ERP Makes a Comeback
Most big companies rolled out their first ERP systems more than a decade ago. Now one in four businesses plans to upgrade or roll out a new ERP system
Tue, December 20, 2011
InfoWorld — They couldn't put it off any longer. The ERP system for the Electric Power Research Institute (EPRI) had reached the end of its useful life.
No wonder. EPRI -- a California nonprofit institute that conducts research on the generation, distribution, and use of electricity for utilities in the United States and abroad -- had implemented its ERP system way back in 1999. Driven in part by the race to beat the Y2K deadline, the system had been designed for a time when EPRI used a combination of mainframes, minicomputers, client server systems, and desktop PCs -- an architecture it abandoned years ago. Worse, the organization's original ERP vendor had been swallowed by a competitor, and support for its legacy product was coming to an end.
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It was time to make a painful choice. But unlike in the late 1990s, EPRI had plenty of options. It could stay with a large on-premise vendor like Oracle or SAP. It could go for a smaller but nimbler SaaS solution like NetSuite or Plex Online. Or it could go for an on-premise solution hosted and managed by a third party.
EPRI chose the last, going with a brand-name solution and a third-party host. Why?
"Their solution offered a contract lifecycle management module, which we needed," says Michael Dotson, senior manager of business operations for EPRI. "And the hosting company had more experience with the software. We thought it would be faster to roll out and easier to upgrade, especially if we needed to customize it later."
An ERP boomlet, born of necessity
For the past decade, ERP has been the poster child for IT projects that overpromise and underdeliver. It was notorious for painfully complex rollouts that took years to implement, required massive customization, and were often only partially realized. Billions of dollars were spent just trying to get ERP systems to work as advertised.
Now ERP is back -- and not just for big enterprises looking to refresh legacy systems. According to surveys by Forrester Research, roughly one out of four SMBs and enterprises plans to either upgrade their existing ERP solutions or implement a new one over the next 12 months.
Many of these are small to midsize companies that have been getting by for years with QuickBooks or Peachtree but now need to take managing their businesses to the next level, says Forrester Research analyst China Martens.
