ERP Integration Struggles To Connect

Getting applications to work with each other remains a big challenge for many companies

InformationWeek Staff, Contributor

March 26, 2004

3 Min Read

Getting applications to work with each other remains a big challenge for many companies. These incompatible puzzle parts exact a toll on the industry in more ways than one. Not only is it a hassle for the businesses that survive poor integration projects, but it's also keeping them from investing in potentially innovative software that could bring top- and bottom-line benefits.

For software vendors, it spells lost revenue opportunities. Nearly 30% of respondents at 305 large and midsize companies using ERP applications from J.D. Edwards, Oracle, PeopleSoft, or SAP that Peerstone Research surveyed say they aren't buying new enterprise applications because they're too busy integrating the ones they already own.

Big ERP vendors have tried to lighten the load by developing their own integration technologies, such as SAP's NetWeaver, but work remains. It's critical that companies' ERP applications don't operate in a vacuum but can communicate with all applications that feed data into a particular business process, such as order to cash. However, such tasks grow in complexity when applications for supply-chain or customer-relationship management are disconnected from core ERP systems, as they still are for about 85% of the companies Peerstone interviewed.

Given the disconnect that still exists among these various applications, it's encouraging that 63% of 215 of the companies surveyed say they've gained real benefits from their ERP deployments by any definition, and nearly 40% claim to have achieved a "hard" return on investment.

How's your company achieving a fully integrated ERP environment? Let us know at the address below.

Jennifer Zaino
Executive Editor, News
[email protected]

Payoff Focus

Did your company conduct a formal ROI evaluation of its ERP applications?

Some businesses skip a fundamental step in ensuring a successful implementation of ERP apps. Nearly 40% of sites using packaged applications from J.D. Edwards, Oracle, PeopleSoft, or SAP are missing out by not conducting formal ROI evaluations. For most sites, however, these reviews are considered a standard business practice.

Failure Factors

Why do ERP projects fail?

Software bugs cost the U.S. economy $59.6 billion annually, according to the U.S. Department of Commerce's National Institute of Standards and Technology. That's 0.6% of the gross domestic product. ERP use isn't going unscathed either. According to Peerstone Research's study, nearly 20% of large and midsize companies say buggy software is behind the failure of ERP projects. Another software issue reported by surveyed sites: The lack of key features. Sixteen percent report that this contributed to the failure of ERP projects.

Legacy Effect

Did your company's ERP investment fix its broken legacy operations?

Older or legacy applications pose challenges to managers charged with improving software performance. While legacy administration can be costly and time-consuming, compatibility across key company software is crucial to business operations. For 18% of companies surveyed, an ERP package has helped, not hindered, legacy management by fixing broken legacy operations. Not all returns are as concrete as legacy improvements. Nearly 30% of sites report ERP investments have resulted in a soft return on investment.

Not Good Enough

Why isn't your company buying new enterprise applications?

Vendors of enterprise applications need to take heed if they want their businesses to continue to grow. Not all consumers of ERP software report satisfaction with their portfolio of products. A quarter of sites surveyed by Peerstone Research contend that the reason their company isn't buying new enterprise apps is because the ROI analysis isn't good enough. For 14% of companies, applications just aren't meeting their business needs.

Eighteen percent say they don't need new apps, while the same number say they have too much shelfware.

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