The end of ERP?

As the founder and leader of PeopleSoft, Dave Duffield played a seminal role in establishing enterprise resource planning, or ERP, systems as the IT engines of big business. But then, in a hostile takeover, the enterprise software giant Oracle yanked PeopleSoft out of Duffield’s hands. Now, Duffield’s back in town, and he’s gunning for ERP.

It’s the Shootout at Enterprise Gulch.

Today, Duffield’s new company, Workday, is announcing an expansion of its suite of software-as-a-service business applications to include not only human resource management – its original offering – but also a set of financial management services, including accounts payable and receivable, general ledger, and reporting and analysis. The integrated suite, which is being offered in beta form and will be further fleshed out in coming months, provides, Duffield’s deputy Mark Nittler told me, “the first alternative to ERP.”

It’s an alternative to ERP, rather than a Web-delivered version of ERP, argues Nittler, because the system’s software guts are entirely different. Rather than being tightly tied to a complex relational database, with thousands of different data tables, running on a separate disk, the Workday system uses a much simpler in-memory database, running in RAM, and relies on metadata, or tags, to organize and integrate the data. Having an in-memory database means that the system can run much faster (crucial for Web-delivered software), and using metadata rather than static tables, says Nittler, gives users greater flexibility in tailoring the system to their particular needs. It solves ERP’s complexity problem – or at least it promises to. (For more on the nuts and bolts, see David Dobrin’s whitepaper and Dan Farber’s writeup.)

So what are the odds that Duffield’s Workday will come out on top once the dust has settled in Enterprise Gulch? The odds are long. But Workday has three things going for it. First, it has the widely admired Duffield, who gives the upstart immediate credibility with customers, investors, and programmers. Second, it has a technological head start. There are reasons to believe that the secret new system, codenamed A1S, being developed by SAP, the biggest ERP provider, will resemble what Workday is doing, with an in-memory database and much metadata, but SAP is moving slowly, weighed down with the baggage of the past. Third, Workday is adopting a strategy of patience and steady gains. It’s targeting mid-sized companies that have not yet implemented full ERP systems – a rich market that’s also being targeted by SAP, Oracle, and Microsoft, among other mainstream software houses. The ERP virgins, who well know the costs, complexities, and risks of installing an ERP system on their own hardware, have good reason to give careful consideration to a software-as-a-service offering like Workday’s, which runs in a browser and requires little in the way of upfront capital investments. The middle market offers Workday a means of establishing a toehold before it moves upward to the big-company market, where it will actually have to displace installed systems – a tall order, indeed.

Salesforce.com’s marketing slogan has long been “The End of Software.” Workday’s pitch sounds like “The End of ERP.” Whether or not Workday itself succeeds in its battle against the behemoths, we already see in its innovative system the outlines of the post-ERP era of enterprise computing.

12 Comments

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12 Responses to The end of ERP?

  1. Epicurus

    Quote (of the quote):

    “It’s an alternative to ERP, rather than a Web-delivered version of ERP, argues Nittler, because the system’s software guts are entirely different. Rather than being tightly tied to a complex relational database, with thousands of different data tables, running on a separate disk, blah blah bla”

    Or how to turn a technical choice to avoid slugishness into a whoopy successor (or terminator) of the ERP.

    Ok that’s marketing and its not illegal to abuse of. But what about the risk of hosting such critical data for the company outside its walls?

    People may exchange their soul for a free email account, I doubt that companies will do the same with their core strategic data (as I think that salesforce.com is used as a usefull widget)

  2. Adam Stein

    Sorry for the off-topic comment, but I don’t see an email address anywhere on this site. Is there a reason your feed only includes excerpts of your posts, Nick? You’re presumably not trying to make serious money from advertising, so I’m wondering if maybe this is just the result of an oversight. The partial feed almost certainly decreases readership, albeit by a small amount.

  3. ironchef

    “the Workday system uses a much simpler in-memory database, running in RAM, and relies on metadata, or tags, to organize and integrate the data. Having an in-memory database means that the system can run much faster (crucial for Web-delivered software), and using metadata rather than static tables gives users much greater flexibility in tailoring the system to their particular needs.”

    Um. So if the “in-memory database” never writes to disk, the data never persists. You’re going to have to take that hit at some point in time, right? I don’t see why that makes this so revolutionary. A nice caching scheme will compete fairly effectively against this I’d suspect.

  4. It does write to disk but only for persistence. As Dobrin writes in the white paper I linked to:

    Workday runs on an in-memory database (64 bits, at least 1 TB of memory); it uses a relational database (mySQL) only for persistence (that is, to store the information in case the in-memory database goes down). This persistent database has exactly three tables, one for data, one for metadata, and one for instructions. Yes, that’s right. All data–the employees, the positions, the organizational structure, and even the layout of a screen–is stored in the same table.

