ERP makes a comeback

Most big companies rolled out their first ERP systems more than a decade ago. Now one in four businesses plans to upgrade or roll out a new ERP system

They couldn't put it off any longer. The ERP system for the Electric Power Research Institute (EPRI) had reached the end of its useful life.

No wonder. EPRI -- a California nonprofit institute that conducts research on the generation, distribution, and use of electricity for utilities in the United States and abroad -- had implemented its ERP system way back in 1999. Driven in part by the race to beat the Y2K deadline, the system had been designed for a time when EPRI used a combination of mainframes, minicomputers, client server systems, and desktop PCs -- an architecture it abandoned years ago. Worse, the organization's original ERP vendor had been swallowed by a competitor, and support for its legacy product was coming to an end.

[ InfoWorld's Andrew Binstock runs down lessons to be learned from ERP failures. | Discover what's new in business applications with InfoWorld's Technology: Applications newsletter. | Get the latest insight on the tech news that matters from InfoWorld's Tech Watch blog. ]

It was time to make a painful choice. But unlike in the late 1990s, EPRI had plenty of options. It could stay with a large on-premise vendor like Oracle or SAP. It could go for a smaller but nimbler SaaS solution like NetSuite or Plex Online. Or it could go for an on-premise solution hosted and managed by a third party.

EPRI chose the last, going with a brand-name solution and a third-party host. Why?

"Their solution offered a contract lifecycle management module, which we needed," says Michael Dotson, senior manager of business operations for EPRI. "And the hosting company had more experience with the software. We thought it would be faster to roll out and easier to upgrade, especially if we needed to customize it later."

An ERP boomlet, born of necessity
For the past decade, ERP has been the poster child for IT projects that overpromise and underdeliver. It was notorious for painfully complex rollouts that took years to implement, required massive customization, and were often only partially realized. Billions of dollars were spent just trying to get ERP systems to work as advertised.

Now ERP is back -- and not just for big enterprises looking to refresh legacy systems. According to surveys by Forrester Research, roughly one out of four SMBs and enterprises plans to either upgrade their existing ERP solutions or implement a new one over the next 12 months.

Many of these are small to midsize companies that have been getting by for years with QuickBooks or Peachtree but now need to take managing their businesses to the next level, says Forrester Research analyst China Martens.

"Their businesses are becoming more complex, they may be growing very fast or have operations in more than one country, and they need to bring more discipline to their business processes," she says. "We're seeing more SaaS deployments, where SMBs don't have to get their limited or nonexistent IT staff involved. That makes it a bit easier for them to make that move."

But even large-scale ERP vendors have become more responsive, promising faster and smoother rollouts, hoping to put the multi-million-dollar failures of the past behind them.

Speed vs. strength
For years, Recovery Healthcare Corporation (RHC) used QuickBooks to help manage its operations, which provide support services for the Texas criminal justice system.

But four years ago, the then-15-person firm moved to NetSuite. The reason? Simplicity, says Vickers L. Cunningham, a retired criminal district judge who is now COO for RHC.

"We are in the people business," says Cunningham. "We don't want to own servers; we don't want to worry about backups and maintenance. We don't have an IT department and we don't want one. We just want to plug into the Internet and go."

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