Ugly duckling ERP matures

After a troubled youth, ERP projects appear to have matured and are drawing spontaneous applause from users, according to a recent survey.

Research firm S2 Intelligence asked 92 Australian enterprises [without prompting] which IT projects delivered the best value financially to their organisations. ERP scored a shock victory over telephony and WAN upgrades, employee portals (read intranets) and business intelligence projects.

Admitting the findings were a surprise, S2 managing director Bruce McCabe said it clearly indicates that a lot of installations are deemed to be extremely valuable.

"We tend to hear about the disasters and the cost overruns, but this is telling us in the main that [ERP] is their greatest value IT project in the last year," he said.

McCabe said that "pure new" ERP installations constituted less than a third of the total, the remainder being upgrades or extensions, suggesting growth in value for such systems was incremental rather than "holus-bolus".

"If you go back a few years, there were greenfield installations and a lot of people were putting up very large sums of money; that was a time of high risk, a lot of learning and a lot of failures," he said.

"This reflects a more mature market where [enterprises] are bolting on upgrades or new modules to existing systems. They have learnt a bit - and are not putting up $100 million and doing massive installations."

McCabe said around 24 of the 92 respondents were public sector, the rest being private industry. Banking and finance users were particularly chipper, nominating "customer facing" projects as yielding the best results.

Another bonus of ERP success is a kicker effect through to business intelligence applications and analytics, which came fourth.

"People are applying it on top of their applications, it's the predictive work and it's very common and there's a lot of value in it. It's living up to the hype, which is a big call," McCabe said.

Meta Group vice president Michael Barnes concurred with S2's interpretation of the flow-on from ERP into business intelligence.

"The reason for that is [ERP] systems automate processes, but BI optimises them and you will see a major focus on analytics from ERP vendors themselves; it enables better decision making," Barnes said.

"The end result is [an attempt] to create an information delivery architecture. That needs to be managed and defined from an enterprise-wide perspective - and that then gets back into ERP."

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