Who Loves ERP Systems?

Executive Summary

  • ERP systems are frequently defended.
  • Who defends them (and who doesn’t) tells you a lot about who the ERP systems actually benefit.

Introduction

What you discussed about ERP projects is exactly what the academic literature shows, and which no implementer or vendor is interested in acknowledging. That is over decades of studies, ERP has no ROI as we cover in the book The Real Story Behind ERP: Separating Fiction from Reality. But remember, everyone has to have an ERP system. They are mandatory and to question this orthodoxy is to be dismissed as a wearer of a tin foil hat. Everyone knows that you need one. Except they have a negative ROI. But of course, everyone needs one!

And furthermore, no combination of systems can be used (i.e., connecting a financial system to a supply chain planning system to other systems). Also, you can’t start with a few systems and add customization. No matter what the industry or how poor the fit with the ERP system, you must use an ERP system. All of the financially interested parties have spoken on this topic.

A Typical SAP ERP Implementation

Let us take a look at a typical Deloitte implementation with SAP. After years and hundreds of millions spent, how does the implementation get a positive ROI? Obviously, the cost is the denominator in the calculation, so the bigger it gets the bigger the payoff needs to be.

I covered in this article how consulting companies parasitized by vendors and consulting firms as I covered in the article How Vendors and Consulting Firms Parasitized the ROI of IT.

Open Source With Customization and Integrated Applications Never an Option?

SAP consultants laugh when I present open source ERP options like ERPNext.

However, with open source ERP, you can now add customization and better individual applications, and you have plenty of budget to do it. The sort of amazing thing about this is there are no SAP customers I have ever seen that feel particularly advantaged by “having an ERP” system. It’s more considered a boat anchor. Now, who might jump on this article to defend SAP? Most likely it won’t be a customer saying

“How dare you; I love my SAP ERP!”

Instead, it will be an SAP consultant or SAP sales rep who makes money from SAP. Invariably the biggest supports of ERP are not users.

How Executives Give Their Users Systems They Don’t Want

Who supports ERP systems in ERP customers? Executives. Executives who make the purchase decision, who get wined and dined by the vendor-consulting firms. Moreover, the exact people who never log in to the ERP system. If you want an endorsement from an executive in technology, ask them what they use for email and calendar scheduling. In that they are experts.

Users of ERP are non-plussed. Go into the cubicle area, and people are trying to get their work done, with SAP often getting in the way. But who thinks ERP is great? It is the people who ride the ERP money train. But we already know that the consultants love ERP. Sales reps love cashing ERP commission checks.

No kidding. We all know people like getting paid.

The question is what is the ROI for the customer, not for the vendor or consulting firm.

Conclusion

ERP promises, over a 5 year period, an increase in business productivity. When we compare the before and after figures, we see no increase in revenue per employee or units of output or profit per person-hour. In fact, we often see an increase in IT staff to employee ratios (for obvious reasons and to maintain the ERP system). In this case, the ongoing cost of the IT investment keeps escalating until it consumes most of the IT budget leaving no room for innovation.

To answer the question, “Who defends ERP systems.” The answer is those that benefit the most from their implementation — vendors and consultants.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

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References

Thanks to Ahmed Azmi for his contribution to this article.

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

How to Use the Latest New Digital Transformation Terms!

Executive Summary

  • Digital transformation is ramping up the bridge and has caused its own digital transformations requiring a whole new set of super open minded terminology.
  • This is not some “Deepak Chopra-ish” fanciful wordplay, but serious terminology enhancements that all implementers and OTs should be aware of.

Introduction to the New Digital Transformation Terms

The term digital transformation has been with us for a few years, with digital transformations appearing left and right. However, there are special conditions have now arisen on projects that require further elaboration through terminological discussions. You will learn about these new and groundbreaking digital transformation terminologies in this article.

What is the Right Terminology for Digital Transformations that Fail?

The problem with the term digital transformation is that while we switched out the word “implementation” for digital transformation, it was quickly determined that nothing changed on projects. This lead cynicism to run rampant. Depression occasionally set in, with some of those in software implementation going so far as to wonder (out loud sometimes) if it was merely wordplay.

What did change is that many marketing departments had to use the “find – replace” command in their word processing systems to bring their documents up to snuff.

Within a short period, a revolution occurred in the IT industry, and there were no longer any software implementations.

Why might you ask?

Well to understand why we need to go back to why the terms were switched in the first place.

The Digital Transformation Master Plan

What follows is top secret. It is not for presentation to non-SAP friendly personnel.

This graphic displays the bad old days of software implementation.

SAP and SAP consulting firms figured out the fundamental flaw in software implementations. And it had nothing to do with the lies told during the sales process, immature SAP applications like S/4HANA being implemented or faked resumes by SAP consulting firms. No, the problem was that the declaration of success had to wait until the end of the project. And since SAP projects failed with such frequency, it meant that most projects would never get to the promised land of being declared a success.

SAP and their consulting partners needed to make a radical change to address this issue.

Introducing……”DT!”

The answer was simple. Make the project associated with a successful terminology, so that the process itself rather than the outcome was the focus — i.e. a “digital transformation.”

This way the project is already successful because it is associated with something considered virtuous. Who in their right mind could be against transforming something?

It does not matter that the term is meaningless in the modern context as it is from the 1900’s describing the transition from nondigital technologies to digital technologies. Almost no SAP consultants or customers will bother to look it up!

Simply assert meaningless terms to your heart’s content!

Furthermore, it turns out that IT departments also have no interest in validating the success of their projects, and are very happy to use this terminology also. Everybody wins!

The 100% Conversion Ratio of Software Implementations to Digital Transformation

We are very happy to report that the conversion of SAP software implementations to digital transformation was 100% successful. There are now no more software implementations occurring…..anywhere.

However, the industry was left with a conundrum.

