Ann All spoke with Bill Allison, a principal with Deloitte Consulting, about the future of ERP. Though deployments had dropped over the past few years, Allison is predicting a resurgence in ERP.
In this, the first of a two-part interview, Allison discusses the reasons for ERP's comeback, cloud-based ERP and other topics. In part two, to be published later this week, he shares advice for organizations considering ERP investments.
All: For a while it seemed no one was talking about ERP, but now we seem to be hearing a lot more about it again. Were people just preoccupied with other technologies?
Allison: There were fewer ERP implementations going on. Compared to where we were three or four years ago, there are still fewer. The best indicator of that is fewer ERP license sales. They are down pretty significantly, especially for the big vendors like SAP and Oracle. That's pretty closely correlated to the world economic environment. This stuff is pretty expensive. When the economy slows down and earnings slow down, organizations tend to defer these big capex projects.
It's amazing that once again we've predicted the end of big ERP. Those predictions started about a year ago. But ERP is continuing to reinvent itself, and we're starting to see it come back. Think of the big bang theory. Mostly you'd start with something like HR. If you got around to supply chain and those sorts of things, it was five or six years after you started your ERP project journey. Everyone was afraid of that big bang option in terms of go-lives. Now implementations are accelerating. Hourly rates are going down due to global labor arbitrage. And the products are getting better and safer to implement.
Not only is big ERP not dead, it's getting bigger. The dollars spent aren't necessarily getting bigger, but scopes are getting bigger because you get more for your money. The boundaries of ERP are expanding. The things we considered nice-to-haves a few years ago are now commonly included in scopes because people can afford them and the industry is getting better at implementing bigger scopes.
All: Are those bigger scopes a good thing or a bad thing?
Allison: We're seeing dramatic reductions in time to benefit. The R in ROI not only is more certain but it shows up sooner. In addition, we're seeing big line-of-business and even category shifts. We weren't even talking about mobility two years ago. Now in the jobs Deloitte is looking at, mobility is becoming almost a standard part of scope because it's now doable and affordable.
Over the past few years we've made strides in business intelligence and analytics that are now available to a mobile device. When we were in the downturn, people were spending smaller amounts in a tactical way. A common answer was to buy some analytics capabilities to help make organizations more nimble in the face of a choppy economy. As a result, we made big strides in the BI category the past few years. A natural extension of that is how do we make this information more real-time and almost ubiquitous. That is why mobility is such a hot topic. We now have relevant data to send to those mobile devices.