ERP is still a big business. You only need attend Oracle OpenWorld to get a real sense of the huge scale and growing footprint of Enterprise Resource Planning (ERP).
On face value, the OpenWorld conference held in September provided observers with a vivid display of the sheer size and complexity of the ERP ecosystem. Between the 41,000 participants, almost 9,000 different events and sessions, and the ever-present legions of partners, vendors and consultants, the conference was a fair reflection of the vast number and variety of options now facing IT leaders.
The conference also served as a strong signal of an economic recovery. Attendance numbers were significantly up from the past few years, indicating not only a loosening of corporate purse strings, but also the resurgence of ERP on the CIO agenda.
The most obvious is the move towards the integration of systems in Oracle's Fusion Application suite. The much anticipated package is significant for two main reasons.
The first is that it provides a path for existing PeopleSoft, JD Edwards and Siebel customers to migrate to an Oracle platform. For IT leaders managing multiple platforms across various geographies — often a symptom of rapid M&A and globalisation — this package may bring them one step closer to what some consider their dream of a single system.
But any CIO with an existing ERP system will need to conduct a rigorous value-based assessment of their current systems and future business needs. Rather than rushing headlong into a wholesale migration, IT leaders must carefully balance the benefits gained by doing so, against what can be achieved through the strategic optimization and consolidation of current systems, supported by software upgrades and deployments.
The new Fusion package also represents a wider trend to bundle a much broader variety of business software under the ERP umbrella. This includes enterprise performance management, business intelligence, and governance, risk and compliance.
Despite the maturity of the overall market, vendors struggle to create industry-specific solutions that are tailored to the needs of each sector and provide the right accelerants for successful deployment.
The impact of cloud computing on both users and vendors was also a common topic. The subject took centre stage this year, almost stealing the show. And while nobody yet knows exactly what effect cloud will have on ERP infrastructure, it is clear that IT leaders should consider the impact of this — and other disruptive technologies — on their infrastructure planning.
Overwhelmingly, it reinforces the need for a fundamental shift in thinking about the purchase of these big-budget systems. Rather than selecting components that provide 'best fit' solutions and planning around them, IT leaders should be looking at ERP in terms of the broad basket of services and resources that are required to address the needs of the business, and selecting the components that best meet those requirements.
This will leave CIOs – who generally want to simplify and consolidate systems where possible – having to choose from a bewildering array of options and components.
This may force some critical thinking about the availability of in-house skills, the project's alignment to business priorities, challenges of technical integration, value drivers and – at the end of the day – how to run the system as efficiently and cost-effectively as possible. It will certainly force CIOs to rethink the way they present the benefits of their ERP strategies to their CEOs and CFOs.
Most CIOs will find that the question should no longer be about selecting the right ERP system at all, but about choosing and optimizing the right level of service provision to meet the unique and future needs of their organisation.
Bryan Cruickshank, the Global Leader for KPMG's Technology Advisory practice, shares lessons, insights and best practices from his experience working with global CIOs and IT leaders. Mr. Cruickshank can be reached at [email protected].