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Getting more bang for your ERP buck

With a sagging economy, your ERP project must deliver even more bang for the buck than in years past. Here are some pointers to get you started.

With a sagging economy that shows no signs of improvement, your ERP project must deliver even more bang for the buck than in years past. You can no longer pour tens of millions of dollars into a monolithic enterprise implementation that will take three years to build and another two years to yield payback, says Clive Weightman, who, as global SAP alliance partner with Deloitte Consulting in Philadelphia, Pa., has helped deploy some 30 SAP R/3 systems.

On the bright side, Tom Cook, senior enterprise applications analyst with the 451, a New York-based market-analysis firm, asserts the tight economy has bolstered ERP ventures. "It's forced vendors to become more realistic about what they promise and companies to be more realistic about what they can implement in certain timeframes," says Cook.

Enhanced methodologies and tools, such as process maps and templates, level the playing field among the leading ERP solutions, Cook notes. Because costs and implementation times will be comparable whether you opt for solutions from SAP, PeopleSoft Inc., or Oracle Corp., experts offer other ways to help you achieve rapid business paybacks from quick projects:

Maximize value
While you'll benefit from substantial discounting during tough economic times, ERP projects are still pricey. Gather – at no additional charge -- as much best practices and process design information from vendors. Also plan for otherwise hidden costs, such as training, to avoid the erosion of systems knowledge, urges Jim Shepherd, research VP with AMR Research Inc. in Boston. "A big part of maximizing the value from your investment is an ongoing commitment to employee education," Shepherd says.

Take small bites
Don't bite off more than you can chew. Corporate executives won't sign off on projects that take 18 or 24 months, so set 30-, 60-, and 90-day milestones and closely watch them to stay on track and within budget. "They want to see what gets done in 90 days, and then they'll release more of their budgets," says Cook.

Integration: no slam-dunk
Despite claims to the contrary, integrating with existing systems is still costly and complex. Choose a vendor that meets your needs and make a strategic decision to build applications on your backbone ERP software. "Integration is a bear. Get as highly integrated as you can," says Weightman. "If you can go with your installed vendor for extended applications, and it meets your requirements and the needs of your users to give you the information that elevates you competitively, then go with that vendor."

SAP, PeopleSoft, and Oracle all offer deep, comparable functionality. SAP's NetWeaver integrated platform, however, provides a more open environment than PeopleSoft's PeopleTools application framework or Oracle's architecture, notes Cook.

Post-ERP payoff
ERP backbones for financial and other transactional applications don't provide real operational benefits. You gain true value by launching extended enterprise and collaborative commerce solutions, such as SCM and CRM, from your ERP platforms.

"That's where the real bang comes from," Cook says. Because they recognize that SCM and CRM deliver tangible returns by linking transaction data to requirements throughout the supply chain, ERP vendors offer their own extended enterprise applications, which makes integration easier. "Now we can provide that information to our suppliers faster, crunch lead times, compress new product introduction time, and be first to market. That's what the game's about now."

Shephard agrees. "Part of the justification for the ERP investment in the first place is to get in place a set of information systems and processes to [enable] advanced, value-added activities," says Shephard. "One way people get value from their ERP systems is by using that information for decision support, sophisticated planning activities, or making it available to customers and suppliers."

SAP has more complete extended functionality, and NetWeaver will let SAP and third parties share data more easily to link ERP, CRM, SCM, and other corporate systems, says Shephard. But competitors are gaining ground. Oracle offers solid SCM and CRM systems, while PeopleSoft rewrote its Vantive acquisition into PeopleTools and has made several SCM acquisitions, Shephard notes.

Emily Kay writes about technology as a principal at Choice Communications, an editorial consulting firm in Chelmsford, Mass.

Sources:
Clive Weightman, SAP alliance partner with Deloitte Consulting
Tom Cook, senior enterprise applications analyst, the451
Jim Shepherd, research VP with AMR Research Inc.

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