ENTERPRISE Resource Planning (ERP) is not the latest thing from the IT world, which – let’s be honest – is probably a big plus.
ENTERPRISE Resource Planning (ERP) is not the latest thing from the IT world, which – let’s be honest – is probably a big plus.
The second favourable thing to say is that it uses all the right words; the ones that any business manager can under-stand. Enterprise equals the business; resource equals staff and systems (both electronic and human); planning equals planning.
The concept exudes authenticity rather than hyperbole; all you need to do is to put the three segments together (in the right order) and you’re set.
Stephen Tull, the chief technology officer at ASG, agrees that acronyms and abbreviations abound in the IT world, and IT firms increasingly use business-friendly terms to sell IT services to clients.
But he says there is substance to the style; if everything works smoothly, these concepts can have a positive practical effect on the way a business does its business.
According to Saul Sabath, a sales consultant at Power Business Systems, ERP is an example of getting the fundamental principles of business management right.
He says many businesses set up websites, for example, with an aim to conducting business online, but they focus only on the ‘face’ of the website rather than the processes that need to be in place for it to succeed.
“Traditionally people have focused on the front end of the website, but we think that’s passé now. It’s much more about organising the system behind the website,” Mr Sabath says.
He believes the so-called ‘e-tail’ website movement has failed to live up to its promise for this very reason – management principles were not solid enough to hold together what
is, in effect, a disaggregated collection of different business systems.
Mr Sabath says ERP is all about integration. For example, when a company’s website receives an order for a product, checks on stock availability, de-livery instructions, the debiting of credit cards or invoice-issuing, and orders for more stock can be performed with minimal if any human involvement.
The software used continuously refreshes information and, in theory, allows managing directors to sit at their desk and watch how their company does business from minute to minute.
SMEs could be the next sector of the economy to implement the ERP experience, Mr Tull believes.
He says ERP’s uptake among large corporate clients has been high, and this has left fewer large prospects for IT solutions providers to approach. As a result, the needs of the much larger – in business numbers – SME market have become more important.
But Mr Tull questions whether this approach will work, given most SMEs will simply not have the infrastructure required to run ERP systems.
“You have to wonder whether they’re going to replace the MYOBs and things like that,” he said.
“Do SMEs need an HR system, do they need a customer relationship system, or do they have that in their head, so to speak?”
And while in conceptual terms ERP sounds like it’s worthwhile, it has its detractors.
The executive director of a West Perth firm, who requested anonymity, said ERP in particular had been criticised for the vast expense and time needed for it to be implemented. Some ERP projects have taken years, not just weeks or months, to finish.
He said various surveys suggested the majority of projects had failed to meet company expectations.
“Part of that is because these huge project implementations, by their very nature, are going to be difficult anyway,” he said.
“So if you’re going to stuff something up, (ERP is) probably going to be the one. It’s like painting the house; you can paint one room without too much trouble, but when you paint the whole house, things can go wrong.”
Stephen Langsford, a director at Change Corporation, thinks the ERP wave of the past five to 10 years has been a boon for ERP vendors who made the most of “me-tooism” among large corporations.
He suggests that, while ERP was intended to integrate all a business’s processes, ERP itself needs to be integrated properly if it is to be successful.
“Where the technology sits at the moment, the opportunity is now about integrating all those core systems that you’ve now got in place – your customer relationship management, your billing system, your knowledge management – and eliminate the requirements for duplicate data entry and costly customisation work that comes of a result of a new application,” Mr Langsford said.
“ERP was never intended to do all things, although most vendors will claim it can do all things. Its implementation has been around in place as a financial system mainly, but it falls short in other ways.
“There is plenty of work to be done with integrating ERP and interfacing it with other organisations.”
