Information Systems and Enterprise Resource Planning

If a broad definition of information systems is taken as "usage and adaptation of the IT and the formal and informal processes by all of its users" (Paul, 2007), then Enterprise Resource Planning (ERP) must be recognised as a major IT application which seeks to combine a very wide range of business processes in an organisation in a technologically-mediated manner. Integration is of primary importance, for example, so that the disparate and siloed software applications that manage customers, sales, procurement, production, distribution, accounting, human resources, governance etc are provided common associations through a database system and from which decision-makers can engage in effective and informed business intelligence and enterprise management.

As can be imagined with such scope, effective ERP systems are highly sought after, with a range of well-known major providers (e.g., Oracle, SAP, Infor, Microsoft, Syspro, Pegasus etc), and a number of free and open-source solutions as well (e.g., LedgerSMB, metasfresh, Dolibarr etc). The main advantages of ERP systems should be self-evident; forecasting, tracking, a systems consolidation, a comprehensive workflow of activities, and business quality, efficiency, and collaboration. What is perhaps less well-known is the disadvantages; the twins of expensive customisation or business process restructuring for the software, the possibility of vendor lock-in and transition costs, and, of course, cost.

Panorama Consulting Services is a consulting company, that specialises in ERP that has been in operation since 2005, providing advice to business and government. They describe themselves as "[o]ne-hundred percent technology agnostic and independent of vendor affiliation" (Panorama Consulting, 2019), who provide a significant number of corporate "White Papers" on ERP-related subjects which, on a prima facie level, makes them a good candidate to begin some ERP comparisons. In particular, two White Papers are reviewed, "Ten Tips for a Successful ERP Implementation" (Panorama Consulting, 2015) and "Clash of the Titans 2019: An Independent Comparison of SAP, Oracle, Microsoft Dynamics and Infor" (2018), the selection in part to have a sense of a foundational paper followed by a practical implementation, and to determine whether their own principles of assessment in the former are actually applied in practical cases.

As an aside, mentioned must be made of the difference between White Papers in government and business. In the Commonwealth tradition, a White Paper is an official policy statement that is developed from an initial brief, and an initial statement designed for public consultation (a "Green Paper"). This differs significantly in the business world where a White Paper has come to mean a brief statement of businesses policy on a complex topic, and is much closer to a marketing tool (Graham, 2015). Government White Papers are significantly longer, more complex, and, arguably, are often the result of more extensive research.

Review: Ten Tips for a Successful ERP Implementation

The first recommendation from Panorama Consulting is for organisations to establish their own business requirements, which must arise from having defined business processes. It is not possible to define ERP requirements without having the business processes (and presumably the technology) already in place. This relates heavily to the major issues noted by Panorama that 75% of ERP projects take longer than expected, 55% are over-budget, and 41% realise less than half of their expected business benefits (based on Panorama's 2015 Annual Report). The reason for these problems are based on "unrealistic expectations", "mismanagement of scope", "unrealistic plans", "failure to manage the software vendor and project scope".

These issues form the basis of the stated tips, i.e., "focus on business processes and requirements first", "quantify expected benefits" to achieve a healthy ERP return-in-investment, "[e]nsure strong project management and resource commitment", "solicit executive buy-in", "take time to plan up front", "[e]nsure adequate training and change management", "[u]nderstand why you are implementing ERP", "[f]ocus on data migration early in the process", "[l]everage the value of conference room pilots", and finally "clear communication ... to all stakeholders" via a project charter.

Much of the White Paper is dedicated to issues that are less related to ERP as such and more on the project management aspects. Certainly there is some justification for this, after all, the implementation of ERP is a significant project. The highest level recommendation, however, ties in well with an information systems approach, that is, ensuring that business processes exist in the first place. If a business has not mapped its own processes the introduction of an ERP will not solve their problems as well as it could because neither the business procedures or culture are in place to effectively use the ERP.

Review: Clash of the Titans 2019

The second, and far more extensive, Panorama ERP White Paper was written some four years after the "Ten Tips". It analyses the major enterprise ERP software providers, (SAP, Oracle, Microsoft Dynamics, and Infor), based on their own ERP Benchmark Survey which was conducted between September 2018 and October 2018. The survey had some 263 respondents, with some 30% using SAP, 29% using Microsoft Dynamics, 25% using Oracle, and 16% using Infor. The top-level comparison from Panorama to organisations is to "consider software functionality, deployment options and vendor and product viability" and, returning to the previous White Paper, "[a]n informed decision also requires business process mapping and requirements definition".

