CORE VALUES
ERP vendors may stack up differently - but their basic financial applications rarely do.
By Scott Liebs and Karen Winton

If you can hear a pin drop in the halls of Lee Kum Kee, that is the sound of an ERP system successfully implemented. Since the privately held Hong Kong maker of Chinese sauces went live with SAP in October last year, CFO Mike Lim can no longer tolerate anyone from marketing shouting at production, demanding when the heck the orders from Xiamen will ship out.

That's just one fringe benefit Lim is deriving out of enterprise resource planning. Since the family-owned company reorganized itself - turning departments such as sales and marketing, manufacturing and import-export into distinct group units - Lim has been able to integrate each of these units so that they can share information at the click of a mouse.

So today, practically everyone in Lee Kum Kee knows immediately what is going on. "If there is a shortage, or if the quality of the material has a problem, it will affect production scheduling, which affects the whole chain," says Lim. "An ERP system forces people to work closely together so we have a smooth operation," he says. The installation, he says, took eight months from start to finish.

Lim was lucky. What Ronnie Lum didn't know when he decided to look for a suitable enterprise software package was that it would take him 12 months from finding potential providers to actually having a stable platform in place. Other installations can take even longer. But the Singapore-based managing director of Pana Insurance (Asia), is now satisfied that his S$350,000 (US$215,000) was money well-spent. He is preparing to implement the Microsoft Great Plains e-Enterprise package into Pana's companies in Malaysia, the Philippines, Pakistan and Cambodia before end-2002.

Lum says that the time it took to choose an enterprise provider was almost solely due to difficulty in distinguishing one ERP package from another, with each embracing several capabilities, for example, general ledger, accounts receivable and payable, as standard. What sold him on the Microsoft Great Plains package was its cost, its adaptability in terms of fitting with Pana's complex insurance and reinsurance database system, and the branding support of buying into a Microsoft product.

ERP software is so complex that it may come as a relief to prospective buyers that some aspect of the package is virtually a commodity. Analysts say that because the core financials are typically among the first modules an ERP vendor develops, they are usually robust and mature, with each vendor tweaking its own products to match improvements made by others. "Vendors in the US won't admit it," says one analyst, "but they really don't devote many resources to the core financials." In fact, the websites of many vendors prefer to devote maximum verbiage to customer relationship management (CRM), business intelligence and other technologies that represent growth markets.

ERP vendors in Asia are also emphasizing their alternative enterprise applications, particularly CRM, supply chain management and human resources management applications. But analysts in the region seem to think that these will have little impact on industry growth this year despite the vendors' push. "It's true that sales volume is increasing but that's because the products are becoming commodotized and much easier to implement than they used to be," says Stephen Lee, senior manager with management and technology services provider Accenture in Hong Kong.

Lee also says that heavy demand for first-time ERP systems is coming from markets such as India, Korea and China, and is partly the reason why some of the new applications on the market will be longer taking root. "Mainland Chinese companies in particular are realizing that they need to implement ERP because of World Trade Organization membership. There is a push for them to catch up with foreign multinationals and they want world class software to help them become world class organizations," he says.

SAP only introduced its mySAP CRM product suite into Asia late last year. Microsoft and other vendors plan to debut their applications this year. So while it is too soon to estimate the impact of such applications in the region, it's obvious that vendors are trying to expand beyond ERP into the wider world of business intelligence.

Where does that leave companies that are in the market for the core financial applications? Buying decisions will be based less on the capabilities of the products themselves, analysts say, and more on the capabilities, viability and suitability of the vendors in question. "The needs of the finance department remain a key driver for ERP sales, along with the needs of the manufacturing side," says Dennis Byron, an IDC analyst in the US. "But since there are only so many ways you can do a general ledger or an accounts payable application, a feature-for-feature comparison usually doesn't make sense."

Instead, analysts say companies should find a vendor that's a good fit based on its vertical industry expertise, underlying architecture, licensing terms, product direction and financial health.

Below are snapshots of some of the major vendors of ERP and integrated accounting applications in Asia. This collective portrait shows the trends most likely to influence buying decisions in 2002 and beyond.

