Capgemini consultant Ron Tolido has a humorous take on the misplaced loyalty some companies have for their mega-suite ERP systems. He calls it the ‘ERP Stockholm Syndrome’ after the psychological condition where hostages develop ‘powerful… positive feelings towards their captor.’ Ron writes:
‘Let’s be completely honest here. ‘Fun’ is not the first thing that comes to mind when thinking about the big, monolithic ERP systems that we have reluctantly learned to live with over the course of literally decades. Unless you are a daily power user of such a system and can’t imagine living without it anymore – in essence suffering from the ERP Stockholm Syndrome – you typically just try to cope with its complexity and hardly satisfying user experience.’
It can be difficult to resist the holy grail of the all-encompassing ERP system. But that’s just what companies need to do if they’re to embrace the opportunities of the new era of postmodern ERP – an era where companies are saying ‘No’ to monolithic ERP systems that monopolize IT resources and restrict innovation.
The rules or reminders that follow may seem self-evident but, as Goldratt says in his ‘Theory of Constraints’, unless we articulate our intuitions we run the risk of doing the opposite of what we believe. Here then are my three rules for a new era.
(1) ERP systems exist for manufacturers; not manufacturers for ERP systems
Here’s something I used to hear a lot: ‘We have an XXX-unless strategy.’ In other words, software from an ERP mega vendor was their first choice ‘unless’ the mega vendor simply did not have the software in question
Or, ‘We’re going with a single ERP vendor (the mega-suite kind) because that’s good for total cost of ownership, and we won’t have integration issues.’
Often I’d sense that the speaker was simply repeating something he or she had been told. Uncritical loyalty is a symptom of the ERP Stockholm Syndrome, and many companies certainly seemed to be victims of it. Faced with a choice between mediocre supply chain planning software from an ERP mega vendor, and smart software that would enable real innovation, the mediocre software invariably won.
Postmodern ERP buyers are different. They’ve concluded that the cost of implementing the typical monolithic ERP system (that claims to cover everything from payroll to supply chain planning) is actually very high indeed. Like Tesla Motors, they’re demanding the ERP systems they need, and saying ‘No’ to the bloated offerings that vendors think they should have.
(2) ERP has its uses. Creating a competitive advantage isn’t one of them.
ERP systems are essentially transactional systems. Employees have worked a certain number of hours, and this needs to be reflected in the payroll. A customer has ordered something, so an invoice needs to be processed. The basic technology required for these backend processes has nothing in common with the real-time processing and in-memory computing that powers successful supply chain planning and optimization.
Postmodern ERP buyers are beginning to draw a crucial distinction. They’re separating the world into the historic data that needs to be captured and processed in a database (ERP systems are very good at this), and the forward-looking decisions that ensure their competitiveness. (Mega-suite ERP systems are mediocre at this.)
(3) It’s not about buying as much software as possible from one company. It’s about achieving your business goals.
I know – this reminder seems obvious. But we’ve all seen how easy it is to succumb to marketing tactics that encourage companies to stick with a single mega vendor.
The future of your business depends on your ability to make the right decisions. It’s about choosing approaches that give you the flexibility and agility you need to thrive. I’m thinking here of platforms that integrate product lifecycle management with supply chain planning and optimization, and manufacturing execution systems. This is about platforms that support planning – all the way from the initial idea for a product, to the end of its lifecycle. It’s also about planning and optimizing across all horizons – strategic, tactical, day-of-operations, and right down to the second-by-second control of the production floor.
Postmodern ERP signals the end of an era dominated by monolithic ERP systems. The new age belongs to companies that seize the freedom to innovate, differentiate and achieve unprecedented levels of efficiency and responsiveness.
Are you ready for it?
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