ERPs have been a mainstay in large-scale project delivery. As Agile and innovation projects become more prominent, is it time to consign ERPs to the past?
Enterprise resource planning – or ERP – has been a longstanding trend for large-scale project delivery. Yet while the term “ERP” has become part of the modern business lexicon and can deliver significant organisational benefits, it would appear that the trend is shifting away from ERP implementation.
Many organisations are instead adopting agile or online self-service systems and technical innovation is driving alternative methods for project delivery. So is ERP in steep decline and how will that impact the types of projects selected for delivery?
What is an ERP?
ERP stands for Enterprise Resource Planning and is typically a stand-alone suite of integrated business applications that services the entire company’s business processes.
The aim of the ERP system is to break down the silos within a business and thereby gain benefits from the integration of all core business processes across the organisation, including:
- Process improvements
- Cost reductions
- Synergies from sharing information
ERP implementations are large scale project undertakings and impact the entire business, thus the cost of implementation is a significant investment for any organisation.
What Does a “Typical ERP” Look Like?
Typically, ERP systems rely upon big data stored and controlled centrally. Successful implementations require long project lead times to gather requirements, design and implement if done properly.
Furthermore, the ERP market is dominated by very large software vendors who follow well-planned project delivery methodologies to ensure ERP implementations are successful, but this too comes with a hefty price tag.
Why are ERP Implementations Declining?
Whilst ERP solutions can offer undoubted benefits for an organisation the current trend is to move away from ERPs. Some of the new business thinking driving this shift away from ERP implementations includes:
It’s got to be Agile to get the benefits
Undoubtedly the biggest shift in project delivery thinking and practice over the last five years is moving more toward an “Agile way of doing things”.
Agile project delivery, unlike waterfall, is not big bang but seeks to deliver project outcomes, and more importantly the benefits, incrementally.
Most organisations are adopting Agile techniques for projects where it is appropriate i.e.: software development projects with significant opportunities for business process re-engineering. An Agile approach ensures benefits are delivered regularly and learnings are carried forward to the next cycle or sprint.
ERP implementation by their very nature do not lend themselves to Agile techniques. They are delivered by Waterfall methodologies and require long lead times. More importantly they require an executive to sign off on a business case that will not deliver benefits until sometimes far off into the future which senior executives are increasingly reluctant to do instead preferring regular and consistent delivery of benefits.
On-line self-service systems
The pendulum that once drove the large uptake of ERP systems i.e. the desire to break down the silos within an organisation, is now swinging back in the other direction. The proliferation of on-line self-service systems is creating a new way of doing business where data and processes are segmented off by an organisation and accessed on-line by users thus re-creating the silos ERP systems sought to break down.
Innovation is the way forward
All organisations need to innovate to ensure they can remain relevant and successful in their market space. This is particularly true with the pace of change occurring in most sectors.
Innovation by its very nature needs to happen quickly to keep pace with the speed of change and should work on the principle of “fail fast”. This is giving rise to project innovation funds whereby small teams are afforded the freedom to pursue business objectives sometimes outside the normal project delivery structures.
Often known as Skunkworks, this trend is moving away from the large scale, time consuming and expensive ERP solutions of the past to a more lean and nimble approach to delivering change in an organisation.
Big Data Can Now Be in the Cloud
One of key drivers of a successful ERP is big data. The capture, storage and access of the company data across all divisions was greatly enhanced by ERP solutions.
With the increasing use of the Cloud for an organisation’s data needs, the case for an ERP is no longer as compelling, particularly when you look at the cost savings the user pay model the public Cloud can offer.
Whilst the large scale ERP solution is not dead, it is certainly on the decline and this is impacting on the types of projects that are now receiving funding approval for delivery. The current generation of project managers will need to be mindful of this trend and be adaptable to the new project delivery landscape.
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