Feature

Reality hits integrators after Y2K boom

It has been a case of boom and then bust for many ERP suppliers, but some wily consultants are still on six-figure salaries, writes Nick Langley.

What is it?

Enterprise resource planning (ERP) software links cross-company applications such as manufacturing, accounting, logistics and human resources. More recently, ERP suites have begun to acquire customer relationship management and supply chain automation functionality too.

Some suppliers, such as SAP, Baan, Peoplesoft and Oracle, provide fully-integrated suites. Other suppliers concentrate on one area, such as "financials" or the supply chain. There is an ongoing debate as to whether it is best to take a fully-integrated suite from one supplier, or to build a solution from "best of breed" offerings from a variety of suppliers.

Three years ago, most of the ERP suppliers were selling licences faster than they could train people to implement and run the products. The year 2000 bug gave a tremendous boost to the market, as customers decided that instead of working to make their existing applications Y2K-compliant, they could replace them with Y2K-ready software. The boom stopped abruptly towards the end of 1998, when one supplier after another reported drastically reduced profits or losses. Two leading suppliers, Baan and SSA, are currently being acquired.

Where did it originate?

With MRP (manufacturing resource planning) applications.

What's it for?

Software suppliers saw that instead of providing monolithic applications addressing a single function, which had to be linked by custom coding to other standalone applications, they could provide products that support business processes across the enterprise, from receipt of order to dispatch of goods.

However, the view of ERP as a panacea has received some hard knocks from analysts in the past year or so. Most recently, PA Consulting found that 92% of companies are dissatisfied with the results from their ERP implementations, and only 8% achieved an improvement in business performance.

PA says most user organisations are turning their attention to unlocking the value of their investment. This will increase the demand for skilled and experienced people.

What makes it special?

Customer organisations could replace in-house developments and standalone packages with a single solution that would be installed, maintained and upgraded by the suppliers and their partners. ERP skills, being scarce, are relatively well-paid.

How difficult is it?

Basic training in SAP, for example, takes about five weeks, but it takes months of hands-on experience to become productive with most ERP products.

Where is it used?

ERP began in manufacturing but has since spread to enterprises of all kinds, including banks, local government and utilities.

Not to be confused with

Consultants say firms should not mistake a completed implementation for the end of the ERP project. Instead, they should see it as an opportunity to dip their hands in their pockets to pay consultants to make the system do what it promised to do in the first place.

What does it run on?

NT, Unix, AS/400 and, in a few cases, IBM mainframes.

Few people know that

ERP is not an acronym, but an onomatopoeic sound representing the hiccup in productivity most businesses experience during implementation.

What's coming up?

The integration of e-business front-office systems with ERP back-office systems. Enterprise application integration tools and XML are the key skills for this.

Rates of pay

Three years ago, the pool of permanent ERP staff became dangerously low, as thousands became contractors in pursuit of fees that could be as high as £600 to £1,000 per day.

The silly money days are over. The likelihood is that you will begin as a trainee, and salaries will reflect that. However, with a couple of years' experience you could look for £35,000, and with five years' experience command up to £60,000.

Very experienced, very dedicated people, who spend more time on planes between implementation sites than they do at home, are still getting those six-figure salaries.


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This was first published in August 2000

 

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