As per the ChangeWave report on software spending, there are major cuts predicted across the broad spectrum for the next 90 days, and the worst hits are ECM and ERP categories with almost 1/4^th decline in spending. Spending cuts prediction is not surprising, if you look at current economy and how every company is trying to deal with shortfalls, you know that software would be impacted.

What surprised me was that ERP is predicted to be one of the worst hit. From customer’s perspective, I have always seen ERP listed as more critical than ECM (or many other softwares for that matter), so why it is at the bottom? I think this has more to do with project lifecycle than with criticality of software. You ask any customer who has gone through or is going through a ERP implementation and they can tell you horror stories on missed deadlines or extremely long project timelines. For many customers, to plan for such long projects may not be a priority and they would rather patch up what they have then spend lot of money on a new software in this environment. This means there is still a decent opportunity for ERP project work.

From ECM perspective, I am not that surprised. ECM products/projects do well when economy is booming, as many customers still view that as secondary to their most critical softwares. They know they have something in place and they can live with it, so they can let new software purchase wait in turbulent times. Another aspect is user interface, most of the ECM products allow you to modify user interface for end-users, so a customer could spend little bit money and do a face lift for end-users, and could live with back-end shortcomings. A customer who has difficulty making the changes to their front end, would be the one who could be spending the money on ECM.

Irrespective of what department you work for, IT (especially enterprise systems) is probably an important success factor. If you are worried about the market downturn, this actually may be an opportunity to improve your Enterprise IT ROI. Your organization is probably shackled by budgetary constraints but that does not mean that you cannot exploit the situation to your advantage.  Contrary to popular belief, simply cutting head count does not save a company much money (unless yours is one of those bloated organizations where people have no idea what/how they are contributing).  Why not take the opportunity to exploit the time freed up by production cutbacks to improve your process efficiency. Use the downtime to educate you workforce about your systems and processes. Kick off a re-engineering program and get the people involved in something that will lead to both process improvements and innovations.

Most organizations today have multiple enterprise applications such as ERP/CRM/WMS/SCM/ECM etc.  This applications landscape may or maynot be integrated.  Irrespective of integration issues, the people who use these systems are the ones who can drive the value offered by these applications. Sadly, these very users are often the weakest link in the value stream and most often due to no fault of theirs. Poor management practices lead to silos in organizations which runs contrary to the philosophy of having an integrated IT applications backbone. Lack of proper training and the absence of a forum to participate in process discussions compunds the problem. A market slowdown allows for the time which is often not available to be spent on learning projects.

Re-engineering processes is starkly different from continuous improvement programs. Even though they are all the rage, continuous improvement can fall into a rut of trying to continuously tinker with a process that has no potential for innovation. Try to use the free time to foster process innovation. Imagine that the group is starting with a blank slate and open up the forum to as wide a group as possible. See what ideas bubble up. You may as well end up with a radically different process that copes with future growth opportunities in a much better way.

Identify the growth plan that your company/department needs to support and build the solutions to support that. Often software enhancements are not well thought out and the final users hardly get to provide any inputs. This may be the time to take another look at the current and future solutions with a critical eye. Ensure that your business apps (ERP/ECM etc) enable these new processes and facilitate in contolling/managing the processes. Use this review to also create or supplement the documentation. If job-aids and tutorials are not available, take the time to put them in place. Setup online training processes and institue a continuous learning program. Ensure the learning program is relevant to your company’s business.

The organizations that take the time to shape up with overhauled process to meet market imperatives will be the ones that outperform their competitors. Growth is the product of innovation powered by market insight, combined with good processes. The lines of communication opened up by the above efforts will drive the innovation.

If you have some thoughts on the subject, feel free to share your opinion via a comment. We routinely help organizations with their Re-engineering efforts. If you would like to discuss this directly with us, please use the “contact us” link for our site.

ERP systems have been around long enough that it is no longer necessary to explain their importance in running a business. While ERPs still is the favorite system that most users like to complain about, the problems faced are largely dependent on the size of the company (number of users) and the number of people that are actually knowledgeable about ERPs.

I notice that small and mid-sized companies that have bought any one of the JBOPS (JDEdw/Baan/Oracle/Peoplesoft/SAP) software often struggle the most utilizing their ERPs. That is mainly because they implemented ERP in a hurry and never took the time to explain the workings of the software to their users. Saving consulting costs play a major role in this but that is not the only reason. The pace of business and the workload per employee does not offer too much free time to explore and learn in small-mid sized companies. Users are generally not motivated to learn a software in their free time unless they plan to use it on their resume. Additionally, IT departments get (strapped with) the honor of having to manage a system that seriously impacts the business. This become a serious problem when the IT group and its management has only a fuzzy idea of how the business actually works. It is no use having an “business liaison”, unless this person has the executive backing to be a change agent (I am assuming the person understands both ERP and business processes). The organizational silos in such companies stifles communication even further where business units often fail to learn from each other despite having so-called “collaboration” tools.

So what is the solution for improving the utilization of the Enterprise Application Suite? While it is true that certain applications are stronger than others and they may have strengths in different functions, all of them are basically capable of supporting 80% of the business needs. Some customization will be needed to get a better fit. If you notice the problems really revolve around people, company culture and management. These things are difficult to fix unless there is communication across departments and championed by non-IT executive leadership. Selecting a competent set of people from the various departments and getting them trained in the theory of ERP helps. Once they have the basics, reinforce it with ongoing application training. This is a relatively small effort compared to what is gained. Rotate people in these groups till a majority of the users are now on board with the program. The improved awareness will lead to process improvements. Some staff may need to be replaced but you will end up as a markedly efficient and a better aligned business than before.

There are a lot of solutions to this problem. If you have faced this problem, feel free share your opinion on the subject via a comment. If you would like to discuss this directly with us for the sake of confidentiality, use the “contact us” link for our site.