The Need for New Digitial Transformation Terminology

Even if digital transformations fail entirely, they are still referred to as digital transformations. For example, the fact that Lidl recently halted one of its SAP projects to go back to its far more desirable “legacy” system did nothing to diminish the fact that it was still a labeled as a “digital transformation.” In fact, it is still labeled as a successful implementation on the KPS website. However, was it? Both SAP and KPS still consider the Lidl SAP failure to be a digital transformation…..because they got paid.

Digital Transformation or Bank Account Transformation?

This brings up the question, should a digital transformation that fails instead be more accurately called a..

“Digital bank account transformation”?

And this leads to the next topic.

What is the Right Terminology for Digital Transformations that Fail and are Greater than $300 million?

Now if the digital transformation fails but also costs more than $300 million? After much discussion, it was agreed that it would be called a..

“digital boondoglefication.”

What is the Right Terminology for Digital Transformations that Lead to High Degrees of Account Control?

A significant benefit of ERP digital transformations is that they put the vendor and consulting company in a good position regarding account control. This allows the vendor and consulting partner the face time to talk down any competing applications. Our research into ERP implementations….digital transformations is that this is primary ROI to ERP digital transformations. As a high degree of account control is the desired outcome of such projects, the question has been posed “what should they be called.” It was concluded that this is a.

“digital accountformation.”

Conclusion

This is an exciting time to be developing new terminology for the digital transformation industry, and we are happy to report on all of the tremendous new terminologies that are coming from the field. As with the original base term of digital transformation, all of the new derivative terms are equally evidence-free. Digital transformations are actually transforming digital transformations, and that can only be a good thing, as this video from the digital transformation center can attest.

Digital transformation is not simply a term being parroted by people who have “no idea what they are talking” about. Far from it. Endorsements for digital transformation can be found in this video. It is easy to see the excitement in the responses from these endorsements. It turns out that digital transformation is creating more breakthroughs leading to more OT booms than in any time in history (according to the video). 

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

The Disastrous ROI of Big ERP When Comprehensively Calculated

Executive Summary

  • The evidence is clear that ERP’s ROI is negative.
  • What is even less discussed is that investing in ERP leads to even more negative ROI with further purchases.

Introduction to ERP’s ROI Face Plant

The academic literature on ERP is that its ROI is negative. This was explained in our book The Real Story Behind ERP. In this article, we will expand upon this to consider the implications for ROI in the rest of the enterprise after the initial ERP purchase.

Including the Larger Picture Analysis — Post ERP Implementation

The studies on ERP ROI are focused only on the ROI of the ERP system. However, none of the studies that we reviewed looked at the overall picture. We analyzed this in the Brightwork Solution Architecture Analysis.

The problem with the ROI of just ERP is that it limits the impact that ERP systems have on the other applications that are purchased. This is because the strategy of ERP vendors to push what are most often marginal applications into the customer by the ERP vendor. A perfect example of this is SAP. SAP has an extremely poor stable of applications outside of their ERP system, the sordid history for which we covered in the article How SAP is Now Strip Mining its Customers.  None of the research includes this very important implication. (Oracle, SAP, Infor, Epicor, Sage), etc…. the larger ERP vendors follow this approach.

How Much Do Companies that Implement ERP Know About their Lack of ROI?

This quotation for Sam Graham, a highly experienced independent ERP consultant applies.

“ROI rarely comes into the equation. At best, ERP is seen as an inevitable necessary evil, or a ‘rite of passage’ to becoming a big company (SAP had a very effective campaign in the UK (and presumably other markets) a few years back, along the lines of, “Now SAP isn’t just for large companies” which glossed over the fact that they were actually talking about Business One. Clever marketing; and a lot of companies fell for it, believing that they were running the same software as the ‘big boys’.) Rarely do they talk to independent ERP consultants and, when they talk to general management consultants, these people are usually keen to sell their services (and gain experience in ERP) so the last thing that they will do is put obstacles in the way of their clients buying a system.

In my last job in industry, I was taken on as Materials Manager for a $100m t/o Swiss company that had just had a disastrous BPCS implementation. They approached what was then called Coopers & Lybrand (now part of PWC) for assistance. C&L sent in a consultant, who identified more work than one consultant could handle, so they pulled in a second, and then a third. Now; when you had 3 C&L consultants, you had to have a senior consultant to supervise them. And when you had 3 senior consultants, you had to have a partner to manage the 3 senior consultants. So they ended up with a partner, 3 senior consultants and 9 consultants on-site. 5 days a week. I’m not making this up; but it gets worse.

This was in the days of MRPII and, in those days, Ollie Wight & Associates were thought to do the best courses on the subject. So the Partner persuaded our CEO to send all of the company’s management team on a 5-day course. Then, when they came back, he said to the CEO, “You know, now that your people have been on that course, there is a danger that they will use terminology that our people don’t”. So he persuaded the CEO to pay for the same 5-day course for all 13 C&L staff on the project. And that meant not only paying for the courses, hotels, expenses etc; but paying for their time to be on the course!”

This is our observation as well.

Companies that purchase ERP listen to biased entities, ERP vendors and ERP consulting companies that are presenting them with sales information.

Conclusion

Companies that implement ERP systems have not and are not doing the most elementary research to evaluate the potential benefits of the software they are purchasing. They not only do not research the ROI of the ERP system itself but do not have the knowledge of the ROI of the follow-on applications that the ERP vendors plan to sell to them after they have captured the account.

