Why ERP is still so hard

After nearly four decades, billions of dollars and some spectacular failures, big ERP has become the software that business can't live without--and the software that still causes the most angst. In Part I of CIO.com's analysis of the ERP market, we look at where ERP has been, where it's at today, and why it's still so hard to do these mission-critical projects well.

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Does ERP Still Matter?

Yes. ERP still matters. Very much so. CIO magazine survey data published in 2008 showed that IT leaders and their companies were completely married to and dependent upon their ERP suites. More than 85 percent of respondents agreed or strongly agreed that their ERP systems were essential to the core of their businesses, and that they "could not live without them." Interestingly, just 4 percent of IT leaders said their ERP system offered their companies competitive differentiation or advantage.

As the CIO profession has grown up, so too has the CIO's ability to manage all that comes along with ERP. Jeffrey Keisling, CIO of pharmaceutical-maker Wyeth, is presiding over a massive, multiyear ERP makeover, moving from multiple, global instances of J.D. Edwards to a single-instance SAP ERP suite. "There's always a lot written about examples of drastic overruns or miscues or re-dos around ERP," Keisling says. "But generally, the people I know in large enterprises have been much more effective in understanding the levers to pull to mitigate risk in these large programs."

Most notable among those levers: the ERP implementation has to be a priority for the company-from CEO to users, Keisling says. "If this is something one person is trying to push up the hill or one division or function is trying to push up, we would reject that," he says. "Without that level of understanding, sponsorship and expectation of value, I wouldn't take the bait."

ERP has its place, too. "The measurement stick for me and my team is not how well we did SAP," he says. "The measurement is: Did we improve the company's performance or our ability to get products to patients? [Our SAP rollout] doesn't dwarf the need for innovation for new products and for working with patients to get those products in their hands."

On the vendor side, the rise of the enterprise software supervendor (dubbed "MISO" by many) has been an unyielding force: Microsoft, IBM, SAP and Oracle have and continue to centralize their positions as software juggernauts. "The traditional boundaries between integrated ERP and best-of-breed vendors have disappeared," notes a recent Forrester report. "Over the past few years, leading vendors have significantly extended their portfolio via acquisitions and in-house developments to offer both: integrated packages for core enterprise processes and best-in-class horizontal solutions for procurement and sourcing, supply chain management, CRM, and other cross-industry application software," BI being most notable.