12
Wed, Jun
4 New Articles

ERP: Should You Stick with a Best-of-Class Software Strategy?

Enterprise Resource Planning / Financial
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Big ERP wants in on the IBM Power Systems; does best-of-class still have the edge?

 

In today's fast-moving business environment, organizations need to stay more agile than ever. Government regulation, competitive challenges, and consumer demands are changing at an unprecedented rate, forcing organizations to change along with them. Meanwhile, CIOs are under tremendous pressure to rein in expenses while increasing performance.

 

For IT staff in charge of IBM Power Systems, balancing those priorities means keeping critical business systems, like financials, up to date without disrupting legacy operational applications that have supported the business for years. For example, financial software must keep in step with new regulations, adjust to structural changes in the company, and, most importantly, serve as the company's primary reporting engine. The economic crisis has forced many CFOs to respond to an influx of requests for reporting and profitability analysis while cutting their accounting staffs—no easy task when they are also grappling with obsolete financial software. But updating legacy applications poses its own set of challenges, especially in the mixed-application environments typically found on Power Systems, which run everything from green-screen applications to Java-based Web applications under i, AIX, or Linux.

 

No surprise, then, that confronted with this unruly mix of applications, some IT professionals have been tempted by ERP suites like Oracle or SAP. ERP promises common user interfaces, end-to-end application suites on one platform, and, above all, native integration between applications. It's the default option for many industries on many platforms. But does it deliver the best value?

Historical Context

Vendors began offering integrated ERP suites in the early 1990s as a way to bring order to the fragmented world of enterprise software, with its confusing array of vendors, acronyms, and competing technologies and its lack of easy integration between systems. ERP promised to address the needs of finance, human resources, customer relations, supply chain, and warehouse management simultaneously.

 

It was—and is—an attractive idea. But in practice, ERP required teams of pricey consultants and substantial coding projects for even minor changes. On top of that, ERP vendors charged expensive ongoing maintenance fees, which substantially increased the total cost of ownership (TCO).

 

Meanwhile, the emergence of XML, Web standards, and other data exchange technologies greatly improved communication between best-of-class applications, reducing or even eliminating the problems that ERP was designed to address.

Best of Class on Power Systems

Fortunately, companies running IBM's Power Systems are relatively well-positioned to cope with change. The platform's unusual ability to handle a mix of operating systems and databases provides a real advantage in today's volatile business environment, allowing organizations to focus on applications rather than the underlying platform. Hence, many have built large catalogs of custom applications for their core business processes. In many ways, IBM Power Systems users have embraced a best-of-class approach from the start, buying or building a variety of applications and running them all on one integrated computing environment. That tendency has only been strengthened by the Power Systems' ability to manage Web services with tools like WebSphere. Now, even green-screen applications written in COBOL or RPG can be securely and easily interconnected with newer financial applications using Web services, with all of them still running on one box.

Is Best of Class Still Right for You?

So how can you tell if you're better off sticking with a best-of-class application? If you answer "yes" to any of the following questions, there is an excellent chance best-of-class is still the best option.

 

Do You Run a Mixed Operating Environment?

 

As an IT manager, one of your most important considerations is whether new software will integrate with your core and/or legacy applications, which could be running under different operating systems. Almost by definition, an ERP suite is less likely than best-of-class software to interconnect easily and affordably with third-party applications running in different operating environments. ERP systems come with their own platform architectures and specialized tool sets and tend to take over an IT environment.

 

The strength of ERP is the inward-facing integration on one platform; however, that strength can become a limitation if you are just trying to install a few modules into your mixed environment. By contrast, best-of-class applications, with their focus on communication and configurability, are designed to work with other applications (they have to). And since they are usually application-centric as opposed to platform-centric, they tend to put ongoing changes in the hands of their users. That means organizations can more easily connect different types of software together and keep their consulting bills down while keeping their core operational system in place.

 

Do You Frequently Need to Modify Your Business Systems?

 

Operational change is inevitable. It's just a question of how often you encounter it. Many IT decision-makers understand the up-front costs of buying and implementing ERP, but few consider the resources necessary to ensure the ERP system can change along with their business. ERP modifications often need to be made at the code, application toolset, or database level, making maintenance a costly proposition.

 

CFO Research recently commissioned a study, "The High Cost of Change for ERP: What Does It Cost to Keep Up to Date?", which found that most organizations spend on average more than $1.2 million per year just to manage, update, and maintain their system, factoring in consulting, maintenance, upgrades, and licensing costs.

