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ERP: Custom Software Inhibits Business Agility
ERP has often considered to be a differentiator and game changer for businesses. ERP enables the automation and centralized management of business processes, bringing efficiencies and enhanced productivity. It used to be that only very large companies with deep pockets could afford the luxury of ERP systems. ERP is notoriously expensive. The cost for implementing an ERP system can often run into the tens of millions of dollars.
With all the hype around the known benefits of ERP, the findings of a report by IFS North America are surprising. The report found that ERP systems lock businesses into rigid business processes, making them very difficult to change once implemented. 57 percent of companies say that their ERP software locks them into a prescribed way of doing business that is very difficult to change once implemented. Businesses become less agile because the cost and effort to reconfigure the existing system becomes too steep.
The reports findings are not totally unbiased. IFS North America is an ERP vendor that is trying to promote and differentiate themselves from the brand-name incumbent software vendors like SAP and Oracle that dominate the ERP market. But there is certainly some truth in their criticism.
ERP software has a reputation for being hard to use. 54 percent of companies say that once their ERP system was implemented that it became very difficult to change and reconfigure. The report described ERP implementations as being “dipped in concrete” because they are so difficult to change once in place.
Only 10 percent of companies said that their ERP systems were easy to use and reconfigure. 40 percent said ERP was “somewhat difficult to use,” 13 said that it was “very difficult to use” and 1 percent said it was “almost impossible to use.”
Web 2.0 and SaaS are two technologies that are changing the change the world of ERP. Expect ERP software to become easier to configure, easier to use, and available at more affordable price points.