Baan

The new millennium heralded a roller coaster ride for Dutch player Baan, which lurched to a halt in August 2000 when the company was acquired by US-based Invensys. With bankruptcy looming, the enterprise applications provider worked to revamp its business and financial models while developing a new application suite, iBaan. Six months after the Invensys rescue, Baan returned to profitability and has remained in that state for the five consecutive quarters since.

It also released iBaan (which lets users participate in intra- and inter-company processes), established alliances with IBM, Crystal, Atos Origin and Hewlett-Packard, and expanded into Mexico, Poland and China. Asia is Baan's fastest growing region.

Major product rollouts are based around iBaan and other existing and third party applications combined into focused industry applications. Japan will be the first market to launch in May, followed by an electronics industry application in China and an automotives launch in Asean countries. The second half of the year will also see the launch of Baan's web-based sourcing product, e-Source.

Epicor Software

Dedicated to mid-market companies, Epicor sounds a theme common to most ERP players today, that of "collaborative commerce". Epicor has invested heavily in the Microsoft .NET initiatives and plans to begin delivering its first components on the .NET web services platform in the second half of 2002. Its mainstay product suite, a financial management tool called Epicor eFinancials, is sold directly through its offices in Hong Kong, Taiwan and Singapore, and through a network of 40 value-added resellers across the region. Epicor eFinancials constitutes the biggest chunk of the company's revenue in Asia but the company is also focusing on its back office financial applications, front-office CRM package and decision-support tools, and its manufacturing application for small manufacturers, Vantage.

Epicor has also embraced portal and business intelligence technologies as part of its plan to provide better supply-chain visibility and greater collaboration among supply-chain partners. The company says that its strategy going forward is to continue to invest in vertical initiatives that will expand its integrated suite of products and meet customer needs for rapid ROI and low total cost of ownership.

Intentia

Intentia is a Swedish company with serious designs on international markets. It reported strong growth in 2001 with an increase in global license revenues by 20 percent and 41 percent in Asia Pacific. Last year it established a third office in Hong Kong in addition to offices in Singapore and Malaysia, increasing regional headcount by 25 percent.

A focus on regional marketing and communications is paying off, with the marketing team capitalizing last year on the launch of Intentia's flagship Movex v12 - Intentia became the industry's first applications provider to launch a 100 percent Java application.

Going forward, the company will focus on key vertical industries such as fashion, food and beverage, distribution and other niche verticals, with investment in industry-expertise areas once its cashflow and profitability targets are met.

Interbiz

This division of software giant Computer Associates (CA) dubs itself an e-business solutions company, but it might better be described as an e-business integrator. Its core competencies are in manufacturing, wholesale distribution, general finance and banking, with technologies to support customers' e-business initiatives. Its core product, BizWorks, is a multi-platform e-business process management suite, which provides a superstructure for several applications, allowing companies to tie together their own systems with those of suppliers and customers.

InterBiz offers financial, logistics, banking and other applications that make it a viable mid-market ERP contender, but it can also lay claim to being an enterprise application integration company.

Venkat Subbarao, senior vice-president for CA in south Asia, says that ERP applications will see incremental growth as businesses in Asia introduce e-business functionality throughout their value chains, especially as e-business regulatory frameworks are aligned between countries. He says that InterBiz is preparing for this with an active marketing campaign, including direct marketing and sales in conjunction with business partners, as well as seminars, roadshows, advertising and other activities. InterBiz also enjoys considerable leverage from CA's presence throughout the Asia Pacific region, working closely with its network and partners.

Microsoft Great Plains

A year after its acquisition by Microsoft, this US mid-market provider is consolidating its presence in Asia as a full-fledged ERP force, with offices in Australia, Singapore and the Philippines, and partnerships in Malaysia, Taiwan and Japan.

Richard Johnstone, the company's Sydney-based regional director for Asia Pacific channel operations, says that Microsoft Great Plains' long-term aim is to drive organizational interconnection inside, outside and in-between its enterprise clients. "We see the opportunities around the fringes where a business connects with its constituents, be they employees, customers or suppliers," he says. Johnstone adds that the company's next generation applications will be based on .NET and other Microsoft technologies, allowing it to adapt its products from entry-level applications to enterprise suites as client needs change. That ability was underscored in the US last year when it introduced Small Business Manager, a suite aimed at small businesses.

