What's Happening with ERP Today

Maintenance and support costs running upwards of 20 percent annually...

What used to be the sweetest deal on the planet for ERP vendors has left a bitter aftertaste in the mouths of many CIOs. With maintenance and support costs running upwards of 20 percent annually, these legacy systems are costly, complicated and customized to the max.

Forrester Research reports that the global recession sent new ERP license revenue diving by 24 percent last year, which surfaced a lot of tension at vendor negotiating tables. And no wonder-about 90 percent of those outrageous maintenance fees is pure profit for the vendors.

Today's ERP-the essential bedrock of your financial, HR, supply chain and manufacturing systems-does little to set your business apart from competitors or generate new revenue. "ERP is the Jack Nicholson of software," as Senior Writer Kim S. Nash puts it in our cover story (" Reviving ERP"). "Its repertoire hackneyed, the old and expensive dog finds it hard to learn new tricks."

The ones learning new tricks are the customers who just can't take it anymore. People like Steve Hanna, CIO of Kennametal, a $2 billion metal-cutting tools company in Pennsylvania. This midsized firm racked up more than 6,400 customizations within its legacy ERP system, spending $10 million on maintenance during the past 13 years. Rather than attempting to retrain this old dog, Hanna is replacing it with a "plain vanilla," non-customized version of SAP and changing Kennametal's business processes to match it. He sees this as the future of ERP: Drawing clear project maps and modifying the software only as a last resort.

The underlying message in our story is that deriving value from ERP in the future means managing it differently-and much more cost effectively-today. As the pent-up demand for new technology initiatives explodes this year, CEOs will be calling on you to rethink and enable new business processes, to drive tougher bargains on maintenance fees and to make way for emerging technologies in the mobile-and cloud-computing realms.

The cloud is potentially one of the more "interesting disruptions" in IT now, says Harvard professor Clayton Christensen, the renowned expert on disruptive innovation. He likens the classic ERP vendors to the automotive and steel companies that tumbled under the onslaught of low-cost competitors. New players in cloud services and the SaaS arena are already picking off HR systems from the ERP pile, much the way Salesforce .com went after the CRM market. Disruption d&eacutej&agravevu. Bring it on.

Do you Tweet? Follow me on Twitter @maryfranjohnson. Follow everything from CIO Magazine @CIOMagazine.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags businessERP

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Maryfran Johnson

Show Comments



Victorinox Werks Professional Executive 17 Laptop Case

Learn more >

Sansai 6-Outlet Power Board + 4-Port USB Charging Station

Learn more >



Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?