 

Do You Have a Low Tolerance for Business Disruption?

 

In December 2009, IDC surveyed 214 business executives from a variety of organizations and industries. The resulting white paper, "Modifying and Maintaining ERP Systems: The High Cost of Business Disruption," measures the business downtime, or disruption, caused by interruptions due to routine modifications or system adjustments to ERP systems. The disruptions ultimately cost the surveyed businesses between $10 million and $500 million due to delays in product launches, mergers and acquisitions, and other activities. Respondents to the IDC survey noted other key results of business disruption, including stock declines, customer satisfaction erosion, and lost revenue. More change-friendly systems reduce downtime, minimizing business disruption and making it easier to main a solid bottom line.

 

Are You Competing in a Fast-Changing Business Environment?

 

For more and more companies, the answer to this question is "yes." Consider how many mergers and acquisitions your company has undergone in the past three years, how many new lines of business it has developed, and how many new products it has released. Does your current system support these strategic, enterprise-wide changes? Do you need to rely on outside consultants to adapt your systems for new day-to-day transactions? One of the chief advantages of best-of-class software is its ability to adjust to business change.

 

If your business changes all the time, the most important metric to measure might be the "total cost to change," or TCC. The cost of change can dwarf the cost of software, hardware, and maintenance as the IDC and CFO studies indicate. Whether you choose ERP or go the best-of-class route, you need to know what it will truly cost you over time.

 

Do Home-Grown Applications Give You Your Competitive Advantage?

 

Consider whether your organization has developed its own core business systems. For example, healthcare or logistics companies often create their own mission-critical software for core operations. In that case, a complex ERP installation could complicate your business practices, while a best-of-class tool with a focused set of functions could make a better fit.

 

Do You Need Top-Notch Financial Software?

 

The economic crisis has put intense pressure on companies' finance departments. Financial users are trying to respond to increased demands with outdated, inferior financial software in many cases and have come to realize they need top-notch financial application functionality. Functionality in ERP packages often lags behind that of best-of-class software, since the domain expertise and R&D investment in ERP suites is spread across a wide variety of applications and technology. Because of their focus and adaptability, best-of-class packages typically provide superior functionality in their area of specialization.

Final Thoughts

Change is a constant in every modern organization, regardless of industry, size, location, or public/private status. Despite its long lineage, the IBM Power Systems platform has an almost uncanny ability to accommodate new breeds of software, integrated in new ways. The latest generation of best-of-class software takes full advantage of the Power Systems platform's flexibility, making a "clean slate" move to ERP unnecessary for most Power Systems users. While ERP platforms provide value for many large organizations, they also present serious obstacles to change—exactly what Power Systems excels at. For users and companies who meet the criteria detailed above, the best-of-class model is usually the better option, delivering the highest return on investment in systems, processes, and people.

 

 

Steve Pugh

Steve Pugh is CEO of UNIT4 CODA, Inc., part of UNIT4, a $576 million global business software company aimed at helping dynamic organizations to embrace change simply, quickly, and cost-effectively. Coda Financials is best-of-class financial management software designed to integrate with industry- and company-specific applications. Coda Financials provides real-time financial visibility and control across people, processes, and systems. By acting as the financial information backbone for companies with fast-changing and mixed application environments, it offers a "no compromise" approach to financial modeling, process controls, and application choice. For more information on UNIT4 CODA, visit http://www.unit4coda.com. Follow us on Twitter and LinkedIn, or visit http://blog.unit4coda.com.

BLOG COMMENTS POWERED BY DISQUS

LATEST COMMENTS

Support MC Press Online

$0.00 Raised:
$

Book Reviews

Resource Center

  • SB Profound WC 5536 Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application. You can find Part 1 here. In Part 2 of our free Node.js Webinar Series, Brian May teaches you the different tooling options available for writing code, debugging, and using Git for version control. Brian will briefly discuss the different tools available, and demonstrate his preferred setup for Node development on IBM i or any platform. Attend this webinar to learn:

  • SB Profound WP 5539More than ever, there is a demand for IT to deliver innovation. Your IBM i has been an essential part of your business operations for years. However, your organization may struggle to maintain the current system and implement new projects. The thousands of customers we've worked with and surveyed state that expectations regarding the digital footprint and vision of the company are not aligned with the current IT environment.

