To ERP or Not to ERP

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.  The second is that automation applied to an inefficient operation will magnify the inefficiency.

Bill Gates

We’re entering a new world in which data may be more important than software.

Tim O’Reilly

That is the question.  The cost of a business process can increase dramatically if the right IT enabling tools are not used.  Enterprise Resource Planning (ERP) software, perhaps the most complex of all business software, is designed specifically to support business processes.  It is rare that an ERP will support the business processes exactly as required in its vanilla form and so tradeoffs must be assessed against the broader strategic context of the business.  For example:

Single Platform vs Best of Breed:  Integrating best of breed, third-party software into a ERP, introduces new challenges: interface management, multiple sources of the “truth,” increased support costs etc.

Vanilla vs Customised:  Should your company build part or all of its software?  If the software is not a strategic differentiator then you may consider changing your processes to suit a software application as is out of the box.  This diverts implementation costs from software customisation to change management.

These are just some of the strategic questions which must be answered by the Executive Team as a whole and not left to the CIO alone.

Enterprise Resource Planning, ERP, technology