The demise of enterprise resource planning (ERP), in the way businesses traditionally understood it, is a real possibility.
So says Dr James Robertson, CEO of consultancy firm, James A Robertson and Associates, who also believes that the ERP industry stands at a watershed and is in the process of being redefined.
According to Panorama Consulting Solutions' ERP Report, ERP implementation costs are also plummeting. The overall cost of ERP implementation is lower than it has been in years, the report notes.
ERP implementation costs have been on the decline since 2009, it says, adding that, from 2009 to 2010, ERP implementation costs decreased, but at the same time, the benefits reaped from implementation also decreased and failure rates increased.
“Businesses in 2009 didn't invest in ERP software, thus the drop in implementation costs, but the drop in implementation is directly related to a drop in business benefits and project success,” says the report.
A recent survey, conducted by Forrester Research, found that ERP software spending across organisations worldwide declined in 2011. The firm surveyed more than 900 ERP clients, and a quarter of those replied that they would invest in their ERP systems, which is 4% lower than in 2010.
Some 72% of companies currently using ERP software said they have no plans to upgrade or make additional investments to their existing ERP systems, further contributing to the decline in ERP software spending, notes Paul Hamerman, VP and principal analyst at Forrester.
Robertson says big brand ERP is rapidly reaching market saturation. “Most corporations have a big brand ERP, some are on their second or third product. Many have been using those brand-name products for a considerable period of time.
“Realisation is building that it is not the brand or the tool, but what is done with the brand or the tool that is the issue. Consequently, the prospects for new sales of brand-name ERPs are diminishing rapidly.”
He also points out that there are high levels of frustration with ERP among business executives. “The fact is that, at an operational level, there is a reasonably high level of satisfaction in many organisations, but at an executive level, most executives complain.”
Complaints include not being able to get answers to their questions when they need them, he explains.
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