With twothirds of its operations now hooked into the SAP R/3 for retail-based system Alpha Airports has cut stock holdings and improved its negotiating position with suppliers because the retailer now knows which goods sell well, where and when.
The managers of Halfords and Alpha Airports agree that simplicity, packaged software and hard business benefits are the key to successful IT projects. For them, concepts such as SOA will be judged on whether they can deliver on these criteria.