Companies must address application integration strategically if they want to prevent the cost of their ERP systems spiralling out of control, Gartner has warned.
The increasing complexity of enterprise resource planning (ERP) application portfolios is driving the need for a defined postmodern application integration strategy, according to new advice from the analyst firm.
The majority of organisations now operate in a hybrid reality, leading to greater complexities in the application portfolio with new integration, analytics and governance challenges that can increase the risk of failure.
But Gartner has predicted that by 2018, 90% of organisations will still lack a postmodern application integration strategy and execution ability, resulting in integration disorder, greater complexity and cost.
'Postmodern ERP represents represents a fundamental shift away from a single vendor mega suite toward a more loosely coupled and federated ERP environment,' said Carol Hardcastle, research vice president at Gartner. 'This new environment promises more business agility, but only if the increased complexity is recognised and addressed.'
As Hardcastle explains, there is a dawning recognition among end-user organisations that postmodern ERP is no quick route to nirvana. As many organisations move from an on-premises monolithic state, they acknowledge they have little or no skills to support postmodern application integration, naively assuming the vendors will take care of it.
But vendors are not doing this, which has left many organisations scrambling to integrate applications when they finally realise this grim reality.
Until 2018, 80% of organisations will lack the capability to successfully deliver on their postmodern ERP strategy, says Gartner. But by that time we reach 2018, organisations will be insisting on postmodern ERP project deployments that deliver proven value in less than two years.
'Twenty five or more years after ERP solutions entered the applications market, many ERP projects are still compromised in time, cost and more insidiously in business outcomes,' said Hardcastle. 'Organisations need to resist the temptation to succumb to pressure from business leaders to get started before the organisation is really ready (and without a business-agreed ERP strategy).'
Gartner warns that business leaders must get a far better grasp on what it will take to ensure success. The blame for this, however, does not lie solely with end-user organisations that lack the experience and expertise to avoid many of the pitfalls. System integrator (SI) and ERP vendors have to be accountable to their customers in this respect.
End-user organisations are increasingly questioning the value of investment in ERP solutions and are looking for new solutions and new deployment models that can deliver value quickly.
'The poor practices of the past and the associated excuses for suboptimal business outcomes won't hold water any longer,' said Hardcastle. 'The focus of postmodern ERP is on improved business agility and flexibility – for example, through deployment of solutions and services that are better targeted at the business capabilities and address other needs such as user experience.'
'It really is time that the significant investments businesses make in ERP solutions reap real benefits. ERP vendors and SIs must raise their game on implementation approaches, renovating and revisiting their own implementation methodologies for speed and with greater emphasis on the benefits realisation activities.'