The Problem with Mature ERP Systems

The word inheritance usually connotes something of value being passed down from one generation to the next. Money is always good, as is expensive art work and other antiquities.

For IT leaders, an inheritance usually refers to enterprise software, which, while valuable from a corporate perspective, certainly comes with its own set of generational and technological baggage.

In fact, a new report from Forrester Research states that most CIOs today have inherited mature ERP systems implemented by predecessors, over which they have little to no control. Consequently, writes George Lawrie in the report (subscription required), enterprises and their ERP systems tend to drift apart.

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"As the years pass, the original implementation team disbands, retires or dies, and the old use cases and best practices start to brown and curl at the edges like the sepia-tinted photos of yesteryear," Lawrie writes. "Like tectonic plates adrift on a sea of magma, ERP instances and the businesses they serve are bound to drift apart over time or dramatically collide with earthquake-like consequences."

CIOs are then left with clean-up duty. Manjit Singh, CIO of Chiquita Brands International, says that there are far too many instances inside companies of enterprise systems that were implemented by a CIO who is no longer there.

Further complicating matters is that while spending on ERP has grown at the rate of 6.9 percent each year, so too has dissatisfaction among end users with those enterprise applications, according to the Forrester report. In other words, ERP is a lose-lose scenario. (See Why ERP Is Still So Hard for more on this topic.)

Lawrie identified several challenges that cause end users, software vendors, consultants and systems integrators to struggle with ERP. Here are four sources of their problems:

Mismatched Rates of ERP Evolution. The chief problem, Lawrie writes, is that "business really does evolve faster than users can recast the 'silicon cement' of ERP using present technologies and practices."

Multiple ERP Instances and Vendors. Professionals interviewed for the report describe a lack of standardization-SAP or Oracle in their headquarters or largest subsidiaries, and applications from vendors such as QAD and Infor in their smaller operations. "While this makes sense where operational needs vary widely, it places a huge burden on the IT support organization and provides scope for significant duplication."

Poor Governance. Fewer than 5 percent of companies implementing ERP "create a thorough business case for their ERP implementation and then rigorously check that they are achieving their key performance indicators," Lawrie writes. In particular, SMBs view ERP as an IT project, rather than a business project, Lawrie writes. Consequently, he adds, they end up needing more informal spreadsheets or manual procedures to enhance the ERP system's functionality.

Accumulated Modifications Stymie Upgrades. At companies that have made significant changes to their core ERP systems, "there is a huge challenge to upgrading to the latest vendor release," Lawrie writes. "The main problem is to find in one body of experts knowledge both of the business reasons for the modifications and of the true capabilities of the vendor's new release."

Chiquita Brands' Singh is well aware of the lasting impact that ERP purchases can have not only on companies using them but on future IT generations.

"I do think about some of the decisions I make and the implications-whether it's implications for me, because I'm going to be around and have to deal, or a decision that someone else is going to have to wrestle with," Singh says. "I would hate for anybody to look back and say: 'I don't understand why he made that choice or what he thought was going to happen in X numbers of years.' I would rather have people say: 'I clearly understand the rationale for the choice that was made at the time.'"

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This story, "The Problem with Mature ERP Systems" was originally published by CIO.

Copyright © 2009 IDG Communications, Inc.

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