The evaluations taken in the survey include; (i) implementation duration., (ii) operational disruption., (iii) single-system vs best-of-breed., (iv) internal vs external resource requirements., (v) significance of ERP in the organisation's digital strategy., and (vi) business initiatives included in the digital strategy. The results included some interpretation by Panorama, although it is worth noting the questions were more based around business results rather than the underlying technological tools.

From the ERP systems, SAP had the longest duration for implementation (average of 14.7 months), whereas Infor had the shortest (11.2), and by the same token SAP had the longest average operational disruption (128.5 days) and Infor had the shortest (120.6 days). However SAP clients tend towards large, complex, and global organisations, whereas Infor is designed for less cutomisation, and also as a result, tended to be a single ERP system (90.5% of solution set) whereas SAP had the lowest (86.2%), although it should be pointed out that the variation between the providers was not great.

Of some concern is human resource investment required; "vendors typically recommend a team of at least 8-12 full-time internal resources, this isn't feasible for most organizations". Oracle customers have a high of 50.9% of resources sourced internal, whilst Microsoft Dynamics is at at the other end of the scale at 45.4%. Panorama argues that simple customisation can be done in-house, whereas complex configurations require external support. Also of concern is whether or not ERP played a significant role in the organisations digital strategy, which ranged from 71.4% (Infor) to a low of 45% (Oracle), although the latter is explained as Oracle offers diverse components for specific functions. When functions themselves were analysed, a high of 84.6% included ERP in their business strategy, with a low of 8.3% using eCommerce from an Infor installation.

Critique of the Two White Papers

The initial proposal of conducting a review of the second paper based on the suggestions of the first is difficult as the survey as those questions are not directly addressed. Whilst the second White Paper does reiterate the concerns of planning and project management in both the short and long-term for an organisation considering implementing an ERP system, it does not associate the difficulties with the evident disruptions of implementation that ERP systems cause. In a sense, this can serve as a critique of the second White Paper in its own right, that they survey whilst broad in the range of the questions asked related to usage is also shallow, insofar that it relied on some fairly superficial interpretations of Panorama Consulting on why particular results were generated.

A major issue that is not directly addressed by either paper is whether ERP systems are justified, or have a limited justification from an enterprise software perspective. Whilst it would be challenging for an organisation such as Panorama Consulting to give advice that essentially says "No, an ERP system is not for you", it is surprising that in neither White Paper consideration is given to building bespoke systems. These do not need be as "complex but easy" (easy to use, complex to change) expensive enterprise tools would suggest. After all, an ERP is essentially a graphic interface connecting queries to database with stored procedures that incorporates business logic in a stateful manner. An ERP that is developed in-house but with proprietary-free storage and logic engines is relatively easy to change as the business itself develops. Rather than a "solution" it may be worthwhile looking at a "toolkit". It would certainly help with one of the often-overlooked matter that major ERP solutions embody significant cultural biases (Newman, Zhao, 2008).

Further, neither paper engaged in a comparison of technological resources required and consumed, such as requisite operating system and existing software requirements, physical system requirements, or latency and bandwidth. Given the effect that this has in the end-user experience of the system, the performance of the system (especially consider distance between data and processing) and therefore the speed of business intelligence, and the capacity of the system to cover the business needs at scale, one would have thought that such quantitative and objective measures would have had a primary consideration.

The implementation of an ERP system, which suggests an organisation-wide repository of related business data that is updated from various input functions, certainly seems enticing. However, as the first White Paper has correctly argued, an ERP system can only perform as well as the existing business logic and data repositories. The degree that these are incomplete suggests a need that will arise during implementation. Whilst the two White Papers from Panorama Consulting provide some information necessary for the implementation (organisational buy-in, project management) and some information concerning utilising of major packages, the papers lack the necessary systematic perspective for either implementation or comparison, part of which directly comes from the lack of critical quantitative and logical evaluations.

References

Graham, Gordon (2015). The White Paper FAQ, http://thatwhitepaperguy.com/white-paper-faq-frequently-asked-questions/, Retrieved 16 March 2015.

Newman, M. and Zhao, Y. (2008), The Process of ERP Implementation and BPR: A Tale from two Chinese SMEs. Information Systems Journal, 18 (4): 405-426.

Panorama Consulting (2015), Ten Tips for a Successful ERP Implementation.

Panorama Consulting (2018), Clash of the Titans 2019: An Independent Comparison of SAP, Oracle, Microsoft Dynamics and Infor

Panorama Consulting (accessed 2019), We Are Panorama From: https://www.panorama-consulting.com/company/

Paul, Ray J., (2007), Challenges to information systems: time to change, European Journal of Information Systems, 16, p193-195Two Panorama ERP White Paper Reviews