ERP Industry Update with Nucleus Research's Rebecca Wettemann
Top Customer Inquiries Include Support, Cloud and Ease of Use
Ask Rebecca Wettemann, an ERP and CRM analyst with Boston-based Nucleus Research, about the three biggest ERP software trends and topics that she's hearing most frequently from clients today and she doesn't hesitate for a second.
They want to know her thoughts and advice about third party support, she said. They want to gauge her opinions about hosted ERP or ERP delivered as a service from the cloud. And they want to know if any ERP vendors are really working on making ERP software easier to use.
According to Wettemann, it's a very interesting time to be an analyst covering this industry. "Companies are looking at third party support for SAP and Oracle," including PeopleSoft and JD Edwards systems that are still very much in use, she notes. "Third party support is cheaper, and it's not just cheaper in terms of the support contract, but it also means customers do not have to go on a forced software upgrade path" as imposed by their ERP application vendor. For customers, that's a big plus today to be able to stick with whatever they are using as long as it is still working for them - and avoid the costly and risk prone fork lift upgrades.
Third party software support vendors provide services without also having to hawk their latest and greatest application upgrades, which means less pressure on customers, Wettemann said. "In many cases they can also spend less on software maintenance because their support provider can tell them what specific application patches they do and don't need to install" and configure. "These companies are focused on providing quality support, that's often better than the original ERP vendors." Read more »
Rebounding From a Failed ERP Software Implementation
ERP Failures Provide Lessons Learned
You may recall from the prior blog post on ERP software failures how Marin County, California sued Deloitte Consulting for $30 million after the SAP ERP deployment they began together with high hopes in 2006 failed to work as designed and planned.
Now that the dust has settled, Marin County is taking another step as they work to get their ERP plans back on track and meet their original objectives. They're about to announce which of several alternative programs to bring in for a new ERP application that will finally accomplish their IT objectives.
In a 13-page report titled "Assessment of Marin County Software", the review committee within the county's IT department looked at a multitude of alternatives for beginning anew. To their credit, giving up was never on the list.
In the meantime, as they set out their new plans, the county has put the troubled SAP ERP application into a maintenance mode that will allow them to invest the necessary time to find and implement an alternative ERP system.
As I read through the report, I kept thinking about how the best people in any field always seem to find calmness, clarity and wisdom at moments when things appear to be at their worst. The report identified several smart ideas for making the most out of what had already occurred. Read more »
The Rumors of ERP's Death Have Been Greatly Exaggerated
The Need To Automate Complex Business Processes with Not So Complex Business Software
Have you noticed how Enterprise Resource Planning (ERP) applications receive repeated criticism from users and the technology media? The reasons are varied: ERP software systems are complex, expensive and prone to deployment and operational challenges. These are massive business software systems for a company to invest in and getting it right can be difficult.
At the same time, though, while the critics are vocal and oftentimes brutal, ERP software systems continue to be researched, compared, evaluated, purchased and deployed by companies of every size and industry. For something so criticized, they remain a de facto standard.
True, the problems with ERP systems from all kinds of software vendors are legion and the criticisms have been around for years. One of the most cited critiques, "The Problem With Enterprise Software," was written by software consultant Cynthia Rettig and published in the MIT Sloan Management Review in 2007. Rettig certainly didn't mince her words.
"These systems, Germany-based SAP is the most common, promised to eliminate the complexity of multiple operating systems and applications by replacing them with a single set of interconnected modules to run the financial, manufacturing, HR and other major functions of a typical multinational corporation," she explained. "Theoretically, a single monolithic system would seamlessly connect various distinct and geographically separate locations through private networks. Companies understood that they could customize these business systems as needed to suit their unique business processes. That was the hope. But these massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces, introduced new levels of complexity, often without eliminating the older systems they were designed to replace."
So what happened next? "The concept of a single monolithic system failed for many companies," Rettig advised. Read more »
Using BPM to Prevent Automating Broken Processes
Aligning Business Processes with Business Software Delivers Synergistic Results
To help your business operate smarter and faster, you brought in the right information technology (IT) hardware and layered it with the right business applications, from a Customer Relationship Management (CRM) system to packages for Enterprise Resource Planning (ERP) and Supply Chain Management.
