Put simply, enterprise resource planning (ERP) is the building blocks for your business – a system that integrates technology operations in a single environment.
Since the early 1990s, organisations have used ERP to control key activities, such as sales, billing and resource management. Organisations, both small and large, still use and rely on ERP.
AMR predicts ERP spending will rise 5% in 2010 to hit $37.8bn (see further reading, below). In fact, the analyst predicts an annual growth rate in spending of 6% through 2013.
Not that the market hasn’t suffered, both in terms of sales and in terms of technological change. Last year was particularly challenging, with the mix of tough economic conditions and low IT spending causing particular problems for ERP vendors.
The suppliers that are emerging from the period of stagnation – and helping to drive the annual growth rates alluded to by AMR – are those that have taken into account the fast-changing demands of modern business.
The days of rigid, inflexible enterprise software are long-gone. Now, when an organisation buys an ERP system, they need to consider how the technology can be adapted to grow with the business.
A rigid ERP system, with little potential for adaptation, could prove a costly mistake. Research from Panorama consulting suggests 41% of companies fail to realise at least half of the business benefits they expected from their ERP systems (see further reading).
The reason is often a failure to match organisational expectations and realities. The fluidity of modern economics means that line-of-business executives are likely to require point solutions as demands evolve.
New functionality for different areas, such as budgeting, forecasting, document management and business intelligence, will be required at different times. Fail to think ahead when you create an all-encompassing ERP system and your enterprise software approach will quickly stagnate.
While the organisation might not require detailed analytics and document management at the moment, fast-changing priorities could mean increased knowledge and more streamlines processes become essential within a short two or three year timeframe. As such, your ERP system must be future-proofed.
The bottom line is that flexibility to meet changing business demands must be a priority for IT leaders that are implementing ERP technology.