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

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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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