ERP Vendors\' Knowledge Assessment Implementing ERP Systems:

ERP Vendors' Knowledge Assessment

Implementing ERP Systems:

Assessing Vendors' Influence in the Decision-Making Process

Enterprise Resource Planning (ERP) systems are used in manufacturing and services companies to interpret and act on demand while optimizing production scheduling while striving to maintain the highest levels of production quality possible. An ERP system, when functioning well, can be the catalyst of competitive advantage and strength for any enterprise (Elbanna, 2006). Infor, Oracle, SAP, and Microsoft all have extensive business units dedicated to developing, selling, installing and supporting their respective ERP systems. All of these companies have highly specific competencies and strengths, with deep vertical market expertise in smaller niche markets commonplace. SAP and their R/3 ERP Series of systems, which are the best-selling systems globally for nearly a decade. Infor has grown through acquisition and is partnering with Salesforce.com in the hope of launching a SaaS-based ERP system in 2012. Oracle's JD Edward's and PeopleSoft acquisitions, and the several ERP acquisitions by Microsoft show what the top priority of vendors are today. It's to act as a consolidator and acquirer of competitive assets, growing their companies as quickly as possible. In this acquisition-oriented mindset the focus has shifted off of the deep insights into what existing and new ERP systems customers need towards how to integrate their many acquisitions together (Forslund, Jonsson, 2010). This and many other factors support the contention that ERP vendors should have not have as much influence over buying decisions as they do. Instead, customer-centered methodologies should be developed that allow for their clients to better align these systems to unique business requirements and needs.

Assessing ERP Vendor Intelligence Regarding System Implementation

ERP vendors are by nature myopic and more focused on how to ensure their companies can continue to stay profitable based on maintenance fees and through acquisition than they are on taking risks with new innovation. This is seen throughout many of the decisions ERP vendor company's CEOs make over time. The priority in Infor, Microsoft, SAP and Oracle on a daily basis is more focused on how to ensure maintenance revenue streams first (Chatha, Weston, Aguirre, Grabot, 2005). ERP vendors' business models are more focused on ensuring existing customers stay on contracts and pay maintenance first. The investments of these maintenance revenues are often promised by these software companies for use in new product development (Vemuri, Palvia, 2006). In reality this only happens the minority of the time however.

At the most fundamental level, ERP vendors lack the ability to tailor these enterprise-class systems to the unique and often one-of-a-kind implementation requirements of their customers. This is seen in the many ERP failures that occur in the market that occur due to vendors attempting to push companies into frameworks and delivery methodologies that only partially fulfill their needs (Tsai, Yi-Wen, Li-Wen, Ching-Chien, 2007). ERP vendors have a one-size-fits-all deployment methodology that makes the customization of their systems extremely difficult for the typical company that has very unique and differentiated requirements. The challenge for many companies implementing ERP systems is that the greater the customization the higher the services and long-term maintenance costs (Gunasekaran, Abthorpe, 2004). Based on this point alone, ERP vendors should not be involved in the system implementation process due to the inherent conflict of interest (Motwani, Nidumolu, 2005).

On large-scale ERP projects, companies will often hire system integration companies including Accenture, Avanade, Price Waterhouse Cooper and others to assist with the planning, implementation and go-live sequence of events. The four ERP vendors mentioned in this analysis each have practices dedicated to the system integration community for tracking and capitalizing on customization needs (Forslund, Jonsson, 2010). While ERP systems are highly complex and system integrators need this guidance, the potential exists for ERP vendors to add in smaller, more expensive customization projects to drive up costs as well.

Third, after evaluating each of the four vendors' ERP systems, their strategy of offering a very wide breadth of support which is relatively shallow in certain areas in terms of functionality becomes clear. ERP vendors often strive to position their systems as being able to scale across a very wide breadth of needs (Forslund, Jonsson, 2010). The issue is that while they can scale across an enterprise's breadth of needs, often they cannot go to the depth the enterprise needs in terms of features and functions. Again, this is another opportunity for upselling services and working to lock a customer into their specific system. There is a balance that enterprise purchasing and implementing ERP systems need to keep, and that is between technical expertise of the systems they are buying on the one hand and the ability to customize the system to their unique needs (Motwani, Nidumolu, 2005).