Yet at the end of the day, or the quarter, or the year, it seems that things inside your business aren't improving as quickly as expected, even though you are leveraging all of that new software technology.
According to a sampling of analysts and IT users, that may be because you're in part trying to change the wrong things. New business software systems are both promising and alluring and can deliver improved productivity and revenue potential, but before these tools can achieve big benefits, your company probably has to do some changing and improvements in the ways that internal processes are performed and decisions are made.
That's where Business Process Management (BPM) tools fit in. Often, it's not the business software that needs to be refreshed first. Instead, what's needed is a review and upgrade of those high volume business processes that your company repeats over and over again, sometimes with only mediocre results.
Business process improvement or reengineering is difficult work, and there are often plenty of people and processes inside your company that are going to be resistant to needed change, says Daryl Plummer, an analyst and chief of BPM research for Stamford, Conn.-based Gartner Inc. Read more »
ERP Industry Update with Analyst Chris Selland
Top Customer Demands Include Simplification, Diversification and Risk Sharing
What issues are giving ERP customers the biggest challenges? According to Chris Selland, an ERP consultant and analyst in Needham, MA., top concerns among his clients are the problems of ongoing software complexity, worries about continuing vendor consolidation and finding ways to share deployment risks with vendors and consultants.
Selland is the managing director of Selland Capital and a longtime IT analyst, investor and business development executive, and he reiterates that one of the major issues keeping ERP customers up at night is the ever-growing complexity of ERP software systems and the continuing desire to simplify these complexities. "ERP software has always been such a broad idea for companies," he commented. "It's been an umbrella term since the 1990s. It was originally seen as software for companies that make money by making stuff, and then integrating and bringing all the processes and data together."
But much of the market for ERP software today, he says, seeks applications that no longer take one or more years to implement. "What is going on these days is more and more demand for solutions that can be up and running much more quickly," he advises. "On-demand ERP is also capturing the attention of the marketplace" because it means just using the services a company needs without having to invest in and maintain an elaborate infrastructure and complex applications. "People just want to get things running. They don't want to be running the IT in many cases anymore."
That kind of customer interest in making ERP software simpler is growing all the time, Selland said. Often companies are finding that they don't have to use big-iron or monolithic ERP applications in their remote divisions or satellite offices, even when their headquarters is running one of the big brand ERP systems like Oracle, SAP or Infor. "They don't want to have to buy all the servers or maintain a large IT staff or big data centers. More customers are looking at hosted ERP or software as a service." Read more »
The Most Common Mistakes Incurred in ERP Software Implementations
ERP Failures Provide Valuable Lessons Learned For Others
Enterprise Resource Planning (ERP) software applications are fraught with risk. Planning, deploying or fine-tuning these complex business systems for your company is such a large undertaking, according to many experts, that these IT projects fail approximately 50% to 70% of the time.
Those are not encouraging statistics. Just ask the local government of Marin County, California, who filed a $30 million lawsuit against Deloitte Consulting in connection with a four year SAP ERP project that hasn't worked out as planned. Marin County, located just outside San Francisco, retained Deloitte to refresh its financial, payroll and Human Resource (HR) systems. But instead of solving its IT problems the project allegedly raised a slew of additional issues related to the SAP deployment, so says the lawsuit.
So what can your company learn from Marin County's experience? Plenty, said ERP consultant Dave Andrews. Andrews, whose firm specializes in ERP implementations from Oracle Corp.'s JD Edwards and PeopleSoft brands, said that the Marin County debacle and lawsuit is not an aberration. Many ERP projects across the nation and around the world have ended up in litigation, splashy headlines and out of court settlements, he said.
"I've been watching it happen for 40 years," said Andrews, who in 2002 wrote the book "Revolutionizing IT", in part explaining how these failed IT deployments unfold in businesses. "The same dynamics occur over and over again."
The reasons for the high ERP project failure rate are myriad, he explains, from design flaws in ERP software to complex installation and configuration schemes that permit projects to bog down by involving a virtual and unmanageable maze of feature settings for users. By allowing so many configuration and tools choices, the deployments can become a minefield of conflicting features that never seem to get finished, explains Andrews. Read more »
ERP Implementation Best Practices and Advice
Time to replace that legacy ERP system?
