Why ERP Packages Failed To Deliver Desired Business Value ? Part 1

ERP packages started in much fanfare in late 80's and early 90's , peaked during 1995-2005 and then slowly stareted losing lustre and almost in maintenance mode after 2010. While BAAN, Peoplesoft, JDE and other medium sized packages got acquired by SAP and Oracle, many others went out of business or just stayed with localized markets/clients.

Over time, ERP packages just served the role of a glorified business transaction recording and management system with enough audit trails that substituted the earstwhile paper-based transaction systems.

But the primary intended objective that ERP was designed for, namely MRP-I and MRP-II was partially achieved in few companies. Material Requirements Planning (MRP-I) and Manufacturing Resource Planning (MRP II) in their intended design was a distant dream for most of the companies. MRP-III (based on Master Schedule and Accurate Demand Forecast) was never integrated into the ERP packages.

Business process optimization, based on forward/backward loopback was never achieved even though many BPM packages like ARIS, SAP Solution Manager etc. improved process capacity enoromously.

Many ERP vendors attributed the failure to inefficient implementation/execution of the business processes in the system, inability by clients to adopt standard business processes and insufficient processing capacity of the IT infrastructure/systems besides other smaller factors.

As there was not much the client could do to alleviate in regards to the business process implementation and standardization, the vendors started selling the 3rd part : In-Memory solutions like SAP HANA etc.

But in the whole journey, the soul of Enterprise Resource Planning, Resource Optimization, was never even touched.