"Where ERP fails," says Roger Hockenberry, EVP for IT services provider Criterion Systems, "is when you try to apply best-practices business process that are empirically created to an organically grown enterprise. Replacing process that was developed internally, over a long period of time is not an easy thing for any organization."
Your choice? Either change your people and processes to match the software (good luck with that) or customize the software to match your business (hope you brought your checkbook).
As a result, implementing an ERP project is "like teaching an elephant to do the hootchy-kootchy," in the words of CIO magazine senior editor Thomas Wailgum. Millions of dollars later, most massive ERP projects end up half finished or largely ignored by the people they were supposed to help.
A 2006 report by the Cutter Consortium found that application software packages -- predominately ERP -- are fully implemented less than a third of the time. Forty percent of businesses reported that squeezing the promised benefits out of this software ranged from "quite difficult" to "extremely difficult." More than 90 percent of ERP projects take longer than expected to implement, and nearly 60 percent go over budget, according to the Panorama Consulting Group.
But many of ERP's failings lie with enterprises that weren't mature enough to handle the concept of integrated data flow, says Sue Metzger, management information instructor at Villanova University's School of Business. "The Y2K crisis of the late 1990s gave [ERP vendors] a great opportunity to come into enterprises and replace existing technology," she says. "Sure, some of them may have oversold and overcharged. Those were fat and happy times for many ERP providers. Organizations that had the fear of Y2K instilled in them felt ERP was the way to go, even if they weren't mature enough to handle it."
Though they never fully delivered on their promise, ERP systems are now common across large enterprises, as is the concept of data integration. "The challenge today is what to do with all that data," she says. "How do you make decisions based on that information?"
5. B-to-b marketplaces
Era: 1999 to 2002
The pitch: "By 2005, 35 percent of the Internet b-to-b trade volume will be conducted via a net market or a consortium of buyers or sellers. ... The value proposition of the Internet is on a grander scale for the b-to-b space; the sheer size of b-to-b trade, coupled with inefficient processes, makes the Internet migration of business strategies very attractive." -- Jupiter Research, June 2000
They were supposed to revolutionize the way organizations did business on the Net -- matching buyers and sellers in a dynamic, interactive bazaar that would dramatically cut procurement costs while boosting efficiency. According to Gartner, by the middle of this decade some $8.5 trillion of trades would occur annually via automated B-to-B exchanges.