The Future of ERP in Uncertain Times

Jan. 7, 2009
Some analysts are suggesting IT spend will stay the same or even increase in 2009

How do we see Enterprise Resource Planning (ERP) faring over the next turbulent 12 months? We've seen a number of trends that paint a refreshingly positive picture for some in our industry, and despite the recession we see opportunities for any business ready for change.

Dissatisfaction Among Users of 'Big ERP'

Businesses have a host of complaints, starting with the uncertainty brought about by Big ERP's changing strategies. The early erratic moves of major ERP vendors' complex platform integration projects have left customers nervous about whether their platforms would be supported, fused or retired down the road. Big ERP vendors are trying to back-fit their solutions to accommodate their various acquisitions.

The hype surrounding SOA was over-promoted and widely misunderstood by both customers and vendors and attempts to cobble together disparate technologies have not shown much success. P.J. Jakovljevic put it succinctly in his Technology Evaluation Centers (TEC) blog: "Once and for all, Microsoft has given up on the lofty idea of building an entirely new ERP system to replace all existing code lines. The daunting "new code line from scratch" effort was admittedly stopped for lack of platform readiness to realize vision..."

IT Spending on Critical Infrastructure Isn't Going Away

It may be belt-tightening time across most industries but organizations aren't going to cut the critical tools they need to run their business. Some analysts are suggesting IT spend will stay the same or even increase in 2009. In any event, there will be a lot more scrutiny into purchases and a more urgent demand for value. Certainly, IT departments may see their discretionary budgets dry up. But ERP is a key tool CFOs need to tighten up business processes and control costs to stay afloat in this economy.

Our customers are perfect examples; Anatec International improved cash flow by getting invoices out 30 days faster, thanks to Agresso's ERP solution, Agresso Business World. Skookum, a $25 million not-for-profit had this to say, "When we first entered our Excel-based budget into Agresso, we uncovered many $50K+ errors resulting in hundreds of thousands of dollars in errors". Errors like these are an inherent risk in using multiple linked spreadsheets; Skookum eliminated these risks. Examples like these are the reason organizations will keep IT budgets available for tools to help control costs and increase revenues.

Another factor driving the need for agile ERP is IFRS (International Financial Reporting Standards) readiness. It's the elephant in the room. According to IDG, "90% of financial professionals surveyed ranked their knowledge of IFRS as either low or moderate with only one percent of respondents indicating an "excellent" knowledge level." There is likely to be a scramble in finance departments across North America.

Uncertainty About the Future

It is a perilous time for fortune-tellers. Markets and businesses are reacting forcefully. Just look at the "C-level churn"; as Financial Week reported, "According to a study released by Crist Kolder Associates, roughly half of the CFOs at Fortune 500 and S&P 500 companies stay in their posts for less than three years." This is hardly a surprise: boards want to escape the need-spend cycle of big ERP projects, and they are holding the C-suite accountable for out of control IT spend. As the C-suite churns, businesses are forced to respond to constant flux. The current demand on ERP solutions to provide an agile response to change is unprecedented.

A new administration in Washington also brings potential for change - new regulations, infrastructure spending, green technology and e-government. All these scenarios will demand ERP solutions that facilitate change. Looking ahead to 2009, the road is both foggy and forked. But agile organizations will be able to respond easily to whatever the future brings.

Shelley Zapp is President of Agresso North America. Agresso is an enterprise resource planning (ERP) subsidiary of Netherlands-based Unit 4 Agresso. The companys role-based, Web Services and Services-Oriented Architecture (SOA) enabled solutions include: Financial Management, Human Resources and Payroll, Procurement Management, Project Costing and Billing, Reporting and Analytics and Business Process Automation.

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