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Welcome to gotERP?
This is an online forum to share experiences, lessons and learning about the selection, implementation and return on investment for Enterprise Resource Planning (ERP) Systems. We also like to discuss Customer Relationship Management software (CRM) systems, Social CRM (SCRM) & social media, Manufacturing Systems, Supply Chain Management (SCM) systems and Payroll & HR Applications.

 

 

 

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The Rumors of ERP's Death Have Been Greatly Exaggerated

The Call To Automate Complex Business Processes with Not So Complex Business Software

Have you noticed how Enterprise Resource Planning (ERP) systems receive repeated criticism from users and the technology media? The reasons are varied - ERP software systems are complex, expensive and prone to deployment and operational challenges. These are massive business software applications for a company to invest in and getting it right can be difficult.

At the same time, though, while the critics are vocal and sometimes brutal, ERP software applications continue to be researched, compared, evaluated, purchased and implemented by companies of every size and industry. For something so often criticized, they remain a de facto standard.

True, the problems with ERP applications from all kinds of software vendors are legion and the criticisms have been around for years. One of the most cited critiques, "The Problem With Enterprise Software," was written by software consultant Cynthia Rettig and published in the MIT Sloan Management Review in the fall of 2007. Rettig certainly didn't mince her words.

"These systems, Germany-based SAP is the most common, promised to eliminate the complexity of multiple operating systems and applications by replacing them with a single set of interconnected modules to run the financial, manufacturing, HR and other major functions of a typical multinational corporation," she explained. "Theoretically, a single monolithic system would seamlessly connect various distinct and geographically separate locations through private networks. Companies understood that they could customize these business systems as needed to suit their unique business processes. That was the hope. But these massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces, introduced new levels of complexity, often without eliminating the older systems they were designed to replace."

So what happened next? "The concept of a single monolithic system failed for many companies," Rettig wrote. "Different divisions or facilities often made independent purchases, and other systems were inherited through mergers or acquisitions. Thus many companies ended up having several instances of the same ERP systems or a variety of different ERP systems altogether, further complicating their IT landscape. In the end, ERP systems became just another subset of the legacy systems they were supposed to replace."

A pretty grim assessment for most readers. However, her essay-ending conclusion was even more depressing. "At present, however, corporations see in software's seductive invisibility and seemingly open-ended flexibility a never-ending frontier of promise, where hope triumphs over reality and the search for the next new thing trumps addressing difficult existing problems. And hope, unfortunately, has never been a very effective strategy."

Such criticisms continue today, with everything from male-pattern baldness to global warming seemingly being blamed on troublesome ERP systems. In the end though, the topic is more complex than simply pointing the finger at complex systems designed to automate very complex business processes and management demands.

Perhaps this is just the cycle for an ever-changing software technology and ERP marketplace. But despite the criticisms and the calls for ERP's replacement, these complex business applications are critical to process the volumes of company transactions and track the business' performance metrics, from budgeting to planning to marketing to sales to manufacturing to distribution to support and much more. It's all tied together so the various business processes can be carefully gauged, evaluated and monitored for compliance or course corrections.

To fairly critique the suitability and performance of ERP applications one must consider the alternatives. Would companies be better off with multiple, disparate business software systems rather than a single, central application? Of course not, this is the stove-piped information systems history which paved the way for ERP's two decade growth. Multiple systems historically resulted in multiple data silos, never ending system integration costs and complexities, piecemeal and broken business processes, long period cycle times and complex technical efforts to get even simple information and reporting out of the system.

Unlike seemingly good ideas that failed market adoption, such as IBM's former OS/2 Warp computer operating system, ERP applications have stood the test of time and at this time have no superior alternative. ERP is complex and technically difficult to deploy and maintain, but is nonetheless, a business requirement without suitable alternative.

What does the future hold for ERP then? Well, perhaps we are in the midst of an evolutionary period in the world of ERP, where we are moving away from the traditional deployment of huge applications and are truly seeing a future where ERP might be reasonably provided as a service, perhaps via the cloud. This could simplify deployment and operations and make the systems easier to use while leaving the administration, maintenance and upgrades to the experts who operate from purpose built data centers. Maybe, just maybe, these complex business systems could finally work to the potential that has long been promised by software vendors. However, the precursor concerns to hosted ERP or ERP delivered in a software as a service (SaaS) model are security and reliability. Only after these concerns are addressed will SaaS ERP gain mass market traction.

At the same time, the potential of mobile ERP is also getting closer, where companies can send out their mobile work forces with wireless and handheld devices that can run ERP applications at the customer's premises, in real time, delivering information and solving business problems in an instant.

Despite all the critics and long-term criticisms, corporate users are not giving up the concept of ERP applications, they just want the business systems to work as advertised.

ERP still has a pulse, however, the market wants the benefits without the complexities. The next winning ERP vendor will be the one to get their products out of the operating room and into the recovery suite before its competitors do.

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