In a Dysfunctional Enterprise Software Family, ERP is a Really Crazy Cousin

Ann All

Every family has a crazy cousin (or uncle or grandparent) who tends to derail reunions and other gatherings with unpredictable, borderline crazy behavior. Most in the family have a love/hate relationship with the guy, and in many ways they enable his behavior. If you send him to the store with a $20 bill to get whipped cream for the Thanksgiving pumpkin pie, he'll pick up a woman in the checkout lane and turn up the next day in a police station two counties away.

 

In the enterprise software family, ERP is that crazy cousin.

 

Consider all the reports of ERP systems gone wildly over budget and over schedule and the number of companies that consider ERP systems a success just because they managed to get the darned things installed, never mind whether they actually do the company any good.

 

But there's plenty of dysfunction to go around in the enterprise software family.

 

That much is clear from a recent CIO.com article that, while it focuses on ERP systems, makes points that apply to most enterprise software. ERP gets lot of attention because it tends to be big and expensive, but many of its problems plague other software as well. I've written before about the increasingly unsatisfactory model in which "software (is) sold by people who don't write it and purchased by people who don't use it," as a commenter to a blog post wrote in late 2007.


 

First, some bullet points on ERP, derived from a Panorama Consulting Group study:

  • ERP projects that take longer than expected: 93 percent.
  • ERP projects that exceed original budget expectations: 59 percent.
  • Companies that report receiving 50 percent or more of ERP's projected benefits: 21 percent.

 

And now the ugly truths that apply to many, if not most, enterprise software implementations:

  • An initial hype cycle -- coupled with an unmet need, in ERP's case -- that led companies to participate in what former Gartner analyst and founder of the Deal Architect consultancy Vinnie Mirchandani calls "an almost irrational buying pattern."
  • Difficulty breaking away from vendors once they are entrenched.
  • Non-transparent costs and highly restrictive licensing terms.
  • Rising maintenance and support fees.
  • An overreliance on customization -- much of which is unnecessary, says Manjit Singh, CIO of Chiquita Brands International.
  • Internal politics and infighting.

 

ERP sounds like a system practically crying out for software-as-a-service options, which in theory can alleviate most of the cost and complexity issues mentioned above. There are a number of them, including Workday, a product created by PeopleSoft founder Dave Duffield that pundit Nicholas Carr and others speculated could lead to the "end of ERP." One of Workday's marquee clients is Chiquita.

 

Yet a recent Gartner report questions whether SaaS ERP solutions are comprehensive enough for large enterprises. Analyst Denise Ganly concludes they aren't. From the report:

Because of the complexity of ERP suites, SaaS offerings for administrative and operational functions typically have provided functionality that is confined to one domain, such as sales force automation, or one business process, such as payroll. Thus, ERP SaaS suite offerings are still immature.


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Sep 15, 2009 1:48 AM Steve Christensen Steve Christensen  says:

I certainly agree that ERP systems can be referred to as the family member that wreaks havoc.  But unlike your analogy where the relative leaves the house and causes disruption publicly but privately only by their absence, the reality of this "family" is the crazy person takes over the house and will not ever leave.  Makes you wish for the day of distant county sheriffs calling about crazy Wilbur.

Changing ERP licensing from traditional to SaaS is the difference between a liquor store and a bar; I can buy the entire bottle at once and take it back to my house, or I can buy it by the drink and sit in a bar. It is the same drink either way. Regardless of arguing for the cost savings of not buying the entire bottle up front you will still have a multi-year hang over.

Its time to control the ERP systems by not asking them to do something they are incapable of achieving; their frustration only leads to longer binges of consultants, employee revolt (see it can't straighten up, its weak) and budget consumption (2/3rd of IT budget is just the care and feeding). ERP systems are complex and scalable, they consolidate data, standardize financial reporting and offer other higher level capability.  What they can't do is change. If you have one already installed; Keep It. If you are considering upgrading or replacing the one you have; Stop being Stupid. Any modification, upgrade or replacement of an existing business system is shipping out one problem relative to receive an entirely new set of problem relatives. They won't be any less disruptive and at least the old relative you've learned to tolerate.  Look into Enterprise Add-On therapy for your dysfunctional ERP/Operation/Company family. No body gets hurt, shipped out or made to "do that one thing" that they hate. Instead you can introduce innovation to your company and get everyone working together and making your dysfunctional family better than everyone else on the block.

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Sep 16, 2009 2:38 AM Mark Symonds Mark Symonds  says:

Ann,

I totally agree with your assessment as to why many enterprise implementations fail.  I further agree that SaaS solutions can dramatically simplify the process and that proper expectation setting and scope management transcend whatever product is chosen.

There are, however, mature, wide-reaching SaaS applications in the market.  Plex Online, for example, has nearly 500 customers running their entire manufacturing enterprise in a SaaS model.  Many still think of SaaS as just point solutions for CRM or HCM.  These companies, ranging in size from $1.5billion in revenue down to startups, run ERP, MES, Quality, and most other aspects of their business in the cloud.

It is just a matter of time before this next wave of vendors like Plex, Workday, Netsuite and others overtake the winners of the 80s and 90s.  There is a huge replacement cycle going on because so many ERP systems were installed in the runup to Y2K.  Those implementations are now 10-15 years old.  Mapics, QAD, Syteline, Made2Manage and many other products are headed for the scrap heap.

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Dec 13, 2009 10:23 AM Simplify Solutions Simplify Solutions  says: in response to Mark Symonds

Wonderful and resourceful article on how to simplify ERP solutions, this will also help in designing new web development in this direction. We would love to put this information on our website http://www.simplify.co.in

Thanks & Regards,

Simplify Team

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