It’s fair to say that many companies have struggled in rolling out ERP software since the introduction of this technology in the 1980s. CIOs have had to deal with increasingly complex applications and many project fail to realise expectations. One survey suggests that half of all ERP deployments fail at the first time of asking and 30% take longer than expected.
So, the latest IDC DLC gathering talked about the tricky question of how to get the best out of an ERP deployment and what the future of ERP looks like, inspired by this recent blog by Leadership Advisor Marc Dowd on CIO considerations regarding these tools.
Tom Seal, IDC research director, kicked off the debate by looking at the current trend towards ‘business transformation’. He said that there were two types of transformation: the transformation of business models and technological transformation supporting existing models. In parallel with this, there were those companies who were looking to make changes at the edges as opposed to those who were looking for a complete overhaul of the underlying technology.
Upgrades vs “Best of Breed”
It has some relevance for ERP implementation said Seal, because of the pressure put on organisations by the likes of Oracle who will ask “why aren’t you upgrading?” Are companies going to rip out existing software and implement new ERP systems? It’s a question of whether there’s going to be a root and branch upgrade or a more measured approach. As Seal pointed out, the number of ERP customers actually taking the upgrades they are being pressured to deploy are still remarkably low.
One speaker pointed out that there was an indication of how times had changed. In the past, the process was all-important, he said, and the technology was there to get things done – now the technology and the process are more bound together.
The problem with this was that companies had to fully commit to making a change. As one speaker pointed out, many CIOs want to take something off the shelf and customise it – something that’s not so easy to do with ERP software. It is possible, however. “We have to customise a lot to make the ERP solution useful for us. We couldn’t find it off-the-shelf. We need to customise too much to make it work.”
This “best-of-breed” approach was definitely one that has been seen in the future plans of IDC clients and those that responded to surveys, according to the IDC team present, and this was acknowledged by those present. The value of having ERP to manage core data and processes with more flexibility at the edges of the system was valued. However there are technical and commercial challenges to this.
The Licensing Question
Licensing models were also on the agenda for those present. One speaker said that the price that many organisations paid for upgrading was a hefty hike in these charges, although another speaker said that although companies would be paying for additional licences, there would be an immediate uplift in other benefits. However, the cost is a useful weapon as IDC’s Martin Canning said. “ERP vendors have generally assumed that the cost/risk of multiple licences, integration, training data management etc. would be a enough of a deterrent to a best of breed approach.”
There was another more fundamental problem, as one participant explained, when services and processes are so wrapped up in ERP and delivered as commodities, how can users distinguish themselves when they are using the same services.
One other speaker said that there were ways forward. “ I use the same type of brush as Leonardo da Vinci but I don’t get the same results, the difference is that he knows what to do with it. It’s the same with ERP, it isn’t necessarily an advantage but some of us know how to use it. It’s this that sets organisations apart.”
Division
Some CIOs pointed out that the way to make ERP work was by splitting the software from the processes, it may not be what the ERP vendors wanted, but they can have some success that way. One participant said that for its supply chain infrastructure, the managing of processes, it works very well but his company tried to manage all of its business data on a common data platform rather than with ERP.
One other participant said that there was another path forward. “We are moving to see departments starting to act like small companies within a big organisation, giving them more autonomy, with the digital leader acting like a mini CEO.”
There were certainly calls for the tinkering to stop and let CIOs take stock. “I wonder if we are getting to the stage where further attempts by core ERP vendors to “innovate” will not be helpful,” said one participant. CIOs certainly have enough on their plate right now with their existing set-ups, any more changes will not necessarily be welcomed.
The IDC Digital Leadership Community brings people together from across Europe to discuss the burning issues in corporate technology and its implementation, culminating in our annual summit which will next be held on 5th October 2021. You can join in the conversation by emailing Chris Weston (cweston@idc.com) or Marc Dowd (mdowd@idc.com), or alternatively why not join our LinkedIn Group?