In a recent article over on CIO.com, Thomas Wailgum suggests that the future of ERP might be harmonization, which he defines as the happy middle between new advances in middleware offerings, tools from the big vendors that allow easy integration between core databases and infrastructure, and SaaS apps where appropriate.
Given that, as Thomas astutely notes,
- for most companies, the pursuit of the single instance dream hasn’t led to success,
- companies can no longer afford to wait the typical five to seven years for returns on major IT investments (especially when, on average, three new hardware platforms and three new major software versions will materialize in that timeframe), and
- the worst recession in recent history is causing most companies to ask what the true cost of their ERP is and what the realized value is, especially when most ERP vendors are trying to raise maintenance costs to 22% or more while delivering little or no incremental value.
Given these harsh realities, and the fact that many companies are finding that their time is running out on their antiquated ERP systems such as PeopleSoft, R/3, e-Business Suite, and JDE, this might finally be the turning point where companies stop pumping millions of dollars into legacy ERP systems that, for many organizations, provide little return — especially when enterprise versions of open-source cloud-ready ERP systems like Compiere are available for a fraction of the cost of typical ERP systems. These systems, which can come bundled with support, often cost less than 1/5th of a SAP or Oracle solution and play nice with on-demand middleware and best-of-breed SAP solutions that implement common XML standards. This allows you to quickly assemble considerably more functionality, and value, for an up-front cost that is a drop in the bucket compared to what many traditional ERP systems cost.
In enterprise software, it’s often hard to say for certain what will happen. But I think this is the recession that will finally force the inevitable move away from “sunk cost” IT to “pay for performance” and that the enterprise of tomorrow will be different from today.
I’d also recommend checking out part II of the article on Making Sense of All That Data. Regardless of your viewpoint, Thomas makes some interesting points, especially with regards to the “Super Vendors” and the forthcoming consolidation in the traditional ERP space (which always occurs at the end of a recession when the rich buy the poor).