Functional incrementalism is the concept of being able to add application functionality in manageable increments. This concept is counter to the ERP systems of the last decade where huge chunks of functionality were tied together in a tightly coupled fashion. This tight-coupling was promoted as a ‘feature’ by the ERP vendors. Unfortunately, a significant number of large ERP installations were a disaster due to the significant amount of time and energy required to install, configure and integrate.

Functional Incrementalism suggests that an initial investment must be made to lay down a base infrastructure (the Service Network). After the foundation is laid, new business applications may be incrementally deployed. Although an initial investment is required, the application investments become incremental, enabling an organization to more effectively manage new systems deployment.

It is believed that ERP vendors will be refitting their applications to work on a services network (due to customer demand). This will enable a customer to selectively choose best-of-breed business modules from a variety of package application vendors. Thus, package applications will conform to business dialects, expose predefined interfaces and be process orchestration aware.