Anyone reading the IT and business press will know that ERP software sparks a great deal of debate. It seems that people fall into two camps – the lovers or the haters. Its reputation for scalping the most hardened and experienced of CFOs follows years of spectacular and very public implementation failures to the tune of hundreds of millions of pounds.
Ironically, ERP’s popularity grew out of frustration with bespoke systems, which were increasingly being classed as failures. ERP architecture heralded an opportunity to facilitate the flow of information between all business functions inside the organisation and links to outside stakeholders such as customer and supplier systems. And all with the added benefit of vendor support.
However, its key benefits have often proved to be its Achilles heel. Businesses often underestimate the resources needed to redesign and realign business processes in order to configure the system. As a result not all business goals are met and implementation can take years and prove hugely expensive.
Failures have been high profile and costly. In 2004, Hewlett-Packard was forced to report a $160m loss following implementation issues. Fallout continues over New York’s CityTime payroll system project. Wracked by cost overruns and a criminal probe, the original $63 million budget has skyrocketed with total estimates reportedly reaching some $760m.
Analysis of why ERP projects fail has significantly helped companies achieve successful implementation. Key considerations include defining and sticking to system requirements, analysing which solution is best and a carefully planned and structured approach to adoption. Key critical success factors have also been identified helping to overcome change management challenges and ensuring a strong focus on competent and well resourced project management.
A good ERP implementation will deliver integrated business processes, one central database with no data duplication, a single ‘view’ of the truth, easy to use powerful reporting across the whole suite and organisation, and the same look and feel making end-user training straightforward. But perhaps traditional ERP’s biggest challenge is its perceived inflexibility. Despite offering seemingly limitless options and parameters, once implemented ERP systems can constrain how a company can change in the future.
Today’s organisations, big and small, are subjected to dramatic change at unprecedented rates. Whether it’s a merger or acquisition, restructuring or organisational change, diversification or entering new markets, modern-day businesses need to have agile and flexible systems in order to embrace change swiftly and successfully.
ERP ‘light’- faster, cheaper and more agile
Buying and implementing ERP can be expensive and time consuming. What’s more, the largest players in the market have a reputation for needing huge resources and external consultants not just for implementation but also when making changes to the system or even just upgrading and maintaining it. Some of the more responsive vendors have embraced a new approach to ERP, which focuses on keeping costs of business change down, ensuring business change can be handled as and when needed (independent from the vendor) and most important – eliminating any chance of business disruption.
It’s this level of flexibility that is fast becoming business critical. Change has always been a part of the corporate and public sector environment but never more so than now. The global recession has accelerated organisational change whether it’s as a result of a merger or acquisition, restructuring or efficiency drives. When software can be quickly and easily changed in relation to new business situations without the need for programming or external resources it makes the business more agile and able to create lasting (competitive) advantage.
Consumerisation and cloud
What’s more the influence of the social web, enterprise mobility and ‘instant’ access to applications is driving a technological revolution. Cloud computing is now quickly becoming a part of our modern-day business systems architecture. Once confined to the outsourcing of mundane back office functions and storing data, the phenomenon is fast driving a significant shift in IT services delivery. The need to be mobile, immediate and omnipresent in the new era of consumerisation is drastically changing the way organisations leverage technology.
It’s also changing the way individuals view IT. As individuals get used to technology that is more advanced and flexible than that which they use at work, the ‘bring your own device’ (BYOD) trend means that employees can securely plug into the network from any device enabling a truly mobile workforce. The complex nature of ‘big’ ERP architecture means that organisations need to carefully consider what cloud model to migrate to and indeed which business functions to migrate.
But ERP is increasingly becoming cloud-friendly. Products with architectural design mean that companies can create a hybrid on-premise/cloud environment that meets their constantly changing needs. Cloud technology certainly addresses a number of key drawbacks that traditional ERP has suffered from, including:
- Quick to implement
- Easy to deploy across large teams or organisations
- Intuitive to use
- Flexible configuration and pricing models
- Rapid scalability
- Easier to maintain, change and upgrade
- Reduced need for IT resources
- Lower cost of ownership and cost of change
ERP vendors are rapidly embracing cloud technology although some have offered cloud based, multi-tenant ERP delivery models for many years as part of a more flexible, change-centric approach.
A platform approach
The ‘platform’ approach to ERP is another growing trend, which will deliver significant benefits to users. This approach meets the demand for specialist functions and capabilities with multiple vendors offering solutions built on the technology platform of a core ERP solution. While only the biggest vendors were able to achieve this in the past, evolving technologies including cloud have made it simpler for smaller software providers. A platform approach can offer users the best of both worlds; the security of dependable ERP solution combined with choices of specialist applications to address very particular requirements.
Users no longer need to face the stark choice between ‘best of class’ or single-vendor ERP. The advent of the platform approach has seen the growth of another consumer technology influence – app stores. Users can choose from many small applications or solutions developed to run with their core ERP solutions to solve specific challenges.
Despite being written off by many as having no business use, the impact of social media on ERP and business applications generally is rapidly becoming apparent. Forward thinking users and vendors see the significant advantages social technologies and approaches can bring in terms of collaborative working. The ability of such tools and technologies to support cross functional communication and new ways of working open up considerable possibilities in the modern enterprise and new ways of working will continue to emerge in the future.
The future of ERP is being significantly influenced by consumerisation of technology. This ‘power to the people’ movement is driving vendors and enterprises to offer more flexible, collaborative approaches to business technology and in turn exciting ways for organisations to respond and support more agile, innovative approaches to business. Despite a bad press in recent years ERP looks set to reinvent itself in response to fast changing business challenges and finally deliver on its promises.