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  • 26 June 2013 17:20

Time to disrupt Australian ERP: the last bastion of traditional IT

The Leading Edge Forum (LEF), the research arm of IT giant CSC, has embarked on a global research project, headed out of Australia, to examine the future of enterprise resource planning systems (ERP), which it describes as “the last bastion of traditional IT,” so far largely unaffected by forces such as cloud and open source that have disrupted most other sectors.

LEF argues that the market for ERP systems is one of the more unusual segments of today’s information technology business. “The typical IT industry pattern is that, as the market for a new technology expands, it tends to become standardised. Competition emerges, prices fall, and the product eventually becomes a commodity, a service, or even an open source option. “We have seen this cycle with servers, operating systems, CRM and many other hardware and software marketplaces. … The story with ERP thus far has been quite different. … Yes, there has been competition and supplier consolidation (a form of standardisation), but prices haven’t fallen, installations have not been commoditised, ERP as-a-service offerings remain modest, and open source alternatives are used primarily in smaller businesses.” According to LEF, “Today, almost every large firm is a major ERP customer, as software (mostly from SAP or Oracle) is widely seen as an indispensible tool for controlling large global businesses. The market for ERP megaprojects (over $200 million) continues to rise, and the demand for ERP expertise is as strong as ever. However, the rest of the maturity cycle hasn’t really kicked in. The result is that large firms continue to spend a great deal of money establishing and maintaining their ERP environments.” LEF argues that few multi-billion dollar IT marketplaces have been so stable for so long and it says this raises two main questions that it aims to answer with its global research project. Do ERP systems really have to cost so much money? Will the cycle of commoditisation kick-in, and if so how and when? It suggests that the complex nature of ERP gives it significant inertia that makes change extremely difficult. “Individuals spend entire careers implementing ERP systems, but often only have deep expertise in a handful of modules of which there are many dozens. Recruitment firms looking for ERP talent spout a raft of acronyms that make little sense to anyone outside the industry.” To illustrate the point it quotes a advertisement on an Australian career website - Looking for dynamic leader with FI/CO, BI, SD, XI and MDM experience to start immediately -saying: “The fact that it is unlikely that any single person would actually have the above combination of skills shows that even the ERP industry itself is struggling with its jargon. This complexity also explains why so much ERP work has migrated to consulting firms, who can leverage their expertise. Removing at least some of this complexity is an essential requirement for the standardisation/commoditisation cycle.” LEF says the research project: "will investigate why ERP is different, the specialised skills involved in leading ERP efforts, possible paths forward, disruptive scenarios and evolutionary new approaches.” LEF seeks the participation of CIOs, CTOs and “anyone else interested in the evolving ERP landscape.” They can register that interest here. LEF plans to publish the results in October 2013 and says that its report will be accessible to a wide business/IT management audience. The project is being led by LEF’s Australia-based regional director, Warren Burns. More: Enterprise Resource Planning (ERP) news For more information:

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