Decision makers don’t measure benefits, (measurement is tricky), don’t read academic literature, and benefit by doing things that are considered “right” at the time to do. What is considered right to is controlled by marketing departments of vendors and consulting companies that also control the media landscape. So IoT is being pushed right now. Are there really many use cases for IoT? They exist for package delivery and a few other areas, but IoT use cases are quite overstated. Big Data is similarly overstated. But assertion without evidence is the norm in the IT industry. Loosely translated, the only justifying logic for ERP is that firms that promote ERP propose that ERP is something that should be purchased. That is it. And the firms that recommend ERP, most frequently recommend the most expensive ERP systems to implement.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

The Myth of ERP Being 90% Out of the Box

Executive Summary

  • ERP vendors nearly always tell companies that the functionality they provide will cover more requirements that it does.
  • This leads to unplanned customization.

Introduction to the Myth of ERP Coverage

ERP systems were first introduced in the 1980s as a single system that would meet all of a company’s needs. Consulting companies helped vendors present this fiction because they made so much money from ERP system implementation.

SAP Promotes the 90% Out of the Box Myth

One of the most assertive promoters of the 90% out of the box myth was SAP. SAP has been extremely assertive in declaring that all systems that exist at an SAP prospect that are not SAP are “legacy” as we covered in the article How SAP Used and Abused the Term Legacy. SAP also promote the false construct that SAP was only built upon best practices, as we covered in the article How Valid are SAP’s Best Practice Claims? SAP argues that companies should implement as much of standard SAP functionality as possible and minimize customizations. However, SAP only offers a portion of the functionality necessary to run companies. This is where the proposal is made to perform business process re-engineering, as we covered in the article Reengineering and its Impact on ERP Sales. Re-engineering was a trend that eventually petered out, primarily because re-engineering projects did not demonstrate the ability to add value to customers.

90% Out of the Box

Even though ERP systems have been implemented for decades and vendors like SAP know that 92% of the ERP systems will be moderately or heavily customized, SAP sales continue to propose to prospects that 90% of their functionality will be addressed “out of the box” SAP ERP. This is one of the significant reasons ERP systems were able to become so prevalent. In this way virtually all ERP systems are sold under a false set of pretenses. In each case, they have to escalate in time and budget because the customization percentage is perpetually underestimated. There was never any effort (by consulting firms, but also by Gartner/Forrester) to illuminate this fact to customers. If someone can make me aware of some entity that did this, I will read it, but there is a peculiar silence on this topic.

Proprietary ERP and High Expense

When a company buys SAP, they also end up with the high-cost ABAP customization environment. They did not have to accept SAP’s recommendation to use ABAP, but almost all of them have. This served as a “double whammy” for the customer. First, they accepted the false assumption that they would only have to perform limited customization. Then when they found out that they would have to customize highly, they were stuck with the ABAP coding and SAP customization environment, which dramatically added to the cost of ERP projects. SAP and other ERP systems have turned out to be high cost closed systems that give the vendors increasing levels of control over the IT budgets of these customers. While SAP is the most difficult broadly sold ERP system to customize, ERP systems have tended to be developed as monoliths, and have been expensive to customize.

Customers that relied upon consulting companies found that the consulting companies were “in on it” and merely repeated whatever the vendors said. This entire system of the undisclosed history of ERP has only helped the bottom lines of consulting companies.

Conclusion

For decades ERP and partner consulting companies have been telling prospects something they know is false. This falsehood is that most of the requirements of the customer will be met by the standard functionality of ERP. Once purchased, proprietary ERP systems have proven very expensive to customize. In this way, and other ways, ERP systems appear to have been a Trojan Horse, allowing entities to take control of IT spends under false pretenses. Interestingly, the companies that have told all of these lies and have so misled their “customers” have not been called out on this inaccuracies. Buy this does explain, or is one of the explanations for the broad negative ROI to ERP systems.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

Should SAP Come Clean on How Much SAP ERP Relies on Excel?

Executive Summary

  • SAP normally presents SAP ERP as a system that can stand alone. However, if this is true, why is it so dependent on Excel to function?

Introduction to How Much SAP ERP Relies on Excel

In the original presentations from SAP, R/3/ECC was primarily about work in the application. Customers were not told, even after the evidence was quite clear that users would be using ECC in combination with Excel that it is how the system would be used.

What Was Promised?

In research, it is very important to evaluate what was promised, and then what happened. One does not view a discrepancy between promise and outcome and disregard it unless there is no research motive. Moreover, SAP salespeople and consulting companies routinely understate how much ECC relies upon external systems to customers. You don’t even hear the word Excel on SAP presentations. Its as if ECC does everything.

Consulting

The number one way to report and do analysis in ECC? Yes, that would be Excel. ECC has been fantastic for creating external spreadsheets. It seems that Microsoft does not get enough credit for ECC being able to function.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Is SAP ERP Good Because it Won Against Other Options?

Executive Summary

  • The concept is sometimes promoted that because SAP ERP is popular, that it must lead to good outcomes for customers.
  • What were the true reasons for SAP ERP’s popularity?

Introduction to SAP ERP Being Popular as an Argument

We recently found this quote on ECC regarding its popularity.

“R/3 in its days – before SAP had the dominant market position it has today – did win against most of the options on the market so it had some merit. “

How SAP Sold Out Customers to Corrupt Consulting Firms

There are many things to say here. First, SAP was the most aggressive vendor in giving away it is consulting to consulting firms. These firms, in turn, recommended SAP. Not because SAP was right or the correct fit, but because it allowed them to make the most money. Therefore, the playing field was not level. Consequently, it is not at all evident that this was a good decision merely because many companies selected ECC.

How is SAP Degrading Customer’s Investments into SAP?

Moreover, as I observed, that initial decision is looking worse and worse as SAP is changing the terms of the deal by giving customers a bad upgrade option in S/4HANA and by using indirect access to illegally push the account to buy SAP. Customers now deal with an SAP that is making up false constructs (like Type 2 indirect access) to control them. SAP thinks and behaves as if they are owed a certain percentage of the IT budget, even if the customer does not want to use their software. A vendor that acts this way is a liability to have in the building. SAP will be pummelling its customers for the next two decades. Every year that passes will likely increase the regret that they ever purchased SAP.

Who Likes ECC, Customers or SAP Consultants?

There is no evidence that ERP systems are beneficial to customers that implement them. I can say I have never seen an SAP account particularly happy with ECC. Users also do not enjoy working with ECC. They find it a burden and SAP is frequently lampooned at my client sites. It is also often commented that the system does not live up to expectations or is otherwise “takes forever” to “get things done.” ECC frequently appears to be a system that was forced on the users by the executives rather than a system that users want to use. The people who are happy with ECC, are consultants who make money from ECC.

The most prominent defenders or ECC or SAP on LinkedIn are never customers. They are SAP consultants who say a lot of unscientific things to defend their source of income. 10 out of 10 SAP consultants enjoy billing hours for SAP. I keep pointing to academic research that no other ERP consultant has read and that no ERP consultant is interested in reading. That is the academic consensus of decades of papers on the subject demonstrates no ROI from ERP systems.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Can SAP ERP Be Sold with Realistic Expectations?

Executive Summary

  • Is SAP sold under realistic expectations? This is brought up as a possibility, but direct experience with the SAP sales process indicates that this is highly unlikely.

Introduction to Realistic Expectations for SAP ERP

It is sometimes stated that..

“If one has reasonable expectations, ECC can work well.”

However, how often is ECC sold with reasonable expectations?

How SAP Salespeople Operate

Salespeople ensure that customers will not have realistic expectations. Every SAP sales presentation I have participated in or reviewed has been entirely divorced from the reality of SAP projects. SAP sales reps, along with SAP consulting companies will in all cases vastly underestimate customization, undersell the real TCO of ECC, overstate ECC’s “best practices,” and on and on.

Conclusion

It is near impossible to have realistic expectations of SAP applications, because SAP is so active in providing false information to their customers.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Is it Right to Lead Clients into SAP Software Failure?

Executive Summary

  • S/4HANA is an implementation that makes money for SAP and consulting partners but has a very low likelihood of success.
  • S/4HANA implementation has turned into quicksand, and the consulting partners know this.

Introduction to S/4HANA Risks

Our observation from many implementation data points of S/4HANA as outlined in our S/4HANA implementation study is that S/4HANA is the highest risk application with the least likelihood of going live of any application we track. One major reason? S/4HANA is not a completed application.

The risks of S/4HANA implementations that are specific to S/4HANA (that is exclusive of all of the factors outside of S/4HANA such as the implementation partner, customer, etc..) break into the following:

  1. Incomplete nature of the overall application. (see SAP’s Misleading Storyline For S/4HANA Being Incomplete)
  2. Problems with HANA has in supporting a S/4HANA ERP system.
  3. Customization remediation effort due to changes in the database schema.
  4. Data migration effort due to the changed in the schema and the shortage of tools for making the migration (along with migrating custom tables)
  5. The loss of functionality through “simplification.”
  6. Customization remediation effort due to changes in functionality.

Obtaining Financially Biased Information About S/4HANA from SAP’s Coterie

Interestingly, the entities that provide information about S/4HANA to the market are either SAP itself or SAP consulting firms. SAP has been massively overstating S/4HANA as covered in How Accurate was Hasso Plattner on S/4HANA? Media entities that cover SAP are paid directly by SAP. We are a research entity that focused mostly on SAP. When we receive research requests from companies interested in the validation of information about S/4HANA that has been provided by SAP and their coterie, we find that in 100% of cases the company is working from an inaccurate set of assumptions. And in 100% of cases, the assumptions are positively biased. It is clear that the objectives of SAP and their coterie is to get S/4HANA into companies by any means necessary, and by telling any lie they need to tell.

S/4HANA’s extremely poor implementation history has been almost entirely censored. SAP consulting firms won’t discuss these failures and halted projects with prospects, they want to discuss SAP marketing talking points. And when an individual from a consulting firm writes an article about S/4HANA, they are very careful to never discuss their financial bias in favor of S/4HANA, or that they, for instance, have a quota to sell S/4HANA services. Instead, they prefer to present their views as if they are impartial.

This explains articles like this, that vastly overestimate the readiness of S/4HANA for implementation and underestimate the implementation challenges with S/4HANA. They have no other purpose than to drum up business for S/4HANA implementation services.

The S/4HANA On-Premises vs Cloud Distinction

These are all called out for S/4HANA on premises. S/4HANA Cloud has too small of a functionality footprint for any one company but small professional services firms to implement. (S/4HANA on premises and S/4HANA Cloud are two separate applications, something which SAP deliberately obscures to customers and Wall Street.)

Implementation Costs

Secondly, the implementation cost of S/4HANA on premises is guaranteed to be extremely high for the factors listed above. Merely the costs of item 3 and 4 will be extremely high. S/4HANA is like no other SAP ERP upgrade, which was already quite problematic and expensive.

ERP Failure Rates

ERP and more broadly enterprise software failure rates are a frequent topic of conversation among those that work in the industry. However, what is curious is how undiscussed the implementation of applications that have a very low likelihood of implementation success. If the implementation advisory function is more focused on billing hours than in selecting applications that have higher probabilities of implementation success, then naturally, failure rates will be higher than necessary.

Increasing Consulting Revenues with S/4HANA

Even with S/4HANA extremely low implementability, SAP consulting firms still want the S/4HANA consulting business. This means they work with SAP to mislead customers and prospects about the existing S/4HANA case studies, their personal implementation experience with S/4HANA and S/4HANA’s revenues.

But what happens if the project that is being recommended by the consulting company has close to no chance of being successful?

Consulting

What we are seeing is a consulting ecosystem that is recommending S/4HANA implementations that in most cases will not go live and will worsen the condition of the client, but which benefit the consulting company. So should consulting companies be recommending implementations that they know will fail? The SAP consulting market has become so profitable for so many companies, combined with SAP bringing out such immature applications, that implementations are recommended that have close to zero chance of improving the condition of the customers.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

ERP Contact Form

  • Want Honest Information about ERP?

    We can help you independently verify the information provided by major consulting companies and answer your ERP questions. Our work together can remain confidential too. We are one of the very few truly independent sources of information on the areas we cover

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

Repair MRP Book

 

MRP System

Repairing your MRP System

What is the State of MRP?

MRP is in a sorry state in many companies. The author routinely goes into companies where many of the important master data parameters are simply not populated. This was not supposed to be the way it is over 40 years into the introduction of MRP systems.

Getting Serious About MRP Improvement

Improving MRP means both looking to systematic ways to manage the values that MRP needs, regardless of the MRP system used. It can also suggest evaluating what system is being used for MRP and how much it is or is not enabling MRP to be efficiently used. Most consulting companies are interested in implementing MRP systems but have shown little interest in tuning MRP systems to work to meet their potential.re

The Most Common Procedure for Supply and Production Planning?

While there are many alternatives to MRP, MRP, along with its outbound sister method DRP, is still the most popular method of performing supply, production planning, and deployment planning. In the experience of the author, almost every company can benefit from an MRP “tune up.” Many of the techniques that the author uses on real projects are explained in this book.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Opportunities to Improve MRP
  • Chapter 3: Where Supply Planning Fits Within the Supply Chain
  • Chapter 4: MRP Versus MRP II
  • Chapter 5: MRP Explained
  • Chapter 6: Net Requirements and Pegging in MRP
  • Chapter 7: Where MRP is Applicable
  • Chapter 8: Specific Steps for Improving MRP
  • Chapter 9: Conclusion
  • Appendix A: Calculating MRP

Is SAP’s ERP System Innovative?

Executive Summary

  • SAP’s ERP systems are often presented as a good application, even innovative, but we question this assertion.
  • To understand SAP ERP, it becomes necessary to understand how ERP was originally sold when SAP first became a well-known vendor.

Introduction to the Whether SAP’s ERP Was Innovative

SAP claims to be an innovative application. The following quotation presents this.

“To be fair to SAP, they have great products and they have not so good products 🙂
SAP Business Suite is a great ERP when implemented properly and deployed on a scalable/reliable platform (ahem, e.g. Oracle).
You have correctly pointed out all those inaccurate claims on their other not so good products. However, this shouldn’t diminish those positive impacts of their very trusty and reliable Business Suite applications since 1992. Rational product development decisions should prevail over old feud though. Moreover, the rational thing to do is to continue the ECC product line way past 2030 with updates in technology and Business processes so that true innovations without disruption is what all customers can depend on.”

Is ECC a Good Product? Is it an Innovative Product?

There is a consensus that ECC is a good product. SAP’s entire existence is due to ECC.

However, is ECC innovative? To consider this question, let us consider the actual definition of innovation.

“Innovation can be defined simply as a “new idea, device or method”. However, innovation is often also viewed[by whom?] as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. The term “innovation” can be defined[by whom?] as something original and more effective and, as a consequence, new, that “breaks into” the market or society.” – Wikipedia

Therefore, innovative means the company came up with something that no one else came up with. It must be new. Now let us consider ECC.

ECC was just a better and broader implementation of something all the ERP vendors were doing back in the 1980s. At that time software vendors were acquiring MRP vendors, and incorporating MRP systems into financial systems to make “ERP.” The benefit was integration, but less discussed was that much was lost in this process. For example, it worsened the MRP systems, which is something I covered in this article Why are Companies Still Running MRP from ERP?

The idea was that with one system costs would decrease. However, can anyone look at the costs of ERP implementations and say this reduced costs?

Another problem is that ECC is so weak in so many areas that without Excel it would die.

The number one way to report and do analysis in ECC? Yes, that would be Excel. ECC has been fantastic for creating external spreadsheets. It seems that Microsoft does not get enough credit for ECC being able to function. 

ECC is Good Outside of Finance?

ECC is difficult to use in supply chain management (the area of functionality I have been consulting in for decades in SAP), and it received far less development effort than SAP’s FI/CO module. In fact, I consult with ECC customers that normally have great difficulty in managing the supply chain process with ECC. The supply chain functionality was hastily created by what looks to be force feeding supply chain books to developers. The forecasting functionality is virtually impossible to work with. I could go on and on. But this is why I recommend to companies that they do not perform MRP or forecasting or any supply or production planning in ECC.

Deloitte and Accenture on the other hand, desiring to bill the most SAP hours as possible, never recommend reducing the reliance on SAP, no matter how bad the functionality. The entire SAP consulting ecosystem exists not to help customers, but to bill as many hours in SAP as possible. Any approach that reduces this primary objective will never be recommended. SAP gives awards to consulting companies no matter how much they mistreat clients. Even WiPro won an award!

However, SAP proposes ECC is great for all of the things mentioned above. The result is now companies perform these functions in ECC with great difficulty. This issue extends to analytics (all ECC systems have separate analytics systems) to sales order management (CRM has taken much of ECC’s sales order origination function) (why SAP loves indirect access claims against Salesforce).

ECC, a System Propped Up By Customization, Other Systems and Excel

As time has progressed from the initial “sales job” for ECC as the Swiss Army knife of applications, ECC has given up increasing amounts of functionality to other better applications. No one seems to remember that this is not what SAP or their coalition of the billing said would happen. Originally CIOs wanted to get rid of their multiple systems, but decades later, ECC also has….you guessed it, many systems connected to it. And SAP is more difficult to integrate with other systems than any other vendor.

Without these systems, and without extensive customizations (something else that SAP lied to customers about), and without exporting to Excel, the frustration with ECC would have no release valve, ECC would be removed from companies at a far high rate. People that consider the popularity of ECC neglect to mention that ECC is propped up from so many dimensions. ECC can be considered like an old man. If four other people drive him around and give him his medication, he can have an active lifestyle. But without that external help, he is not going anywhere.

ECC is stable, comprehensive (a relative term I know), standardized, and probably a few more accolades…..but innovative? Companies that implemented ECC are better off than before they purchased ECC? Not the companies I see and that is not what the academic research indicates.

And as we will discuss, life is about to get even more difficult for ECC customers.

When and How ERP Became the Largest Software Category

ERP became the largest enterprise software category purchased during the 1980s, and it held onto this title until just recently until giving it up to CRM. But it did so without any evidence that ERP improved the condition of companies that purchased it and used it.

It is important to recall that SAP and consulting companies told customers that ECC was the only system companies would never need and would lower their spend. Over decades a tremendous number of companies have lied about the impact of ERP on customers, and because all of the money is on the side of the ERP “industrial complex,” they are never called out on their inaccuracy. These are the usual suspects. And they have something very important in common. None of them care about what is true.

The Sordid History of ERP

Looking back at the history of ERP, it is easy to see that ERP was purchased because it became a trendy item. Deloitte, Gartner, Accenture and a whole industry — all with a pro-ERP financial bias — all told companies they had to have an ERP system. My analysis of the academic literature is that ERP systems have a negative ROI (as covered in The Real Story Behind ERP).  And because of the high cost of SAP ECC implementations and ongoing maintenance and the fact that ERP systems don’t particularly enable companies to do things better than they did them before.

SAP ECC has a strongly negative ROI. SAP ECC implementations are the most expensive implementations that we track. We offer two online TCO calculators for ECC, one for large customers, and a second for extra large customers. Lidl just canceled a 7-year project that cost $500 million Euros. Many billion dollar and up R/3/ECC failures are all through SAP’s history. Imagine what happens to the ROI of ERP when the failures are taken into account?

Both software vendors and consulting companies have been very careful to never let their customers know the TCO of ERP. It would be ruinous to ERP sales, and therefore would not allow the most important driver in all of the ERP industry, namely quota attainment.

Trapped by SAP ECC and Lead to the Slaughter with S/4HANA?

Executives brought no standard of evidence to the decision making process with respect to ERP, never asking what proof vendors or consulting companies could point to. Executives within customers that purchased ECC were not so much “thinking” as following the adverse risk strategy of just “looking at what your neighbor is doing.”

Now these companies are stuck with ECC systems that offer little flexibility, are exorbitant to maintain, and with the introduction of S/4HANA have a highly unappealing upgrade path. S/4HANA cannot be upgraded from ECC, but is a full reimplementation, pounding customers budgets once again. This is truly outrageous, but the consulting companies are silent on this, presenting S/4HANA as a positive development. (the customer’s exorbitant TCO is money in consulting firm’s pockets)


Deloitte and Accenture’s perspective on software TCO can be understood by Matthew McConaughey’s speech in the Wolf of Wall Street. “You take your customers money and put it in your pocket.” This is how the SAP consulting companies think about their customers. 

With the introduction of S/4HANA, a system that over three years after introduction is still not ready to be implemented, SAP has made the entire value proposition of their ERP system from bad to horrendous. And this is before we get into the other questions of the even lower ROI products that customers often buy from SAP to connect to ECC, and the indirect access liabilities of HANA, which SAP stipulates as the database for S/4HANA.

Conclusion

Our conclusion is that while SAP R/3/ECC has been great for Deloitte, Infosys (and of course Oracle who loves those database revenues driven by ECC with 70% of all ECC instances using the Oracle DB), ECC has not been beneficial for customers that implemented it. That is these SAP customers would have been better off custom coding their solutions (or keeping their existing solutions). Moreover, now companies have SAP, they have SAP account reps trolling their hallways. These sales reps are insistent that their customers double down on their negative ROI SAP ERP investments with even more negative ROI investments into more SAP products that are a step down from ECC. And that with indirect access, customers may have to pay for connecting any non-SAP applications to the negative ROI SAP ERP application. The entire SAP scenario has completely lost the plot. And money rather than product drives every decision.

If only customers buying SAP ERP back in the 1980s and 1990s had any idea that this would be the eventual outcome of their trendy SAP ERP purchase.

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The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

References

https://en.wikipedia.org/wiki/Innovation

Personally Attacking Those Who Critique ERP Failures

Executive Summary

  • Pro-ERP consultants personally attack ERP critics and point the finger away from the software products when discussing ERP failures.
  • Pro-ERP consultants and ERP software vendors motivated to sell products, silence ERP critics and create a narrative that project management teams are to blame for ERP failures.
  • Lawsuits, which are often revealed due to public disclosure laws, reveal that many companies are unable to successfully implement ERP products.

Introduction

ERP implementations have a large money trail behind them. It has come to my attention that there is a strong network of pro-ERP consultants that spend at least some of their time attempting to promote a very strongly pro-ERP overlay or interpretation onto ERP failures. Those who disagree with the “ERP friendly” post-mortem analyses of ERP failures are singled out for personal attacks. In this article, we will review a textbook case of this type of personal attack.

A Standard Pro ERP Comment

The following is a recent share on a LinkedIn post by Eric Kimberling, who published the statistics of ERP implementations. The following is the slide that Eric shared.

Now notice the response from a pro-ERP commenter regarding this analysis.

Hi Eric Kimberling your assessment is cruel but dare to say you are right especially with 80% of mediocrity.

That is “awesome” that with 30 years of ERP on the market and so many beautiful methods, tools, and certifications we still can see poor picture with many hysteric voices around ERP. Of course, even these mediocrities are not really so bad (as it somehow works) but bad things are much louder than good.

After all, here is definitely a lot of things to do. My take is we tend to much focus on material things and toys are drawing our attention away from the main area of ERP – these solutions are still for people not for robots or AI!

Studying loud failures, I found all these started very shiny with sound reasonable vision. They drifted astray. The cause of poor picture is that ERP project management lack at persistence with this vision.”

Let us review the assumptions within this comment.

Non-Pro ERP Voices are Hysterical?

The commenter states the following:

“many hysterical voices around ERP.”

This implies that if a person critiques ERP implementation failures, then that voice is hysterical. Conversely, one would naturally assume those that cover up ERP failures or defend them or point to the customer being responsible are level-headed and rational (not hysterical).

This sets up the debate under the artificial construct between people that are sane (defenders of ERP failures) and those that are insane (those that critique ERP failures). What a convenient way to move away from addressing the points of your opposition.

Many Beautiful Methods, Tools, and Certifications?

The commenter states that:

“so many beautiful methods, tools, and certifications we still can see poor picture.”

But how true is this contention?

I have reviewed many of these methods in the article, The Real Story on SAP Implementation Methodologies, from SAP and many consultancies.  My conclusion is that these methodologies are primarily written by marketing and sales entities, and they don’t have much of an impact on projects. Having reviewed so many of them, I have no idea what this commenter finds so impressive. Some methodologies, which have been backward engineered to sell more services, do not address the primary risk factor. How do I know this? Well first, it is clear from reading them. In fact, many readers of these methodologies are not even aware that a methodology is not what they think it is, as I cover in Why Methodology Does Not Mean What You Think it Does.

Secondly, when I worked on Deloitte’s methodology for SAP, I was told to adjust it so that it could incorporate as many of Deloitte’s services as possible. Therefore it was less of an implementation method than it was a sales document. Deloitte presented hirees all of their various services as part of a “proven approach” to improving the project. The statements had no foundation in research and the only thing they were proven to do is meet a quota for a partner. I have spent many hours with partners at these consulting companies and none of them care about their customers. They care about money. They are all under heavy quota pressure and cannot afford to put their customer’s interests first. These are the institutional incentives within these companies.

Reviewing the History of Implementation Methodologies (for SAP)

If we look at SAP for a moment, for over 20 years the company has introduced an array of methods that were ostensibly designed to speed implementations, such as ASAP (which we cover in Did ASAP Ever Reduce SAP Implementation Timelines?) and the Rapid Deployment Solution or RDS (which we cover in How to Best Understand the Faux SAP RDS). I have never seen one of these methodologies make one bit of difference on any SAP project. ASAP was introduced with great fanfare, but did anyone go back and check if it did what it said it would do? Of course not. Let us say that a consulting partner did, and the method did nothing. How would they publish this results and expect to keep on good terms with SAP? Experienced implementer (like myself, I say, implementers that do the work, not PMs that are associated with management and do not touch SAP) say that these methodologies are to romance the executives. The ERP consulting space does not question the intent of these “methodologies.” Perhaps they are never intended to improve implementations, but rather intended to do what they look like, which is to improve the consulting company’s ability to close sales.

The Result of All of These “Beautiful Methodologies?”

Now, after all of this, how long do SAP implementations take? Well, our research shows that SAP implementations are lengthening not shortening.

Why?

With products like HANA and S/4HANA being so immature, (for details, see Analysis of Steve Chaflen’s Article on S/4HANA Maturity), these implementations are restricted from completion. With SAP’s new C/4HANA, its maturity is so far out, yet still, the company already started promoting it at SAPPHIRE 2018. Bluefin Solutions published an article trying to hype customers on C/4HANA as covered in the article, How Accurate Was Bluefin Solutions on C/4HANA?  Bluefin Solutions could have told its prospects the truth about C/4HANA’s maturity in the critiqued article, but did they? Of course not. That would be bad for sales. This gets to the issue of why the consulting companies that implement solutions don’t have any interest in honestly informing their “clients” of the reality of these applications.

There is also no evidence that success rates for ERP projects have increased.

Studying ERP Failures Honestly or Through the Lens of Financial Bias?

To study failures in a way that leads to a beneficial outcome for future ERP projects means to study them honestly and not from the perspective of “what is in it for me.” As I have observed in the past, the majority of those writing about ERP failures are riddled with financial bias, as they want ERP implementation to continue unabated. In my meta-research into all (literally all) of the academic literature on the returns from ERP systems going back to the 1980s, the research showed no ROI from ERP implementations. This is covered in the book, The Real Story on ERP. This should be no great surprise as these systems are so expensive to implement. ROI is possible from ERP, but not if you choose a Deloitte or IBM to implement.

ERP Failures Are Loud?

The commenter argues that ERP failures are “loud.”

The implication is that these failures attract people’s attention and distract them from the great story of ERP. But where is this great story? The idea of ERP systems as some great enabler has clearly been a fiction constructed to sell ERP systems. Furthermore, how much money goes into publishing ERP failures? Not much. Now, let us see how much money goes into promoting ERP as valuable items to purchase. As covered in the article, How to Best Understand the Control of SAP on IT Media, SAP funnels money to major IT media outlets for positive media coverage. Oracle and other ERP vendors with large resources do the same. ERP consulting companies have great reach and there is no mention of the actual ROI or success rate of ERP systems on any of their web pages. The ERP and consulting marketing spend is massive and it’s all designed to get companies to purchase ERP systems. The argument that more corporate money supports the case against ERP (by promoting ERP failures) over hyping ERP purchases is very difficult to make. Let us think for a moment:

How much money do IDG, Gartner, and others receive to criticize ERP? How much money do they get to promote ERP?

Once again, nearly all the money is on the side of promoting ERP!

