Ray Wang at the Software Insider blog wrote a piece yesterday questioning the notion that single instances are always the best approach for ERP implementations. The link is here. He cites a study indicating factors such as purpose built requirements and cost as primary factors in considering a two tier architecture. This is a good piece and it made me reflect on some recent experiences which are worth sharing.
Most companies will never make a conscious architecture strategy decision. In these cases, business unit CIOs and other executives are faced with making the best decisions that they can and corporate level resources struggle to add value, lacking any consistent access to business data. It is in this environment that the single instance topic comes up and meanders around for years.
We have recently worked with a client who has multiple instances of a variety of new and legacy ERPs. Getting integrated data for business decisions is tough, even within individual instances. On the surface, a single ERP instance appears to be the best answer. It forces a company to reconcile business processes and data elements which will seemingly provide huge value in improved integration and decision making. The pain and expense of implementation are well known but often underestimated. There is also a presumption that any unique requirements met by previous ERPs or point solutions will be significantly outweighed by the value of integrated processes and data. This might be true, but be careful!
Integrated processes and data are not a bad thing, but they may not provide the expected value. I have seen many companies go through the expense and pain, only to find that they can do very little with the integrated data, and not just because they lack the right process or organization structure. It is often hard to figure out what new processes will yield the most value and what data is needed to support the process. Even creating reports on your newly integrated data can be surprisingly labor intensive. Sure, SAP and other ERPs have lots of sophisticated reporting tools, but what insight are you looking for? In this area you are on your own.
There is a growing trend toward the use of simple SaaS applications which take data out of multiple ERP instances and combine this with powerful processes supported in the tool. Integration requirements are minimal and the business insight and process detail contained in the SaaS tool are not typically part of the major packages, including SAP. Examples include products from two companies that I work with right now, LeanDNA for procurement and FireApps for Foreign Exchange.
Aside from the the capabilities of these SaaS apps, I never cease to be amazed at the cost and difficulty of delivering even basic reports out of SAP. Recently, we wrote a quick report for a client which took us about 30 minutes to complete. Even though the data is contained within a single instance of SAP, the client’s IT team had quoted a price of $10,000 for this same report. Just astounding. The high cost reflects a few things including the clients refusal to buy an extremely expensive reporting platform and the lack of data model expertise on the part of the IT team. Either way, this kind of delivery is not what most CIOs are aspiring to provide.
I am not saying that there is no reason to go with a single instance. However, you should look carefully at what processes really need to be global and whether the cost of a single instance is justified and secondarily whether the single instance will even support your biggest needs.
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