Ask the Experts
Ask the experts is a column in the Financial
Times IT Review supplement, which focuses on addressing IT issues faced by
business leaders. This short article, written by Auridian’s MD and founder, Ade McCormack, appeared in the 21st
July edition.
Today’s
question is:
"Are enterprise applications good for my
business"
An enterprise application can be thought of as an
organisational binding agent that enables multi-departmental, multi-product,
multi-site businesses to behave in a coherent manner. They can of course be
used by less sophisticated organisations, but the benefits scale down
accordingly.
There are many strains of enterprise applications, ranging
from HRM (Human Resource Management) through to PSA (Professional Services
Automation), but the three most high profile are:
q
ERP (Enterprise Resource Planning, a meaningless
phrase) - Think ‘joined-up
business’. No department is an island
with ERP. It climaxed in the run up to Y2K, as it was a very attractive
alternative to debugging existing legacy systems. It has since ‘troughed’ but
is now enjoying steady growth.
q
CRM (Customer Relationship Management, a phrase
that is meaningful, though perhaps unachievable) - As the ERP market ‘went
south’ the vendors needed a new theme. CRM provided the next opportunity. Think
of it as a business school theory that escaped from the lab. Though the
underlying tenet that ‘it is easier to squeeze revenues out of existing
customers than new ones’ is sound. The enterprise application vendors beefed up
their client-facing software to ride this new theme. With 40% of CRM systems
currently unused, it is safe to say that this market has reached a low point.
q
SCM (Supply Chain Management, a phrase that is
both meaningful and achievable) - The recent market downturn has highlighted
that many companies have paid little attention to their cost management,
particularly in respect of fulfilment. This makes SCM very timely and it also
fits in with the vendors who have had to find a new theme post CRM.
So are they good or bad? In most cases they are technically
sound and perform as stated ‘on the tin’. However there is a lingering sense of
dissatisfaction associated with the software. I think there are a number of
reasons for this:
q
They can be easily ‘oversold’. CRM will not turn a
poorly performing sales force into a winning team. If anything it will enable
them to perform with enhanced poorness.
q
The bill can be high. The standard modules, which
perhaps meet 80% of your requirements, represent good value. Once you get into
the realms of having these modules tailored to your needs, the price/benefit
ratio can change dramatically.
q
They are often poorly deployed. Throwing software at a
business in the hope that it causes some step-change transformation is naïve.
All too often little attention is given to the users, in respect of training
and getting their buy-in. Similarly shoe-horning software that does not map
onto your actual business processes will generate significant organisational
friction. No wonder they often ‘fail to graft’.
These are all curable. The vendors have a role to play in
selling more responsibly. Business users need to take an active role in the
adoption of enterprise applications. This cannot be dumped on your IT department.
A word of caution. Always factor in the cost/business impact
of decommissioning your enterprise application acquisition. The fact that this
can often be larger than the purchase price makes it the perfect vendor
‘lock-in’ offering. It is one thing purchasing a binding agent, but not if it
only serves to bind you to the vendor’s cashflow.
Ade McCormack
ade@auridian.com