  • SB HelpSystems ROBOT Generic IBM announced the E1080 servers using the latest Power10 processor in September 2021. The most powerful processor from IBM to date, Power10 is designed to handle the demands of doing business in today’s high-tech atmosphere, including running cloud applications, supporting big data, and managing AI workloads. But what does Power10 mean for your data center? In this recorded webinar, IBMers Dan Sundt and Dylan Boday join IBM Power Champion Tom Huntington for a discussion on why Power10 technology is the right strategic investment if you run IBM i, AIX, or Linux. In this action-packed hour, Tom will share trends from the IBM i and AIX user communities while Dan and Dylan dive into the tech specs for key hardware, including:

  • Magic MarkTRY the one package that solves all your document design and printing challenges on all your platforms. Produce bar code labels, electronic forms, ad hoc reports, and RFID tags – without programming! MarkMagic is the only document design and print solution that combines report writing, WYSIWYG label and forms design, and conditional printing in one integrated product. Make sure your data survives when catastrophe hits. Request your trial now!  Request Now.

  • SB HelpSystems ROBOT GenericForms of ransomware has been around for over 30 years, and with more and more organizations suffering attacks each year, it continues to endure. What has made ransomware such a durable threat and what is the best way to combat it? In order to prevent ransomware, organizations must first understand how it works.

  • SB HelpSystems ROBOT GenericIT security is a top priority for businesses around the world, but most IBM i pros don’t know where to begin—and most cybersecurity experts don’t know IBM i. In this session, Robin Tatam explores the business impact of lax IBM i security, the top vulnerabilities putting IBM i at risk, and the steps you can take to protect your organization. If you’re looking to avoid unexpected downtime or corrupted data, you don’t want to miss this session.

  • SB HelpSystems ROBOT GenericCan you trust all of your users all of the time? A typical end user receives 16 malicious emails each month, but only 17 percent of these phishing campaigns are reported to IT. Once an attack is underway, most organizations won’t discover the breach until six months later. A staggering amount of damage can occur in that time. Despite these risks, 93 percent of organizations are leaving their IBM i systems vulnerable to cybercrime. In this on-demand webinar, IBM i security experts Robin Tatam and Sandi Moore will reveal:

  • FORTRA Disaster protection is vital to every business. Yet, it often consists of patched together procedures that are prone to error. From automatic backups to data encryption to media management, Robot automates the routine (yet often complex) tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:

  • FORTRAManaging messages on your IBM i can be more than a full-time job if you have to do it manually. Messages need a response and resources must be monitored—often over multiple systems and across platforms. How can you be sure you won’t miss important system events? Automate your message center with the Robot Message Management Solution. Key features include:

  • FORTRAThe thought of printing, distributing, and storing iSeries reports manually may reduce you to tears. Paper and labor costs associated with report generation can spiral out of control. Mountains of paper threaten to swamp your files. Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing. Manage your reports with the Robot Report Management Solution. Key features include:

  • FORTRAFor over 30 years, Robot has been a leader in systems management for IBM i. With batch job creation and scheduling at its core, the Robot Job Scheduling Solution reduces the opportunity for human error and helps you maintain service levels, automating even the biggest, most complex runbooks. Manage your job schedule with the Robot Job Scheduling Solution. Key features include:

  • LANSA Business users want new applications now. Market and regulatory pressures require faster application updates and delivery into production. Your IBM i developers may be approaching retirement, and you see no sure way to fill their positions with experienced developers. In addition, you may be caught between maintaining your existing applications and the uncertainty of moving to something new.

  • LANSAWhen it comes to creating your business applications, there are hundreds of coding platforms and programming languages to choose from. These options range from very complex traditional programming languages to Low-Code platforms where sometimes no traditional coding experience is needed. Download our whitepaper, The Power of Writing Code in a Low-Code Solution, and:

  • LANSASupply Chain is becoming increasingly complex and unpredictable. From raw materials for manufacturing to food supply chains, the journey from source to production to delivery to consumers is marred with inefficiencies, manual processes, shortages, recalls, counterfeits, and scandals. In this webinar, we discuss how:

  • The MC Resource Centers bring you the widest selection of white papers, trial software, and on-demand webcasts for you to choose from. >> Review the list of White Papers, Trial Software or On-Demand Webcast at the MC Press Resource Center. >> Add the items to yru Cart and complet he checkout process and submit

  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: