We all know that the world is yet to come out of the recession. As a result, tight cash flow is the order of the day. Organisations has to keep a close watch on each head of expenses and its ROI for their survival. So ROI in ERP system is not a exception to this. Many of the organisation out of sheer enthusiasm goes for high end ERP systems. Let us see some of the broad aspects where and how their judgement goes wrong.
Way too many features:
When we look deeply, only 30 – 40% of the features of ERP is used by many enterprises. But they pay for the 100%. Organisations are mislead saying theses features are a must when you grow.
Large ERPs has complex configuration. These systems are developed keeping large and diversified verticals of organisations in mind. So it requires functional and technical experts to configure the system.
Stringent business & user rules:
Users roles and permissions are important. But here again, the large ERPs would have considered many audit and global compliance angels. So many of the inbuilt business rules as part of the best practise makes the usage of the system complex. The user roles and approvals get too confusing. This will also increase the number of users. Such level of controls may not be relevant for many Small and mid size enterprises.
Multiple masters and transactions:
Take an general example of Order to Cash or Purchase to pay. Large ERPs has many inputs and masters. This makes the learning of the system more difficult. In the absence of trained person they system comes to a grinding halt. This increases the cost of resource.
Huge IT infrastructure:
In case of on-premise ERP system, the list of IT infrastructure goes endless. Application server, Data server, Test server, Backup server, Internet, Switches, routers Antivirus, firewalls, Not only the cost of IT infrastructure, it also requires team of administrators to maintain the same.
Army of consultants:
Large ERPs needs multiple consultants to support the implementation. Configuration, Technical, Functional and IT infrastructure etc., The coordination between these team along with the internal teams becomes a nightmare. Better not talk about the day-to-day ego clashes among teams.
Annual Maintenance Cost:
This is a huge burden. Many of the enterprises in the present cash strapped market are struggling to pay this.
Big bang approach:
This means taking the modules an going for a enterprise wide implementation at one go. This will make the ERP adoption touch. Especially in case of Small and Medium Enterprises, this will a disaster.
What is trending?
With all the above cost put together, many ERPs implementations does not meet the criteria of ROI. In view of this, even many large enterprises are pushed to a corner. Some of them have migrated & many are seriously evaluating alternative low cost and simple ERP systems.
The Author S Vijay Venkatesh is the MD & CEO of a 2 decade old ERP product company.