5 Facts About ERP That You May Not Know

Whether you're upgrading your ERP system or deploying one for the first time, it pays to understand today's ERP software landscape.

By Thomas Wailgum
Tue, June 09, 2009

1. ERP may be linked with complexity, high cost and 18-month rollouts, but enterprises today have many alternatives to behemoths SAP and Oracle. On-demand and software-as-a-service (SaaS) vendors offer robust ERP product sets, and open-source apps can be bought via Amazon.com's EC2 platform. Ray Wang, vice president and principal analyst with Forrester Research, says users have turned to SaaS for innovative functionality, as well as lower costs.

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2. Midmarket and Fortune 500 companies can use SaaS ERP. Chiquita Brands is rolling out a SaaS ERP application to 70 countries on six continents to manage its 23,000 workers. Last year, CIO Manjit Singh deployed software from Workday to 5,000 U.S. employees and 500 managers in 42 countries, with implementation continuing through 2010. One challenge: accessing the application in remote areas of the world where bandwidth is expensive and in short supply.

3. If you're trying to decide the right time to purchase and roll out ERP, keep in mind that major revamps from Oracle and SAP are due next year. Oracle's long-awaited (and already delayed) Fusion Applications Suite reportedly will emerge in 2010. SAP's Business Suite 7, announced in February, should be ready for prime-time use early next year (Update: Business Suite 7 is now generally available). Analysts say each vendor hopes that its new offering will grab marketshare and customers from the other.

4. ERP maintenance fees are not decreasing, even though customers are recession-strapped. Oracle recently affirmed that it has no intention of messing with its maintenance fee "cash cow"—that highly lucrative, annual revenue stream paid by customers for "software license and product support" that delivers 90 percent margins. And in January, SAP launched a new program to gradually increase its maintenance fees.

5. ERP projects can still fail. History overflows with ERP disasters, but all the lessons learned from troubled deployments won't save every project. Two recent cases provide plenty of angst: Waste Management is currently embroiled in a nasty $100 million lawsuit with SAP over a failed implementation, and Select Comfort decided (with shareholder pressure) to halt its $20 million, multimodule ERP project.

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