A History of False Constructs to Promote ERP

Over the decades since ERP was introduced, ERP has been promoted with a series of false constructs ranging from how they replace legacy systems (covered in How SAP Used and Abused the Term Legacy) to the idea that a significant competitive advantage could be attained through re-engineering (covered in Reengineering and its Impact on ERP Sales). We have analyzed all of the constructs behind ERP and found nearly all of them to be false. Yet, how often has the accuracy of these constructs been challenged by vendors, consulting companies, or IT media entities? How does the money flow into these entities? ERP proponents have not been held accountable for the many things (benefits) they said that would happen with ERP, which did not happen. If the field was titled “against ERP proponents,” they would not have gotten off “Scott Free.” Companies that have implemented ERP systems do not have the competitive advantage they were promised by vendors and consulting companies. They have spent mightily and made vendors and consulting companies, but what company is today using ERP is “enthused” about the system they now have? What company that has ERP sees it as some empowering system, versus a clerical system that gobbles up the IT budget?

Who was the ERP system designed for? To benefit the customer, or for the vendors and consulting firms?

A Single Reason for ERP Failures: Project Management

This commenter states the following.

“I found all these started very shiny with sound reasonable vision. They drifted astray. The cause of poor picture is that ERP project management lack at persistence with this vision.”

Did all of the failures start with a reasonable vision? Let us parse that comment.

Did the management begin with a realistic understanding of what they purchased, or was inaccurate information given both in the sales process and during the implementation? I would say it’s the latter. Finally, this commenter concludes that the single reason for ERP failures is a “lack of persistence” with a “reasonable vision.”

Really? Every ERP implementation fails because of a lack of persistence? This is the status quo explanation that obviates any need on the part of the vendor or the consulting company to provide accurate information to the customer. How convenient! But also, observed through its proper lens, what an intensely self-serving and negative comment. It appears that all of the customers that fail with ERP are losers, and lack the fortitude and persistence to follow through on the vision of ERP. That is to persevere so that they can finally attain the golden chalice of a system with a negative ROI. They are weak and soft-bellied! Unfortunately, I have also been categorized as a weak soft-bellied loser who would not jump on board (aka get with the program) with the “vision” of the company being created by the head of sales of i2 Technologies. A sociopath with a sex addiction who lied as soon as his eyes popped upon in the morning with what could be described as negative software knowledge. The man who famously said…

“I never want to hear something not existing as an excuse to not sell!”

Right….his vision. That vision. And who leveled these charges against me? Well, salespeople whose primary experience was reading sales material, had worked for the company for around 6 months, and never had to show up on projects and do any work.

The type of people who told our prospects that XML was middleware. Isn’t it amazing how appealing a vision can be….if you don’t have to make it happen yourself?

The Illumination of ERP Industry Practices Brought by Court Cases

These public ERP failures and the lawsuits are of great concern to ERP proponents because they expose the truth of these implementations. This is really the only time that the dirty underside and tricks played by vendors and consulting companies are given a public forum. And let us remember, the only reason this occurs is that the legal systems in the countries where these cases are filed require public disclosure of the complaint. Corporations do not share the truth in a public forum. If it were left to corporations, the PR and marketing departments would massage all information. However, the courts require the publication of the complaint. Court complaints are why we know of ERP failures, and they are what ERP entities seeking to defend their money train find so disagreeable.

Since ERP projects began failing, there has been a strong attempt by vendors and consultants to control the narrative in a way that is favorable to the industry. In fact, SAP has a specific way they release paid placements through major IT media entities in order to control the narrative to point entirely away from themselves as covered in the article The Art of Blaming the Client When a Project Fails.

  • This article points out that Michael Krigsman (the IT failure “expert”) makes comments about project failure that have nothing to do with the facts of each of the project failures on which he comments. No matter which projects, Michael Krigsman is there with aphorisms that discuss how “training is important.”
  • Neither the IT media entity nor the sources that are compensated by SAP disclose their financial bias. One wonders why a media entity would not disclose its payments from a vendor to help point blame away from the vendor. Could there be any possible reason for leaving out such information from the reader? If anyone can figure out this intensely complex question, please comment because it is simply too complex for this author’s limited brainpan.

Lying About ERP’s Mapping to Requirements Cannot be Discussed

Deloitte/IBM/Infosys etc.. lie to accounts before they close the account. They habitually exaggerate how much SAP will cover the requirements as covered in the article The Overmapping of ERP Systems to Requirements. This is so well known at this point, it is outrageous to see status quo ERP defenders imply it does not exist. Deloitte/IBM/Infosys etc.. lie to accounts during the implementation to put off the day of reckoning.

When these behaviors are brought up, the personal attacks begin from the SAP consulting defenders! Why is it virtually every time the SAP consultants, whether they work for the implementation company ceaselessly defend the consulting company and never address (i.e., quickly pivot away) from the issues with the vendor and the consulting firm? Interesting isn’t it. The response is thus…

“Its really much more complicated than that……”

Now the pivot…

“….the real issue is the lack of training, focus __________ (fill in the blank)”

Notice…” it’s much more complicated” always results in “it is the client’s fault.”

No matter how much money is wasted on ERP projects, ERP status quo defenders are always there to tell pro-reform individuals to not be negative. When provided the example of the Air Force’s $1 billion ERP failure, that was again highly based upon lying on the part of the Oracle and the consulting partner, the answer I received from the pro-status quo SAP consultant was that the project was “complex.” For these individuals, there is no amount of money that is too large to waste on ERP!

Conclusion

Something that has not escaped my attention is that the SAP proponents, with their financial bias, never seem to call out many of the very obvious failings of the industry side of the equation. ERP proponents have a story to tell, which is to pay no attention to ERP failures or accept their biased explanations as to the “whys.” However, ERP proponents telling their story means silencing those who critique the overall industry. That is why those critics must themselves be criticized.

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References

The negative ROI of ERP systems from academic studies is covered in the following book.

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion
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