Gartner: Today's on-premises ERP systems will soon get the 'legacy' label

All of those customizations have resulted in systems that are 'arthritic,' Gartner says

The highly customized ERP (enterprise resource planning) systems in place at companies around the world are looking a bit long in the tooth, to the point where by 2016 it will be common practice to refer to them as "legacy" software, according to analyst firm Gartner.

These systems are showing their age in a number of ways, chief among them their monolithic, all-in-one structure, Gartner analysts Denise Ganly, Andy Kyte, Nigel Rayner and Carol Hardcastle wrote in a report announced Wednesday.

ERP systems came into favor in the 1990s because they held the promise of a better-integrated set of business applications and processes than what had come before.

Since then, three groups have benefited from the ERP boom, according to Gartner. ERP customers have received "real business value" while software vendors have made plenty of money, the report states.

"However, the main beneficiaries were the major consultancies who managed the business process re-engineering and implemented the ERP solutions," the analysts wrote. "These implementation service providers secured themselves a prosperous future by utilizing lucrative continuous service contracts that went beyond implementation into extensive customizations."

It's easy to find businesses that have actually spent 10 times as much money on customizations as on the initial license fees, and still more money to support and carry these customizations forward during a software upgrade, according to Gartner.

"The net result of 15 years of continuous customization is that these ERP implementations are now extremely 'arthritic,' incredibly slow and expensive to change," the analysts wrote.

The notion of a single, integrated ERP system to handle a company's every need "is being replaced by the emergence of cloud point solutions that deliver functionality business users want that the IT-controlled and centrally-mandated ERP megasuite previously struggled to deliver," they added.

It may take 10 years or longer for a majority of companies to move to cloud-based ERP, but some segments, such as professional services, will take this path much sooner, according to Gartner. That's partly because traditional ERP suites have done a better job of catering to companies that deal in products and assets, the report said.

Expect core functions such as manufacturing and finance to mostly remain on-premises, however, according to Gartner.

Some of Gartner's conclusions are reflected in recent moves made by the ERP industry's largest players, SAP and Oracle.

SAP has been buying up as well as developing a series of what it calls "line-of-business" SaaS (software-as-a-service) applications aimed at human resources, sales and other areas. The company has also unveiled a cloud hosting service powered by the HANA in-memory database for its traditionally on-premises Business Suite.

Oracle in turn has touted the benefits of deploying its next-generation Fusion Applications, which can be run on-premises or as SaaS, in an incremental fashion alongside its customers' PeopleSoft, E-Business Suite and J.D. Edwards ERP implementations. There are some 100 different Fusion modules.

Meanwhile, the options are growing for pure cloud ERP, even for manufacturers, given vendors such as NetSuite, Plex, Kenandy and Rootstock.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags cloud computingenterprise resource planninginternetOracleGartnersoftwareapplicationsSAPInternet-based applications and services

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

Chris Kanaracus

IDG News Service
Show Comments

Brand Post

Bitdefender 2019

Taking cybersecurity to the highest level and order now for a special discount on the world’s most awarded and trusted cybersecurity. Be aware without a care!

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

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.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?