Sometimes the best way to address business software problems is to scrap the old stuff and bring in the new. Despite the temptation to install more patchworks on the legacy ERP application and save the software selection and implementation project for another day, the reality is that software technology evolves rapidly and new ERP advances in critical areas such as ease of use, business process automation, business intelligence and integration with new systems such as mobile devices or social media can provide significant advancement to the company. Even new software delivery models such as hosted ERP or software as a service (SaaS) or new technologies such as open source ERP applications can fundamentally impact IT processes and business performance.
However, software selections and new deployments are always a very big deal, particularly when you're talking about your Enterprise Resource Planning (ERP) systems. This is no minor system. These mission critical business systems touch nearly every transaction in the company, and done wrong, can mean you're company operations stop come Monday morning after a weekend go-live event.
To mitigate that risk and avoid becoming one of the touted ERP implementation failure statistics, consider a few best practices along the way. Read more »
ERP Ease of Use is an Under-Recognized Critical Success Factor
Easy to Use ERP Systems Deliver Increased Productivity and ROI
No matter how much hardware, software and technology are involved in an enterprise IT project, in the end, success or failure is most influenced and judged by the users. That's because these people are the internal customers who must use the IT to accomplish their jobs. From your employees to your customers who communicate with your business through your Enterprise Resource Planning (ERP) systems, Customer Relationship Management (CRM) software or and other business applications, it's critical that the applications that you evaluate, purchase, install, configure and support meet one of ultimate litmus tests: are they going to be easy to use for your end users day in and day out?
Is this critical success factor something you already think about? Or does it fail to compete with other ERP software selection criteria such as feature sets, software functionality, reporting tools, workflow engines and a host of other items that bolster feature wars among software vendors? The ease-of-use factor is increasingly a key success factor in business computing, claims ERP consultant Jeff Carr. Carr, managing partner of Chicago-based Ultra Corporation, an independent ERP research and consulting company serving manufacturers and distributors, blogged that some ERP vendors are achieving big strides in making their complicated business software systems much easier to use.
"ERP vendors have clearly seen the need to level the playing field in what industry veterans like to call the beauty contest," explains Carr. "The beauty contest focuses on things like navigation, personalization, integration with Microsoft Office, and quick access to information. Software vendor sales staff now spend much of their time showing how easy their software is to use in these areas." This is a high impact implementation, user adoption and staff productivity factor that needs to be one of the many factors you include on your ERP software review checklist as you shop for new applications. If your staff can work faster, better and smarter using your ERP software applications, then your business will benefit through increased productivity, decreased business cycles and improved information reporting. Read more »
An ERP Market Update with Analyst Kevin Benedict
ERP Industry Advancements and Enterprise Mobility
If you think that the business value of your company's Enterprise Resource Planning (ERP) system is past its prime, then you may need to readjust your thinking. In fact, Kevin Benedict, the CEO of Netcentric Strategies LLC, says the use of ERP applications is getting a whole new life due to the growing popularity of mobile communications, mobile applications and the need for increased business agility.
"A client just asked me about where they should start with their enterprise mobility," Benedict said. "Everyone's asking about it." Benedict, an enterprise mobility consultant, social media expert and executive advisor says he keeps busy working with clients and partners to develop comprehensive enterprise mobility strategies which help companies work better, faster and smarter. And what that means today, he explains, is finding new ways to leverage corporate ERP data by connecting applications to a wide range of mobile devices used by workers in a myriad of locations and industries. It's happening everywhere, he says.
Mobile devices and smartphones such as the Android, iPhone and others are enabling businesses to connect their ERP systems and company data with mobile staff in real-time, making companies more agile and better able to serve their customers and business partners. And that, says Benedict, is huge today, particularly in the embedded mobile device market, where mobile capabilities are giving rise to business transactions that would have been unheard of just a few years ago.
Now, embedded mobile devices are allowing machines to talk to other machines in ways that directly leverage and extend ERP data. "You have newspapers like USA Today digitally distributing their content to an audience of iPads, and you have Redbox movie rental machines that can communicate with your mobile phone to inform you which movies are in a particular Redbox outlet," he cites. "And if it does not have the movie that you want, it can tell you where the movie you want is located and it can then reserve it for you. It can give the status of its inventory levels. That's an enormous business change that's happening right now." Read more »
ERP Software Shoot Out Peaks Interest But Fails to Deliver
A One Stop Location for Side by Side ERP Comparisons is Desired but Elusive
Deciding on an Enterprise Resource Planning (ERP) software application is never simple, whether you're starting from scratch or looking to replace an outdated legacy application your company has been using for years. So the idea of attending a two day ERP comparison event where ERP applications from multiple vendors are showcased in a "shoot-out" comparison and where you can see how each one works while running the same scripted, simulated workloads sounds pretty good.
At least that's what I thought when I received the e-mail press release, announcing the 7th annual "ERP Vendor Shoot-Out," to be held in San Diego and moderated by Technology Evaluation Centers (TEC) Inc. The concept of comparing ERP software in a side by side manner using actual production systems and real world business process test scripts sounds like nirvana during an ERP software selection project. However, before making my airline reservation and after digging a bit further, the other shoe dropped.
It turns out that only six vendors were invited to the party. Six vendors out of dozens of credible ERP software vendors. Sorry, but if only six products are being compared, it hardly seems like a valid "shoot-out."
So I called the folks at the Montreal-based Technology Evaluation Centers and asked them what they had in mind. Why only six vendors? How could that possibly give ERP software buyers a real market comparison if there are only a sampling of suppliers from a field of dozens of vendors in the marketplace? Read more »
ERP Applications Require Continuous Testing
ERP Systems Testing Is The Only Verification of Real Time Accuracy
Your IT department builds, maintains, upgrades and troubleshoots your company's IT hardware, ERP software and a myriad of other systems, but if you are not continuously monitoring and testing the results, can you really be sure that mission critical systems are working to their potential for your business?
A recent blog post on the subject of "Testing for Success" by Hans van Waayenburg, a leader of global testing services for IT consulting firms Capgemini and Sogeti, brought some new visibility to this often overlooked subject. For all the investment that companies spend on their information technology (IT), once the systems are installed and running, there is an overwhelming tendency to quickly move on to the next project, or put out the next fire, rather than allocating even minimal time and budget toward monitoring, testing or optimizing the existing hardware and software to be sure it's running correctly or optimally. The "get it done and walk away from it to focus on the next thing" falls short of achieving reliability, optimum results and maximum IT ROI.
So how do under-resourced IT departments go about changing this approach? The idea, argues van Waayenburg, is that it's not just an IT function anymore. "As such, both software testing and quality assurance are now an increasingly important focus not just for IT, but also the broader business users," he explains. "Poor functionality can impact brand reputation and business revenue and can be very costly to rectify. System outages and downtime as a result of bugs in a software system are unacceptable, especially to customers, and can result in loss of service, revenues, customer trust and, in the case of some organizations' systems, can even be dangerous. In both the public and private sectors, around the world, quality of service is one of the most important factors that can affect business success. Quality assurance, therefore, should be one of the main pillars of any sound business strategy." Read more »
A Middle Ground Between Doing Nothing and Over Taxing Company Resources
As companies grow they will ultimately reach a "Twilight Zone" of enterprise software hell. That's the point where your company is getting big enough to effectively use enterprise applications such as an Enterprise Resource Planning (ERP) systems, but at the same time, management doesn't believe the company is large enough to absorb all of that complexity and added expense.
So what are you left to do? Consider taking a middle road and looking at ways to bring in basic levels of needed ERP software automation without bringing in the big ERP overhead. Maybe you should think about small ERP.
That's just the approach being implemented by some cash-strapped local governments around the nation, according to an article in Government Technology magazine. For example, the state of Alaska just built a 'homegrown alternative' to a vendor supplied ERP business system, and has saved millions of dollars in the process. Instead of inflating their IT budget for big a ERP system now, while money is still tight as the recession continues to slowly recede, Alaska created its own smaller but serviceable application for about $100,000, according to Anand Dubey, the state's director of enterprise technology.
"States can do $200 million ERP deployments and still not know whether they are lowering their total cost of ownership or offering better constituent service," Dubey said. "There is a real danger that you have acquired a monster asset that is bleeding you dry. What good does it do to automate if you are not necessarily providing better service or saving money?"
These are the types of challenges also being faced by many companies of all sizes as well, from small businesses to global enterprises. Big ERP systems may deliver many benefits to businesses, but not every business needs all the bells and whistles. And not every business can afford all of what a big ERP application can deliver. Read more »