Johannesburg, 09 Mar 2012
The repeated claims of enterprise resource planning's (ERP) downfall is far-fetched, as its resurgence is set to continue in 2012.
So said Claude Martin, director of technology solutions at Deloitte Consulting, during yesterday's CIO Technology Forum, in Woodmead.
“Rumours of the death of ERP have been greatly exaggerated,” he said. “ERP can be an enabler of tomorrow's innovations, not a fading footnote of yesterday's legacy.”
He chronicled that, from the 1990s, ERP implementations saw explosive growth, particularly in manufacturing, as businesses spent an estimated $300 billion on the tools over a decade.
“In the 2000s, as many businesses looked to outwardly collaborate, ERP spread along the supply chain, enjoying another decade of growth, particularly among SMEs. Expansion was estimated at a 50% annual growth through 2004 alone.
“Today, as information quality and process consistency become increasingly imperative, so do ERP solutions,” Martin noted.
However, he pointed out that after rapid growth in the 1990s, ERP was declared dead and unworthy of significant investment or attention in the enterprise in 2000. “It was eulogised as technology hype.”
In 2010, he added, after yet another decade of growth outside its core industries, ERP was once again declared dead and replaceable by cloud applications and “good enough” solutions.
Nonetheless, he revealed that this year, 50% of companies with ERP plan to invest in those solutions. He added that ERP vendors like SAP and Oracle also witnessed licence growth this year.
“Companies that have large ERP investments continue to make more large investments to keep them running and upgrade them.”
According to Martin, companies that have a robust ERP backbone are much better positioned to take advantage of mobile, social, user engagement and analytics than those without.
Also speaking at the event, Kamal Ramsingh, director and head of technologies at Deloitte, said billions of rands have been invested in the past 25 years in ERP systems by South African organisations, large and small, in both the business and public sectors.
“There has, therefore, been some apprehension among executives about whether to continue investing in refining and adding to ERP systems amid claims that capabilities such as cloud computing would make further major ERP spending unnecessary.
“But the 'death of ERP' story is, in many ways, a rerun, something predicted and discussed for the past 25 years. As the repeating cycle between standalone software offerings, integrated bundles and alternative landscapes has played out, the end of ERP was constantly rumoured,” said Ramsingh.
Highlighting the factors driving ERP, Martin said organisations are currently in the era of “technology refresh” following a rash of IT investments over 10 years ago in ERP and core technologies like Manufacturing Execution Systems (MES) and Supervisory Control and Data Acquisition(SCADA).
Business models are also evolving rapidly in response to volatility and the emerging new economy, demanding agility and upgrades to enterprise applications, he added.
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