The Complex Criticisms of ERP Software
The Challenge of Automating Complex Business Processes with Not So Complex Business Software
Enterprise Resource Planning (ERP) systems receive no shortage of repeated criticism from users and the technology media. The reasons are varied, but generally speak to the facts that ERP applications are complex, expensive and prone to significant deployment and operational challenges. These are massive business software systems for a company to invest in and getting it right can be hard.
However, at the same time the critics are vocal and oftentimes brutal, ERP business systems continue to be researched, compared, evaluated, purchased and implemented by companies of all sizes and industries. For something so criticized, they remain the de facto standard.
True, the problems and challenges with ERP systems from all kinds of vendors are legion and the criticisms have been around for years. One of the most referenced critiques, "The Problem With Enterprise Software," was written by software consultant Cynthia Rettig and published in the MIT Sloan Management Review in the fall of 2007. Rettig doesn't mince her words.
"These systems, of which Germany-based SAP is the most common, promised to eliminate the complexity of multiple operating systems and applications by replacing them with a single set of interconnected modules to run the accounting, financial, manufacturing, HR and other major functions of a typical multinational corporation," she wrote. "Theoretically, a single monolithic system would seamlessly connect various distinct and geographically separate locations through private networks. Companies understood that they could customize these business systems as needed to suit their unique business processes. That was the hope. But these massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces, introduced new levels of complexity, often without eliminating the older systems they were designed to replace."
So what happened to the ERP promise? "The concept of a single monolithic system failed for many companies," Rettig wrote. "Different divisions or facilities often made independent software purchases, and other systems were inherited through mergers or acquisitions. Thus many companies ended up having multiple instances of the same ERP systems or a variety of different ERP applications altogether, further complicating their IT landscape. In the end, ERP systems became just another subset of the legacy systems they were supposed to replace."
A grim assessment for most readers. However, her essay-ending conclusion was even more depressing. "At present, however, corporations see in software's seductive invisibility and seemingly open-ended flexibility a never-ending frontier of promise, where hope triumphs over reality and the search for the next new thing trumps addressing difficult existing problems. And hope, unfortunately, has never been a very effective strategy."
In reality, the purpose, success or failure of ERP business systems is more complex than simply pointing a finger at sophisticated but challenging business systems designed to automate very complex business processes and management demands. Despite the criticisms and the calls for ERP's replacement, these comprehensive business software applications are critical to process the high volumes of company transactions as well as track the company's performance metrics, from budgeting to marketing to sales to manufacturing to distribution to support and much more. It's all tightly integrated so the various business processes can be carefully gauged, evaluated and monitored for compliance or course corrections.
To fairly critique the purpose of performance of ERP systems one must consider the alternatives. Would business be better off with multiple, disparate software systems rather than a single, central application? Of course not. This is the stove-piped information systems legacy which paved the way for ERP's two decade growth. Multiple company systems historically resulted in multiple data silos, never ending software integration costs and complexities, broken business processes, long period cycle times and complex technical projects just to get even simple information and reporting out of the systems.
Unlike seemingly good ideas that failed market adoption ERP systems have stood the test of time and at this time have no superior replacement. ERP applications are complex and technically difficult to deploy and maintain, but are nonetheless, a business requirement without suitable alternative.
Will ERP systems advance? Of course. We are likely entering the next evolution of ERP systems, where we are moving away from the traditional deployment of huge applications and beginning to see a future where ERP might be reasonably provided as a service, via the cloud. This could simplify implementation and management and make the systems easier to use, all while leaving the administration, maintenance, upgrades and trouble-shooting to dedicated experts who operate the systems from purpose built data centers. Maybe then these complex business systems could finally work to the potential that has long been promised by business software vendors. However, the precursor concerns to hosted ERP or ERP delivered in the software as a service (SaaS) model are reliability and security. Only after these concerns are satisfied will SaaS ERP gain mass market adoption.
Mobile ERP accessibility is also getting better, where businesses can equip their field work forces with handheld devices that run ERP applications at the customer's premises, delivering information and solving business problems in real time.
Despite all the critics and long-term criticisms, corporate leaders are not giving up the concept of ERP applications, they just want the business systems to work as advertised.