Marching to the ERP "Death March"

I coined this phrase from Pierre Mitchell from The Hackett Group – I think it’s probably one of his favorite terms when discussing the on-going SAP/Oracle/”fill in the blank” ERP system implementation that many companies are going through. Anyone who has survived and is in recovery following an ERP implementation can testify with tremors to the pain of this experience. Picture excruciating attention to detail around reams of meaningless code, endless frustration in reaching decisions on how to apply the system to a set of business processes that are often not aligned across businesses, seeking to meet diverse functional objectives and metrics, amidst escalating consultant implementation billing hours. Sounds like fun, eh?

But does all of this effort really provide anything that is of competitive value? Our discussions with many managers suggest that competitive advantage is not really an expected outcome of ERP implementation. As one IT manager at a large manufacturing company noted: “We are 90% of the way through our ERP implementation. We have a parade of companies coming through here benchmarking us on our supply market price indices, our global visibility systems, and our supplier collaboration systems. These are the things that we are investing in that distinguish us from others…but NOBODY ever asks to hear about our SAP implementation!”

Companies such as SAP and Oracle offer the promise of a single system, a single sheet of music that provides a solution for any and all supply chain problems that may occur. But current thinking is beginning to swing the other way. Some of the executives we’ve spoken with suggest that ERP doesn’t help with many of the gaps they’re facing, including supplier activity, analytics, service procurement, and contract management. These managers are noting that “We will intelligently fill these holes with best-of-breed players until they [ERP providers] can prove otherwise.”

Meanwhile, we have also heard that ERP systems are moving to become more “home-grown” in China. The scuttlebutt is that the large ERP and telecom players have had several mishaps in the Chinese market, with the result that many large Chinese companies are seeking to go with domestic government-sponsored system providers such as HJSoft, who are piloting their systems with the Chinese companies. HJ Soft apparently has over 20 different modules to their ERP system. “Made in China” is apparently now a software term as well.

Meanwhile back in the West, many companies who are implementing ERP systems are also worried that the implementation will wipe out many of the capabilities they’ve been working on with best-of-breed systems configured to deal with their real supply chain issues. The resulting fall-out could be interesting (to say the least….)