The ERP is dead, long live the ERP

<a href=”http://kordiangroup.com/about-us/the-team/#Tad”><img src=”http://kordiangroup.com/wp-content/uploads/2012/02/Tad_blog.png” alt=”Tadeusz Kluk-Murdzenski” title=”Tadeusz Kluk-Murdzenski” width=”82″ height=”82″ class=”alignleft size-full wp-image-551″ />by Tadeusz Kluk-Murdzenski<br>Research and Analysis Lead<br><br></a>There was an interesting (if a bit surprising…) <a href=”http://www.forbes.com/sites/ciocentral/2012/02/09/the-end-of-erp/” title=”article on Forbes”>article on Forbes</a> recently.

The author, Tien Tzuo, a former chief strategy officer and chief marketing officer at Salesforce.com, claimed that “ERP is dead” and raised several valid points, accusing the largest players – such as Oracla and SAP – of being well behind the times. It is undisputably true that software many companies out there offer, has more than a hard time fitting into the modern economy, where cashing in on recurring customer relationships is a crucial success factor.  <!–more–>

This is a simple consequence of what the life is in the information era. In the mid-XXth century, company names or brands like Hoover could grow to a household name all but replacing the proper “vacuum cleaner” name of their product. And why not? Even if your mom knew the thing is in fact a “vacuum cleaner”, even if there was someone out there making something better, the ways to get the message over were limited – and expensive. Now, information on anything is usually just a few clicks away, along with all the emotionally loaded opinions of both fans and sworn enemies. This is why excellence, especially excellence of service, is what makes the most successful companies these days.

Now, does rigidity and manufacturing orientation of the major packages really spell the doom of ERP? By definition, ERP systems integrate internal and external management information across an entire organization, embracing finance&accounting, manufacturing, sales&service, customer relationship management. ERP systems are supposed to automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization.

It is true that what Oracle or SAP or many other, large vendors call “ERP” is very far from fitting the definition above precisely. I’ve seen mere accounting packages renamed as ERP packages, because the term became a buzzword that made sales happen. CRM, which <i>by definition</i> is supposed to be a part of ERP, is quite often offered separately – because the vendors earn more money that way. But lets face it – the buzzword’s short life is over, and the customers are more and more aware of what exactly they want. Those quick bucks made by selling them something under a catchy buzzword may get devoured by costs of restoring shaken reputation. But companies still need integrated financials, operations, manufacturing, sales, HR, and logistics. ERP has a long and prosperous future.