ERP Product of the Year -- SAP R/3 Enterprise

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More and more organizations are learning what some already know: SAP R/3 Enterprise holds wide appeal for companies of all sizes. The product’s versatility, flexibility, and perhaps most importantly — ease of integration — led it to take top honors in Datamation’s Product of the Year in the Enterprise Resource Planning category with 36% of the vote.

Runner-up in the ERP group was Cognos’ Cognos Enterprise Planning. Other finalists were OpenAir Inc.’s OpenAir Complete and CorVu’s CorStrategy.

R/3 is “the most widely used ERP system in history,” notes Jim Shepherd, a senior vice president at AMR Research in Boston. “It has tremendous amounts of functionality; it scales from the largest corporations on earth down to the mid to upper end of the mid range market.”

With R/3 Enterprise, SAP not only upgraded the technology, but changed the enterprise application server and user interface, and made major changes to the underlying architecture, Shepherd says.

The latter may be the most significant for many customers. R/3 Enterprise makes it possible to leave the core parts of the system unchanged for as many as five years, but users can still selectively do software upgrades in specific areas where they need new capabilities.

R/3 Enterprise user Barry Van Beek, corporate IT director at Vet Pharm, a full-service animal health care provider and distributor with revenues of about $85 million, says the challenge to configure the software properly has changed dramatically since they first deployed R/3 in 1998. Now, Van Beek says, it is very stable and customizable.

“We haven’t had an idea or some functionality we’ve wanted to perform in our business that we haven’t been able to get SAP to do; we haven’t stumped the system so to speak,” says Van Beek, in Sioux Center, Iowa. Recently, Vet Pharm began allowing veterinarians to use an online prescription refill service.

He says the Web application server in R/3 Enterprise is basically a new name for an existing part of the software, but that it has a lot of added features such as Java and Internet capabilities.

“What’s also appealing to us is the architecture has changed,” Van Beek says. “It used to be in the R/3 world if you did an upgrade you had to upgrade the whole thing. Now it’s split into pieces. If you want to upgrade the so-called operating system you could do that and leave your functional areas alone. So flexibility in upgrades is a major point.”

Concurring with Shepherd, he says the timeline of support for R/3 Enterprise extends far into 2007, which was very attractive to the company.

“So there’s longer-term support on Enterprise and we can do upgrades to various pieces rather than switching versions. You can upgrade components on R/3 Enterprise and bring the product to a newer level without having to do a massive upgrade.”

Shepherd says feedback on R/3 Enterprise has been “very positive, and people are really pleased with the quality and process of upgrading and completeness of the tools and documentation.”

“It’s the heart of SAP’s solution for all of the 20 some-odd industries that it serves,” he says.

Fred Carl, manager of financial planning and analysis for L-3 Communications Holdings, has been using second-place winner Cognos Enterprise Planning since 1998, and says it handles pretty much every financial function the defense contractor performs. The Cognos tool extracts information that is fed from a legacy mainframe into a data warehouse, and Carl says the biggest pluses are its flexibility, the lack of IT support needed to maintain the system and its price.

“We just absorbed another division and all that information will flow into the product and all I had to do was add some line items to a list that makes up an already-in-place cube…and that information flows into the cube seamlessly,” says Carl, in Camden, N.J. He says it doesn’t matter what format the information arrives in. “That’s one of the really flexible things about the system — it can read almost anything out there.”

Carl says the company will be moving off the mainframe within a few years and will then look at moving to a traditional ERP system to handle its transactional functions. Right now, systems such as accounts payable, general ledger and purchasing are all disparate and they require translation tables to transfer data from one into one another to get it into the same format.

“What we’re dealing with here is entering code five or six times to upgrade disconnected systems and then enter translation codes to talk to one another,” he says. “An ERP system would completely solve that.”