ERP Gap Fillers
06/08/2012 Leave a comment
It looks like many ERP implementations have a lot of holes and do not cover all business processes in an automated way. Indeed, how can one otherwise explain the wide variety of business initiatives and new businesses that offer solutions in supplement to ERP to fill in the gaps?
Yesterday I read a white paper of a medium-sized software vendor offering a solution to automate the processes of accounts receivable (AR) and payable (AP) in organizations that have implemented an ERP system from a major vendor. One could expect that AR and AP are basic business processes that should be incorporated in an ERP system. Nope! There are several reasons why this gap-filling business is booming. Since business growth nowadays is mainly achieved by M&As, large companies are still struggling with implementing one standard ERP-template in all their affiliates. Time is not always on their side. The greatest common divider of their ERP-template is therefore very small leaving a lot of holes that cannot be covered in the system. These organizations do not manage to fully implement an end-to-end solution for their business processes. Processes AR and AP are considered as quite complex and at times very different over geographic locations, so there are left over to the gap-fillers.
Same goes for the accounting and bookkeeping systems in ERP. Nothing is more country specific as a tax system (e.g. VAT system). Several documents and even complete work flows are defined by governments and are sometimes surprisingly well automated by e-government initiatives, but not so well in the major ERP systems. This time it are the ERP-systems that are lagging behind. Again this leaves room for gap fillers. Therefore it is of no surprise that there is still a large number of independent software vendors selling their country specific accounting systems to organizations where large ERP vendors has once promised to cover the complete set of business processes.
Another example where gap fillers see opportunities is in the domain of business intelligence (BI). BI should be the pedal of an ERP system. Was the promise of ERP not to cover all operational processes and bring them onto a tactical level from which they should deliver information to the strategic level of the organization? It is therefore sad to see that precisely for BI there are a lot of separate products, largely based on open software, that must fill in the gaps.
There are in addition some problems related with ERP that gives extra fuel for the gap fillers. A common problem for many ERP implementations is the often poor performance in terms of response times. ERP systems are centralized systems but incorporate a broad spectrum of different software trunks, all having different operational requirements. This constitutes a system with a very heterogeneous nature. For example heavy duty transaction systems like order-entry systems often demand the largest portion of performance of the system, leaving no room for simultaneous running BI processes. Cloud computing does not always offers a solution here since the variation in demand for immediate performance does not change in a cloud setting. The only solution is therefore sometimes to uncouple the operational data from the centralized system to a separate system. The latter from which BI is operating.
And there is of course the ever present sword of Damocles over the ERP system in the shape of user rejection and resistance to the software. Not all users fully embrace the often complex ERP user interfaces and therefore tend to adopt ‘easier’ solutions.
The discussion inside or outside the ERP is most active in SMEs. Smaller organizations have tighter IT budgets and are therefore sometimes more demanding to ERP systems than large ones and are challenging the selling propositions of ERP vendors. Unfortunately this leads again to lots of IT failures due to unmatched selling promises!