The company is working on a plan to bring this and other specialized applications such as Business Desk, an employee interface for financial information, and Microsoft's debut CRM product, to market in Asia before 2003.

Navision

A Danish company with growing name recognition in Asia, Navision sells its two business enterprise applications, Attain and Axapta, through a network of 65 reseller partners called Navision Application Centers. The core financial management, manufacture and supply chain software is targeted at SMEs. Navision has foundation architecture around Microsoft products and also supports technology from companies including Oracle, Siebel and Unix. It is one of a handful of multinational vendors to address language, currency and business environment differences in Asia.

So far it has launched products in Thai and two versions in Chinese. Korean and Japanese will follow this year. Also on the cards are acquisitions, particularly of smaller vendors, which have difficulty keeping up with software developments. "We're looking at how to use our platforms with their local and industry knowledge to continue servicing and upgrading their customers onto our products," says Garth Laird, vice-president of Navision Asia Pacific.

Oracle

On a quarterly basis Oracle accounts for 15 to 20 percent of net income earned by the global software industry, so don't expect it to refute its "we saved billions with our own software" claim. Despite criticisms that the figure has been distorted, Steve Miranda, vice-president of development for financial applications, says that this year Oracle will continue to stress ROI and offer more details about how it's saving so much money.

A key part of that will no doubt be its concept of moving to a "single instance" of its software, allowing it, for example, to stash all manner of multilingual, multicurrency information in a single database. In Asia, it plans to encompass increasing revenue and market share by augmenting its partner reselling network (which accounts for between 50 and 60 percent of its applications implementations in the region), and expanding into China and India.

It will also extend its Oracle Financial applications into new industries including insurance, utilities and commercial property management. Miranda says it will push "Information Out", a concept that relies on customizable portals to facilitate number crunching and other business-intelligence chores. But he says that customization in the big-picture sense, long the bane of ERP vendors and their customers, will become far less common. The new R11i E-Business Suite, he says, is "aimed squarely at meeting customer needs out of the box."

PeopleSoft

It's fitting that a graph of PeopleSoft's stock price during the past three years resembles a huge grin, because the company has plenty to smile about. Ailing in 1999, today PeopleSoft is faring better thanks to cost controls and focused growth, including some smart acquisitions and a push into Asia. Rob Wells, the company's general manager in north Asia, says that PeopleSoft differentiates itself from its competition in two ways: first, it is the "only enterprise solutions organization to deliver all applications over the Internet"; and second, in the manner in which it delivers functionality and the tools it uses. He cites the CFO Portal as an example of financial functionality, bringing together in a single place all core financial information as well as key business metrics.

Wells says that PeopleSoft's growth opportunities in Asia are centered on products and markets, putting its PeopleSoft 8 suite of pure Internet applications out to the market this year, and opening the company's first mainland China office in Beijing in April. He expects significant new revisions of its CRM and financial applications to drive new business throughout the region in 2002.

SAP

Recognizing the need to facilitate collaboration across business processes and among users within and beyond company boundaries, SAP in November 2001 released details of its open standards-based architecture, mySAP technology, which offers comprehensive and flexible e-business applications. As the foundation for all mySAP.com applications, including the mySAP Financials product family, the architecture is aimed at reducing the pain of abrupt, disruptive shifts in technology with continuous, evolutionary improvement.

SAP began direct operations in the region in 1988 and has steadily built a presence in enterprise resource management applications since then. For 2001, SAP's Asia Pacific operations contributed US$723 million to the company's global revenues. This represented an 11.5 percent share and was a 9 percent increase in the region's contribution over the previous calendar year.

The appointment this year of new presidents to its Asia, Japan, Australia and New Zealand divisions is an indication of where SAP sees its mySAP opportunities arising.

Scott Leibs is a senior editor at CFO in the US. Karen Winton is executive editor of eCFO in Hong Kong. Additional reporting by Abe De Ramos.