Tuesday
May032011
ERP Investments: Not everyone is on the same page
Tuesday, May 3, 2011 at 03:11PM This year, 2011 has finally brought some positive news on return of growth for ERP, but not everyone is on the same page.
According to a Forrester Research report, ERP investment plans will dip this year from last, even though overall IT investment plans are predicted to increase. It also states that roughly half the companies surveyed are running on product releases that are 2 releases behind current.
It is is understandable that a lot of companies scaled back IT spending in general, and ERP system spending in particular, during the recession, but 2011 is projected to be better in terms of economic growth. If you agree with the Forrester Research, it begs the question: why is ERP system investment projected to decline, when it appears that a lot companies need to spend in order to upgrade and take advantage of the latest functionality theses systems have to offer?
The answer may lie in the very nature of ERP systems themselves. ERP systems are the transactional and processing bedrock of a corporation, and as such focus on transactional integrity. The features required to ensure a solid ERP system can also limit its potential in the enterprise. In other words, in order to be the best in operational integrity, sometimes the enterprise ERP systems have to sacrifice functionality that would allow them to address the needs of non-financial users. ERP vendors have tried to address this issue by adding modules, but the functional issues introduced by trying to adhere to their transacational integrity and still have the flexibility and additional features to support nontraditional ERP requirements such as supply and demand planning, simulation, and S&OP support have proven almost impossible to overcome.
Could it be that now companies are starting to look at more than just survival? Emphasis is being put toward improving how the business works and reacts to change, versus just ensuring current processes are performed correctly? This shift of focus will naturally favor enterprise systems that can support coordination of the complete business ecology, along with the ability to act as the ‘brains’ of an enterprises system. These types of systems have a very different set of criteria needed to meet the business requirements of today’s corporations, which might explain the shift away from traditional ERP spending towards systems that can lead to significant improvements in operational performance, not just better transactional control of data.
The ability to implement control over the numerous transactional and data storage systems in the enterprise and bring the data together in a meaningful way is crucial to getting the entire enterprise to react to change faster and move in the same direction in a coordinated manner. Once this capability has been realized in the business, the enterprise becomes much more able to compete and out maneuver the competition. This in turn leads to higher growth numbers, improved margins, and better ROI.
It can therefore be argued that there could in fact be a movement of investment dollars away from traditional ERP system maintenance because of the desire for companies to dramatically improve their competitive position by investing in systems which can lead to a ‘smarter’ and more agile corporation.
According to a Forrester Research report, ERP investment plans will dip this year from last, even though overall IT investment plans are predicted to increase. It also states that roughly half the companies surveyed are running on product releases that are 2 releases behind current.
It is is understandable that a lot of companies scaled back IT spending in general, and ERP system spending in particular, during the recession, but 2011 is projected to be better in terms of economic growth. If you agree with the Forrester Research, it begs the question: why is ERP system investment projected to decline, when it appears that a lot companies need to spend in order to upgrade and take advantage of the latest functionality theses systems have to offer?
The answer may lie in the very nature of ERP systems themselves. ERP systems are the transactional and processing bedrock of a corporation, and as such focus on transactional integrity. The features required to ensure a solid ERP system can also limit its potential in the enterprise. In other words, in order to be the best in operational integrity, sometimes the enterprise ERP systems have to sacrifice functionality that would allow them to address the needs of non-financial users. ERP vendors have tried to address this issue by adding modules, but the functional issues introduced by trying to adhere to their transacational integrity and still have the flexibility and additional features to support nontraditional ERP requirements such as supply and demand planning, simulation, and S&OP support have proven almost impossible to overcome.
Could it be that now companies are starting to look at more than just survival? Emphasis is being put toward improving how the business works and reacts to change, versus just ensuring current processes are performed correctly? This shift of focus will naturally favor enterprise systems that can support coordination of the complete business ecology, along with the ability to act as the ‘brains’ of an enterprises system. These types of systems have a very different set of criteria needed to meet the business requirements of today’s corporations, which might explain the shift away from traditional ERP spending towards systems that can lead to significant improvements in operational performance, not just better transactional control of data.
The ability to implement control over the numerous transactional and data storage systems in the enterprise and bring the data together in a meaningful way is crucial to getting the entire enterprise to react to change faster and move in the same direction in a coordinated manner. Once this capability has been realized in the business, the enterprise becomes much more able to compete and out maneuver the competition. This in turn leads to higher growth numbers, improved margins, and better ROI.
It can therefore be argued that there could in fact be a movement of investment dollars away from traditional ERP system maintenance because of the desire for companies to dramatically improve their competitive position by investing in systems which can lead to a ‘smarter’ and more agile corporation.
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