Monday, September 03, 2007

The I-could-do-it-better Syndrome of ERP Watchers

There is a blog war waging on the value of ERP systems or more precisely, the price/value calculation. It all started with a blog post by my friend & Irregular, Dennis Howlett wrote about SAP in a recent post. Thomas Otter wrote a fiery Who Exactly are you calling a Laggard? piece which I think makes an excellent case for the value proposition of SAP and more generally all ERP systems. Vinnie agrees with Dennis and calls ERP customers late adopters.

Without commenting on SAP in particular, I would strongly suggest that thinking of ERP as commoditized software that has already been amortized w.r.t. R&D is somewhat wishful thinking and arises from I-could-do-it-better syndrome. My suggestion to all the naysayers out there is to do 1 of the following:

Option 1. Go build an ERP system that rocks, and beat the incumbents. Is it too hard? Can’t beat the sales/marketing budgets of big guys? Those are all poor excuses ‘cos if you are serious about how much cheaper it ought to be, you should be able to become #1 by word of mouth.

Option 2. Go sell someone else’s ERP against the guys you dislike. If you really really think there are better alternatives out there (take the flavor of the month) - then you ought to be able to sign up as a channel, and become a billionaire.

Option 3. Stop and Think. There may be a reason why very smart businessmen spend billions every year on these ERP systems.

Disclaimer: Personal opinions expressed here. And as I said, I am defending ERP industry and the customers - not the software that runs on ABAP. I had to say that - it was too easy. :)

(This post initially started as a comment response to Thomas' post.)

6 comments:

vinnie said...

Anshu, every smart businessman I talk to bitches about the lock in of ERP. They tell me they were dumb, not smart, to have spent so much on ERP. And now they are busy dismantling the expensive support and maintenance costs. What I call SacS on my blog

http://dealarchitect.typepad.com/deal_architect/2006/11/sacs_software_a.html

If you don't believe it is coming look at the huge drop off in license revenues of just about every apps company your employer, Oracle, has bought. Like I said below new licenses are wafer-thin...

http://dealarchitect.typepad.com/deal_architect/2007/03/wahffertheen_me.html

Anshu Sharma said...

I agree that customers have higher expectations and demand more.

I am not so sure that a majority of customers are busy dismantling their systems. There could be a few (or substantial minority - in your opinion perhaps) - that want to do it all over again. That's human nature. We build homes, improve them and then pain them again.

I do agree with you that IT in general is hard and ERP is harder than many other IT systems like email. But as we speak there are massive ERP projects underway at leading, well-managed global businesses that rely on packaged software from leading vendors (such as my employer, Oracle).

Note: All opinions expressed on the blog and in my comments are my personal views.

Thomas said...

Anshu,
Exactly. I couldn't have put it better myself. But I'll need to work on your ABAP love another day...
Every smart company I talk to is investing more into their ERP and surrounding applications than ever before. Sure things arent perfect, but the doom and gloom that V and D point to is not evident in my day job, nor in the financials of either of our companies.

Anonymous said...

Love ERP or hate it. It will be around till I retire by the beach with a fruity drink in my hand.

SaCS stuff will take years to mature and get to the point where it is stable, fast and trustworthy like today's enterprise systems from O-company and S-company.

Anshu Sharma said...

:)
Fruity drink? Not a Corona? (Corona Company Marketing people are encouraged to send free beer for this plug. This comment will get upto 5 million hits.)

Nitin said...

Anshu,

I posted stuff at my blog : http://nitnblogs.blogspot.com/2007/09/its-all-in-substitutes.html to supplement this argument.

Thanks.