I recently saw an HR Project Manager make a comment on a web site to the effect that “Forget SAP, it is old technology. Look at robotics or cloud computing companies. ” To my mind this was an incredibly dumb statement to make. Admittedly the individual concerned didn’t elaborate on what he really meant but essentially his comment implied that making investment or further investment in SAP systems was a futile investment that would likely not deliver a good return. To a certain extent he may be right about the importance of robotics and cloud computing technologies, but not the companies themselves, companies come and go, get absorbed bought out or simply die. I think his statement actually just confused and seemed confused when considered. The statement did get me thinking though, are people still investing in ERP and if they aren’t where are they spending their money in technology?
If you’re reading this blog then the chances are that you already work or are involved with SAP systems or you are likely embarking on or evaluating an SAP implementation. To some extent I don’t need to convince you of the merits and demerits of using SAP in your organization but of course reflecting on where we are and why we do what we do should of course always be focal to mission if we work in the realm of Information Technology and the best solutions for achieving business objectives. ERP and SAP are far from dead and certainly not old technology. The architecture itself may be a little aged but the fundamentals of what ERP does and what it needs to do are still essentially the same as they were 25 years ago. Orders need to placed, goods made, stored and shipped and invoices need to be generated and monies collected and accounted for. By the end of the 15th century for example, double entry book keeping was in wide use by the merchants of Venice and not a tremendous amount has changed in that concept in more than 500 years! You can read more on this ‘fascinating’ topic alone at TAM. My point is not to provide a history lesson on SAP or Accounting but to merely point out that just because the concept is old, doesn’t mean that it is defunct or no longer of value.
A recent report from Deloitte indicated quite rightly that ERP may be considered by some to be “a fading footnote of yesterday’s legacy” but business can use ERP like SAP to transform processes with massively reduced risk, the discipline of structured ER means accelerated leverage of things like BI and cloud computing at lower cost and more quickly. Big shiny new ERP implementations are fairly rare these days or at least they certainly arent grabbing the headline news of say ten years ago but they are out there and they are valued by business.
ERP solutions can be somewhat cumbersome to implement and administer and the ROI may be sometimes difficult to assess when the start and end costs of implementation are blurred b y changing requirements, a changing landscape and the desire for more manoeuverability and agility in IT processes but in the final analysis most successful businesses have little choice when it comes to meeting their business requirements with IT systems. efficiencies. It is estimated that 74% of manufacturing firms and 400 Fortune 500 firms are using ERP systems. Conversely, other organizations that adopt ERP systems to improve external market or supply chain conditions needed to do more work than manufacturers to realize operational improvements. (Stratman, J. K. (2007). Realizing Benefits From Enterprise Resource Planning: Does Strategic Focus Matter? Production and Operations Management, 16. 203-218.)
There are of course a great many more things that need to be considered over and above the mere implementation of ERP and SAP particular. Most SAP installations don’t operate as standalone systems. While the promise of ERP is greater flexibility and potential agility the reality is that some businesses differentiate themselves from their peers by having differentiated elements of their business. Investing in custom programs or specialty solutions to maintain best in class (BiC) and best of breed (BoB) approaches to doing things is characteristic of the leading Fortune 500 companies and integration those BiC and BoB systems is key to success. A number of companies that I spoke to recently at the SAP Insider conference in Las Vegas and at the Winshuttle User Group conference in London indicated that their strategy is not to merely ignore the need for real-time integration but to also accerate the mean time to delivery of the integration solutions but at the same time ensure that these integrations are robust and scalable. Consequently these people, in leadership and project management roles are seriously considering what some consider “Almost Enterprise” applications.
The Deloitte techtrends report also underscores this point when speaking particularly to the concept of “Almost Enterprise” which many technologists seem to doubt the technology’s capability. The doubts largely stem from uncertainty about these solutions being truly “enterprise ready applications”. Interestingly, these are enthusiastically evaluated and adopted by many business leaders who have tired of the slugginess of IT in implementing results oriented solutions. “Almost Enterprise” solutions, suggest Deloitte, are a wake up call for CIOs and IT groups who should get in front of this democratization and self-service trend and properly evaluate these technologies especially when they leverage existing methods but in more elegant and accelerated ways. Additionally, IT needs to learn and understand how to identify ways they can “empower employees to better connect dots and improve efficiency and effectiveness”. Such technologies may be the bridge especially if they leverage existing work practices but in more efficient ways.