How much is your company planning to spend on its Enterprise Resource Planning (ERP) system this year?
If your answer, like many companies, is next to nil – what are your reasons for not upgrading?
Please note, that my questions above are not meant as bear traps of embarrassment. If you are not planning to upgrade or invest in ERP this year, you are actually in quite good company.
In a Forrester survey, cited by Jeff Moad at Manufacturing Executive, 72% of Enterprise Resource Planning customers plan do not plan to invest in ERP systems in 2011.
Moad offers a quote by Geoffrey Moore that seems to offer fairly succinct reasoning for not investing in ERP:
“It’s like building the Interstate Highway System. It’s done. Time to move on. Enough is enough.”
On the surface, Moore’s analogy describing a company’s decision not to invest in ERP is easily digestible, and seems to make logical sense. Of course, this analogy only makes sense as a proof point until we decide to break it down to its most literal components.
In other words, an Interstate Highway may be ‘completed,’ but investments will always be made (or should always be made) to make improvements – whether it’s resurfacing, fixing potholes or expanding lanes.
In the same way, a legacy Enterprise Resource Planning system may be ‘done’ (ie installed and implemented) – but there always exists the ability to make improvements.
As an ERP system evolves, its latest release and applications offer significantly better capabilities than when they were first installed at a client site – even if installation was as recent as one year ago. Just a few of the improvements I’ve been a personal witness to in regards to ERP, both on the development side and on the implementation side – courtesy of working with Microsoft Dynamics – include:
- Enhanced ability to integrate with Product Lifecycle Management (PLM)
- Growing status as both a System of Record and a System of Engagement (as noted by Moad)
- Assimilation of consumer-oriented technologies, including mobile and social media (as noted by Moad, and by myself in this post focusing on the integration of social media and ERP)
Making the entire decision to not invest in existing ERP systems a bit fuzzier is that most vendors will offer upgrades and updates for minimal or non-existent costs. This means that the innovation companies seek by ‘moving on’ – or moving investments away from ERP into new technologies – is not only counter-intuitive, but costly.
Again, this post is not meant to call out or embarrass any readers. Rather, it’s simply meant as statement of facts. And the facts are that upgrading ERP is strategy far friendlier to innovation and the bottom-line than more than 70% of companies realize.
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