CIOs' next nightmare: legacy ERP

CIOs' next nightmare: legacy ERP

Summary: Excessive customization seemed like a great idea at the time, but now large enterprises are paying the price and struggling to adapt to what Gartner is calling "postmodern" ERP.

SHARE:
CIOs-next-nightmare-legacy-ERP-hybrid-cloud-software-Gartner-outlook

For more than two decades, large-scale and highly customized ERP implementations were as routine as they were expensive and cumbersome. In the end – if they were lucky – enterprises managed to use Oracle or SAP to keep tabs on internal transactions and maybe facilities reporting and that was about it.

Anything more exciting and useful often required more and more customization, which cost more money and complicated more employees' lives as overlapping applications and business units were marched – often at gunpoint – into the fray. It was good business for the vendors and ERP integrators, but implementation failures – or disappointments – were rampant and the rise of cloud-based apps and services forever changed the game.

So much so, in fact, that Gartner's latest report on the subject predicts that by 2016, heavily customized ERP implementations will forever more be referred to as "legacy ERP" and any CIO will tell you that "legacy" anything is shorthand for an expensive, time-consuming pain in the neck.

"Early ERP adopters, particularly large enterprises in energy, manufacturing and distribution industries, are paying the penalty of a decade or more of excessive customization," Andy Kyte, a Gartner vice president, said in the report.

Kyte said most businesses have finally figured it out and are using hybrid or cloud-only applications that are cheaper, easier to manage and get the applications in the hands of their employees almost instantaneously – Gartner has dubbed this new landscape "postmodern" ERP.

The report bluntly states that the concept of a single ERP suite meeting all of an enterprise's needs is dead. Instead, cloud point solutions with a smaller core of on-premises ERP functionality – financials and manufacturings were cited as examples – will be the norm within the next five years.

"There won't be single-vendor megasuites but instead (there) will be loosely coupled suites of cloud functionality which will create new integration challenges for IT," Nigel Rayner, a research vice president, added.

A couple more ERP predictions from Gartner:

-- By 2018, at least 30 percent of service-centric companies will move the majority of their ERP applications to the cloud.

-- By 2017, 70 percent of organizations adopting hybrid ERP will fail to improve cost-benefit outcomes unless their cloud applications provide differentiating functionality.

 

Topics: Enterprise Software, CXO, Cloud, Mobility

About

Larry Barrett is a freelance journalist and blogger who has covered the information technology and business sectors for more than 15 years.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

2 comments
Log in or register to join the discussion
  • Better take the cost of security into account when living in the clouds

    "There won't be single-vendor megasuites but instead (there) will be loosely coupled suites of cloud functionality which will create new integration challenges for IT"

    Not to mention security nightmares from having multiple paths to a company's crown jewels. Some of these companies will shutter their doors after experiencing Target-like excellent adventures.
    PC Cobbler
  • Any ERP Makes for an Expensive Custom Solution

    Thank you Larry for your insight. I agree that IT buyers better understand that a highly customized ERP solution is a nightmare but this lesson is being lost with the shift from IT buyers to Business buyers for Cloud ERP solutions. With Cloud ERP solutions you are seeing work shifting from IT to Business users performing additional functional work to maintain their tailored ERP solution. http://gbeaubouef.wordpress.com/2010/12/22/erp-expensive-custom-solution/
    beaubouef@...