The fall and rise of ERP and the spiders form Mars?
07/05/2012 Leave a comment
ERP systems are here since more than 20 years now. It all started back in the early 90s when the down-sourcing trend took off and smaller client-server systems became popular. Bespoke software and in house developments, mostly based on older Cobol, PL/I or RPG languages were chiefly outdated and were replaced at fast pace by newer and contemporary ERP systems. We headed to the end of the millennium and the nervousness for a complete system clash due to the date problem rose the temperature and accelerated ERP implementations. Since 2000, sales of ERP systems grow also in Small and Medium-sized Enterprises, although not always with great success. Not that ERP success was only guaranteed for large companies. Horror stories of failed ERP project reached the business and academic literature since the first day. The paper ‘Putting the enterprise into the enterprise systems’ of Davenport in 1998 set the tone of the most of the preceding ominous reports on ERP systems. ERP on the fall?
According to recent research, ERP systems are still alive and kicking! Investments of the early days has become outdated and require updating. Today computer platforms move to the cloud and this requires a new and fresh look to the IT budget. Compared with 20 years ago, decisions to adopt ERP systems are now more carefully taken, with consideration for business disruptions and impact on customers, staff and (financial) resources. But there is more. A lot of ERP suppliers didn’t survive the battle and a lot mergers and acquisitions took place and are still taking place. At a certain point Microsoft in her strive to compete with SAP and Oracle for the SME market became owner of more than three ERP systems. A splendid competitive move to conqueror the market but internally a mess. All these software systems in one portfolio needed a cleanup.
Today ERP systems are based on multiple systems that allow flexible integration of a wide variety of business processes. Not so much the big bang conversion, but gradual integration based on SOA and web services. This means that the suppliers also have changed their software license policies. No more rigid prices for a all-in software, but ‘Software as a Service’ (SaaS). Customers are now paying monthly fees which allows a stricter budgetary control. Not only the software is rented, also the hardware platforms become more and more hosted form external data centers, offering ‘Infrastructure as a Service’ (IaaS) and ‘Platform as a Service’ (Paas). The centralisation of computer infrastructures in data centers allows a better and cheaper 365/24/7 service of the operations, still a burden for most organisations when done on they own premises. ERP on the rise?
However there are still some problems to be deal with. First, implementations of ERP systems for the most part suffer from cost excesses. For SMEs this starts with an appropriate selection of an industry-specific preconfigured solution. However this requires managerial and technical capabilities who are not always present in the organisation, so the burden of the adverse selection loom largely in SMEs. ERP implementers often lack good skills, even those who have glossy brochures and smashing web sites. This is the second major problem with ERP systems: a real shortage of consultants on the market that can combine good IT skills with a combined understanding of an industry and a particular business in that industry. Spiders from Mars? The universities and colleges offering IS and IT programs should start to rework their current (too) technical oriented curricula to bring in new skill domains such as business process management, project management, (legal) contract management, enterprise architectures, business modelling and also the so-called ‘soft’ skills like interviewing, presenting, and writing skills. A well-skilled and talented ERP consultant can make the difference of an ERP systems implementation success or failure!