Waiting for ERP …

I had a quick call the other day with a procurement executive at a large company you’d probably recognize who asked me a question which I’m hearing more and more of these days. And that’s: what is the best course of action to take given a short-term solution need — in this particular case, it was contract management — but an IT-driven emphasis over the long haul on standardizing on their ERP providers procurement capabilities. In this case — as in many — the ERP provider in question had an inadequate answer with their current solution (despite their positioning).

I tossed out a few names including the usual contract management suspects to consider including Upside, Nextance, Procuri, Ariba, Emptoris, and even Iasta (with their new capability), but suggested that the solution he would chose might end up being a long-term one after all. And that’s because there’s a good chance that ERP will not catch up to the level they require, and even if they eventually did, why would you want to rip out a solution that was faster, better, and cheaper — not to mention completely separate from ERP in focus?

Seriously, I’ve had enough of companies wanting to standardize all buy-side technology on ERP because IT thinks it’s the easy thing to do. Sure, HR is a logical extension of payables. But Spend Management is not (because it touches so many points outside the enterprise, in addition to the system of record).

Going forward, in an ideal world where bloggers like me get their way, ERP will need to compete on its own merits in sourcing and procurement, rather than simply delivering a 60% (or 80%) solution that’s just good enough (good enough for whom, should be the question to ask). In my view, this level of achievement might be good enough for transaction processing. But it’s not when it comes to driving value through better sourcing and procurement where domain expertise, solution depth, and category knowledge are all critical to drive results.

Jason Busch

2 Responses to Waiting for ERP …

  1. “Best of breed” has been declared dead by mainstream analysts (and their favorite revenue generators, the ERP providers) over and over again. A perfect example is Kronos (time and attendance), which has been declared dead a number of times over the last 10 years, despite recording 25%+ growth year-over-year for nearly that entire period.

    The battlefield is littered with the corpses of development teams at large consultancies and ERP vendors — teams that are often led by folks fresh out of an MBA program — who have declared a particular vertical to be “easy,” and have attempted to trot out a 60% solution. Hmmm, what ERP player competes with Kronos, 10 years later? [sound of flies buzzing]

    What looks easy from the outside often turns into a series of nasty surprises once you’re on the inside. In my own experience, I recall deciding (while I was still wet behind the ears) that point-of-sale reports should “of course” be driven directly from a database management system, and that the existing POS vendors were crazy for not doing so themselves.

    Once our code lived through one night of bitter reality at a busy restaurant, though, we realized that the multi-way joins required to produce server summary reports caused the database to spin for two or three minutes on each report, on the hardware of the day (100mhz 386’s). That’s totally unacceptable in the real time environment of a restaurant, where 20 servers and bartenders are standing in line swearing, waiting to cash out at the end of the night.

    We mastered the problem domain eventually, but I learned an important lesson on how much development work it takes to produce a competitive vertical application. Bottom line: it ain’t easy, and it takes some very serious staying power and focus to build a good one. That’s something they didn’t teach me at MIT, where we waved magic wands in the classroom and solved big problems on the blackboard.

    So do keep carrying the best-of-breed torch, Jason — but expect the usual criticism from the usual parties.

  2. It’s refreshing to see that bloggers aren’t as ERP-centric as some analysts. In fact, bloggers are to mass media what best of breed solutions are to the ERP vendors. We’re more focused (and can cater to a specific audience), we are faster and more agile (and don’t have to wait until the next product roadmap – or next publication date – to get our value out to market), and we provide a 100% solution now vs. an 80% solution some time in the future (and can fill needs with a pinpoint focus, rather than watering them down for a mass market).

    Here at Nextance, we’re constantly speaking with companies whose IT departments are making them look at the ERP’s contract management solutions, but the businesses can’t afford to wait two or more years for a quasi-viable 80% solution. Nextance, and other best of breed vendors, provides customers with that 100% contract management solution today, and will continue to innovate on contract-related technology. Hence, in two years, the ERP vendor will offer a comparative 60% (or less) solution.

    Just like people are getting more and more information and entertainment from blogs targeted directly at them, companies continue to see the drawbacks of mass marketed ERP solutions, and are looking more and more to best of breed vendors who fill their exact need.

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