Several weeks ago, I published one of my more controversial and thought-provoking blogs in quite some time. In it, I make the argument that when it comes to ERP systems, software and technology are a distant second to business in terms of critical success factors (click to read the original blog, Forget About Technology: ERP Systems are All About Business).
In fact, the article was controversial enough to provoke a welcome point/counterpoint with Lyle Ekdahl, the Group Vice President and General Manager of Oracle’s JD Edwards unit. In Lyle’s response, he asserts that I may have underestimated the importance of technology in successful ERP implementations. Although he raises some good points and brings some valid arguments to the discussion, I still maintain that technology is never as important as business in effective ERP software initiatives.
But first, let’s look at where Lyle and I agree. One key point he makes is that the ERP system you choose does indeed matter. While I may have suggested (somewhat facetiously) that ERP software doesn’t matter, it is true that not all systems are created equal. Different ERP vendors have different strengths, functionality, breadth, and automation, so it is important to find the right fit for your organization as part of your ERP selection process.
Where Lyle and I disagree here is in the reality that customers too often focus on technology at the expense of business needs. Ideally, we like to see customers that look at both business and technical fit when choosing a new ERP system. In fact, both aspects are key elements of Panorama’s ERP selection methodology and tool-set. The reality, however, is that most companies are forced to prioritize what is important to them and make tradeoffs accordingly. When faced with such a tradeoff, if there is indeed one, we will almost always recommend that business needs will trump the technology.
Let’s look at two extreme examples for illustrative purposes: a company has the option either to choose a new ERP system with cutting-edge technology but no business blueprint to start from, or it can pick a sub-par package along with clearly defined processes. If I were a betting man, I’ll put money on the organization with clear business processes and needs over the one with the better technology every time. The even safer bet is on organizations that have both, but again, this is often not realistic in an age of limited resources and constrained IT budgets.
Lyle also uses an analogy that I find very useful: comparing ERP software to cars. Like cars, enterprise software can get you where you want to go, but they can also be dangerous if you don’t know how to drive them or choose to do so with your eyes closed. While Lyle is correct in his statement that driving a 1978 Ford Pinto is not the same as driving a 2011 BMW 5 series, I would argue that having the BMW won’t do you much good if you’re blindfolded after drinking a few bottles of wine. In this case, I’ll put my money on the sober Pinto driver any day. Similarly, I’ll take the informed and business-focused client over other organizations, as I know they are more likely to succeed regardless of the software they choose.
Again, business and technology are both important, but ERP sales reps too often oversell the value of their technology and downplay the importance of business processes and organizational change management. While their intentions are most often good, ERP vendors too often sell technology, best practices, training documentation, and other tools as surrogates for the hard work of defining business processes and effectively managing organizational change. Learn more about how we help clients take a business-focused approach to driving ERP implementations by reading about our ERP consulting services (including business blueprinting and organizational change management).