Why ERP Is Still So Hard

After nearly four decades, billions of dollars and some spectacular failures, big ERP has become the software that business can't live without--and the software that still causes the most angst. In Part I of CIO.com's analysis of the ERP market, we look at where ERP has been, where it's at today, and why it's still so hard to do these mission-critical projects well.

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ERP has its place, too. "The measurement stick for me and my team is not how well we did SAP," he says. "The measurement is: Did we improve the company's performance or our ability to get products to patients? [Our SAP rollout] doesn't dwarf the need for innovation for new products and for working with patients to get those products in their hands."

On the vendor side, the rise of the enterprise software supervendor (dubbed "MISO" by many) has been an unyielding force: Microsoft, IBM, SAP and Oracle have and continue to centralize their positions as software juggernauts. "The traditional boundaries between integrated ERP and best-of-breed vendors have disappeared," notes a recent Forrester report. "Over the past few years, leading vendors have significantly extended their portfolio via acquisitions and in-house developments to offer both: integrated packages for core enterprise processes and best-in-class horizontal solutions for procurement and sourcing, supply chain management, CRM, and other cross-industry application software," BI being most notable.

According to Mirchandani, consolidation might actually backfire for the supervendors: Whereas companies might have dozens and dozens of different IT spends with various vendors (which are easier to overlook, since there is not a combined view of the total dollars), a unified Oracle spend could be detrimental to Oracle's revenue streams. "If anything, Oracle, by consolidating this much, has made itself a target, because now you can have Oracle-wide strategy," he says. "Previously, companies didn't worry too much about their PeopleSoft, JDE, Hyperion [spends, because they were separate]. Now they've got a big bull's eye on their back."

Even so, Mirchandani says, vendors probably aren't losing sleep over their customers walking away any time soon. "The vendors are counting on inertia," he says.

So, are CIOs and their companies really, for lack of a better word, stuck with ERP? AMR Research Chief Research Officer Bruce Richardson was quoted as saying, "You do ERP once, concrete it over and hope you never have to dig it up." Without question, ERP has been a career-enhancing or career-limiting endeavor for many CIOs. Chiquita Brands' Singh terms the ERP vendor selection process as choosing "the lesser of two evils."

Altimeter Group's Wang believes CIOs have figured out the rules of "the ERP game." But the business side is still confused.

"The business sees the slick demos and possibilities, and then keeps forking over the money for this, and they don't understand why they are still paying all this money," Wang says. "Why is it so hard to get a simple report? Why is it so hard to add a new product or build a new product line? Why is it so hard to get consolidated financial information? Isn't that the whole point of ERP?"

In CIO.com's continuing analysis of the ERP market, we look at the future: What's at stake, who are the contenders, and what is and isn't likely to happen in 2010 and beyond. Read "The Future of ERP."

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Copyright © 2009 IDG Communications, Inc.

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