Extreme ERP Makeover

By now, most companies - especially those in the $1 billion to $5 billion range - have heard the knocking. And so far, they seem to be listening. In a recent study on the government's new financial reporting requirements, AMR Research found that 65 percent of the companies it interviewed were considering ERP consolidation, a percentage that analyst Bill Swanton thinks is representative of the market as a whole. "Only a small percent of companies did single instance the first time [they implemented an ERP system], maybe 10percent," Swanton says. "Easily 50 percent of the rest are considering it over the next two years."

The Siren Song of Single Instance

What deploying a single instance boils down to is getting rid of your existing ERP and other best-of-breed systems - such as purchasing and CRMCRM - and replacing them with a single monolithic system from a single vendor. Everything your company needs - financials, order entry, supply chain, CRM - would come from SAP, OracleOracle, PeopleSoft, whomever. There would be one giant database, one application that does everything. Alles zu CRM auf CIO.de Alles zu Oracle auf CIO.de

And there are some compelling reasons to undertake such a project now. For starters, the Sarbanes-Oxley Act, the government's post-Enron accounting legislation, requires that financial reports have a verifiable audit trail. With a single instance, all of a company's financial data will live in one application and will originate from one source, eliminating consolidation errors and greatly reducing the time it takes to close the books.

Having a single data source could also create new revenue opportunities and cut costs. Companies would be able to run reports that show cross-promotion opportunities, places where they could reuse equipment or leverage purchasing power. Also, AMR estimates that companies budget $4.3 million for a single-instance order management module versus $7.1 million for multiple instances.

But despite these benefits, rip-and-replace is a difficult pill for CIOs to swallow, many of whom are just shaking off the multiyear, multimillion-dollar hangover of their first ERP project. And they're wondering if there isn't another cure for their integration headaches: Web services, those plucky little XML-based applications that are currently being held up by multiple standards organizations often working at cross-purposes. Web services could allow CIOs who have invested in best-of-breed solutions to integrate their standalone systems without either shelling out millions for single instance or tying their company's future to a single vendor.