ERP's armageddon

Fellow Irregular Brian Sommer has penned a detailed assessment of the potential impact Workday could have on the ERP industry. Entitled: Workday = New Day for ERP? The report will be issued shortly. it takes a shot across the bows at the incumbent players. It should be required reading by anyone currently engaged in the ERP procurement process. Check this:

Business executives are tired, bored and unimpressed with many of today’s ERP solutions. The vendors who ply them have failed to deliver meaningful innovations. These vendors have fallen comfortably into selling an ever lower TCO story instead of developing truly new and value creating solutions. While vendors think they’re delivering lower and lower TCO, their implementation partners are still enjoying the fruits of $1 billion implementation projects. This marketplace disconnect has not gone unnoticed with business executives.

Brian is not a shill for Workday. If anything he doesn't think they've gone far enough in offering the market an innovative solution to business problems. Neither does he think Workday should be left to plow a new furrow unaided:

Software buyers should investigate Workday’s new solutions to understand how different application software will be for commercial entities. Workday will likely help usher in a new generation of applications...

Software buyers will help themselves by insisting that other vendors re-discover what innovation in ERP means. Workday shouldn’t have to bear this responsibility alone.

Compare this with the tired rhetoric of Sean Culley over at Ann All's site where he says in comments:

At the end of the day ERP customers reach the “trough of disillusionment” because they haven’t addressed the underlying business issues at the root of the problem; poor and illogical processes, untrained or ineffective people, the wrong measures and metrics and more often a complete lack of understanding of the integrated nature of the solution and the required process and data conformance required to deliver quality information into the hands of the decision makers. An ERP implementation, be it SAP or Workday, that simply replaces a legacy system and doesn’t involve a change of processes or behaviours will always get the same, disappointing results.

My interpretation: Blame the customer because they didn't understand our solution or the demands it would place on the business. Culley represents SAP shop Seven Collaboration Solutions so I would expect them to hold that line. The sad part is that it is a typical response to new order thinking. But that same tired thinking ignores the fundamental point that Brian and others - myself included - have been making. ERP as currently sold is about implementing a 600 year old accounting model based on 30 year old technology. It does nothing to answer questions about the environment in which business trades or the many decisions that need to be made up to the point where an accounting entry is made. The point is reinforced when Culley adds:

Articles like this actually do not help the situation because they support an ideology that the problem is not the processes, strategy, people or quality of the data - it’s the fact that the business has the wrong tool.

That is simply not true. Workday is proposing a different approach, not an ideology, where the accounting element is relegated to where it belongs - as a historical artefact and afterthought. No-one ever made money in a business that consists of running accounting for themselves. They make money through the way they interpret the events and environment that surrounds them. That data doesn't exist in accounting systems per se and it is why in Workday, you won't find a conventional general ledger, AP or AR.

By concentrating on TCO arguments, which, I have to say, was something encouraged industry analysts Gartner at the expense of ROI, the vendor community utterly misses the opportunity to answer questions about software that produces value. As Brian said in a phone call we had:

Where is the software that monitors for the A-team player who's likely to walk out the door? What are the events that might lead to the departure of the superstar player and which we can predict and model?

In discussion I said that Brian's example reminds me of the work done at casino operator Harrahs where customers' behavior is not only understood but predicted based upon certain events. Harrahs is so far advanced in the way it looks at its customers and responds to their needs, that it is hard to see how any other operator might catch it. That's what Brian and a small but growing number of like minded people mean when they talk about process innovation.