ERP Still Haunted by Implementation Challenges
Updated · Sep 27, 2011
ERP (enterprise resource planning) has never been the easiest software to deploy. After all, its tentacles spread into just about every facet of the organization. So it’s never going to be a plug-and-play proposition.
But customer complaints about lengthy deployment cycles don’t always fall on deaf ears. Vendors have been working for many years to make their products more user-friendly. So how are they doing?
China Martens, a Forrester Research analyst, thinks there is still plenty of room for improvement.
“Today’s ERP applications are still too complex and inflexible,” she said. “Organizations continue to be plagued with customization and upgrade headaches as a direct result of the software’s rigidity and poor match with real-world business processes.”
Her view is that mismatches persist between how companies want to run their businesses and their ERP applications. In particular, they want to use the data in their ERP systems in a much broader way. Instead of the traditional financials, HR and order entry, they seek to plug that data into other business applications and processes.
Graphical Workflows, Cloud ERP Could Help
However, Martens sees hope on the horizon on two fronts: The emergence of next-generation apps with graphical workflow tools, and broader development possibilities offered by platform-as-a-service (PaaS) cloud environments.
Vendors such as Infor, NetSuite, SAP and Syspro, she said, are beginning to offer their graphical business process orchestration tools. Some are for developers, while others target business process professionals who want to customize existing business processes.
On the PaaS front, apps developers are probably the main beneficiaries, at least initially. PaaS gives them a framework and tools to be able to quickly build and deploy new online services that can be tied into ERP.
“Given the customization and extension capabilities PaaS can afford, we believe ERP apps will evolve to incorporate cloud-based extension and customization tools (i.e., PaaS), especially where the application environment is deployed via SaaS,” said Martens. “Enterprise customers have not tended to pressure their apps vendors to deliver SaaS ERP, but that’s starting to change as companies of all sizes look for lower-cost, more nimble alternatives to on-premises apps.”
So far, she said, NetSuite with SuiteWorld and SAP with Business ByDesign PaaS are available, though others are coming. Other ERP players appear to be clustering around Microsoft Azure as their PaaS provider. This includes Acumatica, Epicor and Infor.
Another big trend, Martens notes is usability. This is leading to a blurring of the lines between applications.
“Vendors are responding to users’ needs to give more of their staff access to data held within ERP apps by working on bringing more of a common look-and-feel between particularly CRM and ERP apps,” said Martens. “The idea is that users can be within an ERP app but not know they’re there and not require training to reach the information they require.”
One current example of this would be cloud accounting player FinancialForce.com, which has built FinancialForce Accounting on Salesforce.com’s Force.com platform, and has worked to ensure that its accounting app closely resembles Salesforce CRM. Martens predicts that Sage may also be heading in this direction by bringing its Sage ERP and Sage CRM products more closely together.
Another area where this is starting to show up is in hooking ERP into social networks and third-party data aggregators. One example would be NetSuite’s teaming up with sales intelligence provider InsideView in a partnership they have dubbed “social ERP.”
“Such technologies could be particularly useful in helping to bring together ad-hoc teams across a company’s disciplines to work on customer problems and retention,” said Martens.
ERP Lawsuits Still Abound
Eric Kimberling, president of Panorama Consulting Group, called attention to recent lawsuits as indicating that the above measures may not have solved the issue entirely.
“CIOs and their respective organizations appear to still be getting schooled on the harsh realities of ERP implementations,” he said.
He mentioned lawsuits against Epicor and Infor for such factors as implementations being delayed repeatedly, costing many times more than originally estimated, failing to function adequately and failing to match business processes.
His advice to users is to do more homework, form realistic expectations and bring in ERP expertise to help with implementation. Few companies, after all, have much ERP implementation experience internally. The dizzying array of ERP options to choose from in the ERP software market makes it difficult for companies to choose wisely.
“It is important to fully understand your business requirements in detail, as well as the strengths and weaknesses of various software options to meet those requirements,” said Kimberling. “Develop a realistic and detailed implementation project plan, resource allocations, and budget based on factors unique to your business. You may need outside assistance from independent ERP experts.”
He said there is less tolerance for risk and implementation cost overruns in general, as well as a growing awareness of the need to focus on organizational change management to help mitigate risk.
“Companies are extremely risk-averse and are not willing to spend millions of dollars on ERP software that is difficult to implement or doesn’t deliver measurable value,” said Kimberling. “Executives are finally smartening up and realizing that organizational change management is arguably the single best way to mitigate and manage implementation risk.”
A common strategy, therefore, is to better define a business case for ERP as well as ROI analysis to assess the viability of ERP initiatives. Despite such tactics, however, Kimberling sees more lawsuits and cancelled projects looming.
“Slimmer IT budgets are going to create a conflicting pressure to cut costs in the wrong places, which will ultimately increase the rate of ERP failures,” said Kimberling. “In addition, because of the low tolerance for risk, companies will be faster to pull the plug on troubled projects and file ERP lawsuits against their vendors if needed.”