One size ERP does not fit all

The ‘one size fits all’ school of ERP, as essentially practised by most of the bigger software vendors, is coming into disrepute – it’s in decline, if not yet dead. So say some of the smaller ERP IT vendors, the more outspoken manufacturing users and independent analyst Dennis Keeling. What they mean is that trying to deploy one flavour of ERP across multiple sites and geographies is expensive, takes for ever and ultimately doesn’t work. Even SAP, which until recently was pushing its mySAP and R/3 enterprise software down market as the top end saturated, is now selling separate lower end systems, like its Business One, for low end users – and All-in-One rapid development R/3 packages for others through the VARs. Simon Harrison, chief technology officer, says: “If you take a flow chart of business, then the structure will include customers or suppliers, and if the business operates on an international scale, then you may want a centralised view of all of them…” But he indicates that whereas the big all-encompassing system, integrating different parts of a business, was the accepted approach until recently, now it’s not deemed appropriate. “Within SAP what we have done is not to recommend one system for all your needs, whether it’s an R/3 or CRM [customer relationship management] or SCM [supply chain management] system. We have mySAP and SAP Business One to address companies at different stages. These are aimed at smaller organisations, and as they grow products like Scala are filling the gaps.” The truth is that the one-size model was only ever realistic while the technologies available made that the only viable way of running a large, distributed enterprise. No-one is saying you can’t do a wall-to-wall SAP, Oracle, PeopleSoft, whatever global implementation. Some thrive on just that. Chris Gill, for example, managing director of Oki UK, is a big SAP user. He says going SAP globally has eliminated duplication, and that the economies have been considerable. “I now have one logistics operation for the entire organisation, and we have been able to reduce warehouses to three for Europe instead of one per country. We’re getting other economies of scale we’re only beginning to see: sales and marketing have improved and the headcount is being evaluated objectively.” Difficult to argue with that, but more typical is Tobias Diener, group executive at the Service Division of Georg Fischer Piping Systems in Switzerland. When he took over the IT global consolidation and simplification, he rejected wall-to-wall SAP. “We went into detail and realised that it would take at worst eight and at best four to five years to implement because of the different types of business within the group,” he says. Moving to a mixed ERP environment was a better bet, so he based the IT strategy on SAP and Scala – and not with an obvious hierarchy. “We don’t have a structure that says the small companies go with Scala and the big ones SAP. We go into it with an open mind.” His views and approach match the findings of a recent report from consultant Dennis Keeling and Ovum (MCS, April 2003, page 5) which found a 4,000% difference in the cost of implementing big and small systems. During his initial research phase Keeling found that almost nobody had a non-mixed ERP environment in spite of received wisdom that said this was the way to go. “What I found was that the cost of implementation could be as much as £60,000 per seat for a Tier One solution in one case, or as little as £5,000 in a mixed environment,” says Keeling. “The global dream of the ERP players, the one-size-fits-all strategy, is rarely fulfilled. Companies all have two tier strategies.” Possibly the most positive thing about this development – or the emergence into the public domain of what a lot of people felt was happening but had yet to prove – is that it’s not turning into yet another bunfight between the pro-ERP and anti-ERP camps. David Topping, senior vice president of marketing at Scala Business Solutions, says: “SAP provides functionality in areas in which Scala is frankly unable to help. Scala is definitely not a company that tries to provide everything. Our task is to increase customers’ functionality in an area where they have one system at their HQ and a larger one world-wide – SAP is one system that can fill in the rest. “What people need is good integration between their Tier One and Tier Two system. They need the ability to connect to a remote part of the world and a remote part of their business process, and having a local system as well as a global one allows them that flexibility.” Not so much one size fits all, as horses for courses.