20 years in IT history: Connectivity

In 2004 (or thereabouts), enterprise resource planning (ERP), fell off the hype cliff and (perhaps this is the fairest way to put it) became subject to the net of its positives and its negatives.

ERP is the art of framing a single formal definition for every object and act in a company so that everything can be managed together, top down. For instance, pre-ERP, each department or division in a company usually defined the term "employee" differently. These differences might be tacit and hard to define and perhaps not even known to top management, but they would usually matter. Once ERP came to that company, "employee" would mean the same everywhere, and every aspect of that identity would be explicit and transparent. There would be one database for the entire company and one interface to that database. A manager setting policies for "employees" would know exactly what he or she was doing. ERP is an instrument for bringing companies to a higher degree of integration.

The great virtue of ERP lies in how well it supports compliance with companywide policies. A given change just radiates across the company, with every division learning about it at the same time and in the same way. In the case of Sarbanes-Oxley, which mandates a specific framework for financial reporting, ERP seems essential to getting to compliance at all.

All good. However, as experience with the technology accumulated, downsides swam into view, among them a loss of flexibility and weakest-link exposure risks-if one department enters information inaccurately or imprecisely, everybody suffers. There were others.

ERP is connectivity taken to the extreme; and while the program has applications that are important and useful, it also teaches that there are limits. Connectivity is not the solution to all problems.