    Phil Wainewright also has a helpful post on the system:

    The breakthrough that Workday achieves is to move away from a fixed database structure. The SQL database in a traditional business management application defines the meaning of data into the table structure, and that is its achilles’ heel. Workday’s database tables reflect the needs of the object-oriented application architecture — there are just three tables, for ‘instances’, attributes’ and ‘references’ — and the data and definitions stored in the table are instantiated only when the application runs. The definitions are therefore as easy to change as the data.

    When I use terms like ‘instantiated’ I’m slipping into the language of object management. At the heart of Workday is an object management server (OMS) — 30,000 lines of Java code that runs as an Apache Tomcat process, entirely in memory. When the Workday application runs, it scoops up all the data and definitions stored in that three-table database and turns them into meaningful data that can be accessed and manipulated. Changing the business logic — even at a very fundamental level — is simply a matter of changing a few definitions and re-running the application.

  5. dubdub

    Well, it certainly looks like an ERP web site.

    No pricing explicitly available, crazy buzzwords, plenty of links to white papers but no links to live demos for a web-based application!?

    I tried the flash flash demo: while I’m glad that “hr can now become everyones’ job”, if my employees spend as much time managing their hr profile as is suggested in the demo, I’ll have to lay off half of them (I’m sure workday allows employees to lay themselves off!). The demo focused only on basic hr stuff, and not on other aspects of ERP.

    Their “top 10 reasons to choose” are straightforward regurgitations of the SaS playbook (which I agree with, but I also like vanilla ice cream).

    A word on the backend: it’s a web based app, so I shouldn’t care if there’s a relational db back there or not. Who cares? The problem with relational databases is having to interact with them, not that they exist! The former should be solved by the web front end and a reasonable API — programmed, Im sure, by workday-certified consultants, or maybe through a partnership with salesforce, one of their partners/customers. Next they’ll be saying all the IT support in their datacenters have iphones!

    With all due respect, this looks like another giant cluster****. A web-based application should have a simple demo available. Even netsuite does this. Maybe I will get access to one after the “sales rep” calls me, and if so, this should be mentioned explicitly.

    Disclaimer: I’m a small business owner with no relationship to workday, or any of its competitors. And I want the last half hour of my life back.

  6. You mean to tell me that you wasted time on the Internet? That’s unheard of!

  7. dubdub

    hahahaha! You got me, and frankly a half hour isn’t so bad ;)

  8. This seems like a lot of fluff and not a lot of functionality.

    How can it possibly be the “end of ERP” when it offers so little functionality? Coming from a true ERP developer that has software made up of millions of lines of code and has well over a thousand of screens, I see none of this referenced on their website.

    True ERP is not just accounting. It is planning, manufacturing, WMS, EDI, CRM, and on and on. I see only vague mentions to limited functionality.

    I’m sure they will find their niche, but stating they are the end of ERP is simply fantasy.

    Rebecca Gill

    Technology Group International

    http://www.tgiltd.com

  9. Greg Quinn

    I’m not convinced.

    Dobrin’s whitepaper identifies two key criticisms of traditional ERP’s; poor performance and inflexibility.

    On the performance side there is nothing to prevent ERP vendors moving their tables into memory for faster processing. Indeed vendors could easily have delivered a raft of performance improvements had they spent some of their revenues on genuine product innovation rather than squandering them on marketing fluff.

    Inflexibility is more problematic. Model inflexibility and the subsequent horror show of schema migration is something of a black hole in relational data base technology. Nobody appears to have a real answer and if Workday has developed a modelling technique that deals with this issue then I’m all ears. However glib talk about metadata and tagging isn’t persuasive. Tagging is essentially a hierarchical model and database vendors abandoned this approach over twenty years ago because of its …………..……..inflexibility.

    Workday’s website, buzzword central, is no more reassuring. For the moment Mae West has the last word “There’s less to this than meets the eye”.

  10. +1 on the Full RSS feed comment. And I’ll click on all the ads you want, but please, I have a medical condition: I’m allergic to unnecessary clicks.

    About loosing half an hour: what about blaming companies not for making crappy products, but making products that look OK for long enough we have to loose several hours before realising they are useless? Those middle-range entrepreneurs are probably the most expensive things that we let hang around on the Internet these days, right? Personal worst (Tried it for a long time because it was so hyped, finally dropped it): Netvibes.

  11. hosen

    I’m not sure why an in-memory database is crucial to web-delivered software.. and ERP for that matter. It’s not like a trading system where milliseconds count – users are just entering data into payables or general ledger, or making a change to their HR status. And it might be useful for speeding up batch imports, but you are basically just throwing more resources at it (from an earlier comment – at least 1TB of RAM – at least?!).