FA L L 2 0 0 7 VOL.49 NO. 1
Cynthia Rettig
The Trouble With Enterprise Software
This article, originally
published on the
MIT Sloan Management
Review Web site,
stirred up a good deal
of discussion in the
blogosphere, a sampling
of which is included in
the following pages.
From the Wall Street Journal
Business Technology Blog
http://blogs.wsj.com/biztech
Technology is supposed to simplify business. This has been true from
the Industrial Revolution to the Internet age. But did the large software
applications that were supposed to streamline large companies instead
irrevocably slow them down?
There’s a compelling argument to be made that they have. The average
company spends $15 million on Enterprise Resource Planning
software, the monolithic systems of record from vendors like SAP and
Oracle, and many large companies have spent tens and even hundreds
of times that, according to [Ms. Rettig’s article].
Some of this resonates. Certainly, companies that have tried to customize
these systems to reflect their own customized processes have
spent a lot of time and money to do so. And ERP systems do introduce a
certain amount of rigidity. On the flip side, having a system of record is a
benefit in and of itself that shouldn’t be discounted. — Ben Worthen
From Rough Type: Nicholas Carr’s Blog
www.roughtype.com
Over the last two decades, companies have plowed many billions of dollars
into enterprise resource planning (ERP) systems and the hardware
required to run them. But what, in the long run, will be the legacy of
ERP? Will it be viewed as it has been promoted by its marketers: as a
milestone in business automation that allowed companies to integrate
their previously fragmented information systems and simplify their data
flows? Or will it be viewed as a stopgap that largely backfired by tangling
companies in even more systems complexity and even higher IT costs?
In “The Trouble with Enterprise Software,” Cynthia Rettig deftly lays
out the case for the latter view. Enterprise systems, argues Rettig, not
only failed to deliver on their grand promise, but often simply aggravated
the problems they were supposed to solve. Different divisions or facilities
often made independent purchases, and other systems were inherited
through mergers and acquisitions. In the end, ERP systems became just
another subset of the legacy systems they were supposed to replace.
So what’s the solution? Rettig doesn’t offer one, beyond suggesting
that top executives do more to educate themselves about the
problem and to work more closely with their CIOs. That may be good
advice, but it hardly addresses the underlying technical challenge. But
Rettig nevertheless has provided a valuable service with her article.
While some will argue that her indictment is at times overstated, she
makes a compelling case that the traditional approach to corporate
computing has become a dead end. We need to set a new course.
— Nicholas Carr
From Andrew McAfee’s Blog
http://blog.hbs.edu/faculty/amcafee
It is certainly true that enterprise systems have failed in many companies,
and it’s also true that, as [Ms. Rettig] points out, many others have not
been able to shut off legacy systems to the extent they expected after ERP
went live. But it is simply not the case that researchers have been unable
to draw any coherent conclusions about these technologies.
Rettig’s argument falls into a long line of pessimistic writing about the
value of corporate IT. Much of this writing takes the implicit, and at times
explicit, view that the executives who make technology decisions are
dupes, perennially falling for a “triumphant vision” of software. The only
way I can see for the IT pessimists to be right is if the delusion about IT’s
benefits is both persistent and virtually universal. And I don’t buy that.
“ERP doesn’t help” is a testable hypothesis, and some colleagues
of mine have tested it. NYU’s Sinan Aral, Georgia Tech’s D.J. Wu, and
my friend and coauthor Erik Brynjolfsson at MIT recently published a
wonderful paper, “Which Came First, IT or Productivity? Virtuous Cycle
of Investment and Use in Enterprise Systems” (
http://papers.ssrn.com/
sol3/papers.cfm?abstract_id=942291). [This paper] contains a vital insight:
If IT were not delivering value, rational decision makers would not
keep investing in it.
I agree that it’s important not to naively accept anyone’s triumphant
vision of corporate IT. But it’s also important not to make claims in the
other direction that are too sweeping. Perhaps most fundamentally, it’s
critical at some point to stop floating hypotheses about IT’s impact (or
lack thereof), and to start testing them. — Andrew McAfee
From the ZDNet.com Blog
http://blogs.zdnet.com
There’s really nothing new in [Ms. Rettig’s] analysis. But Rettig goes a
step further and says there’s no hope for the future. In fact, while she
doesn’t offer any remedies for her gloomy prognosis, she does quash
one — service-oriented architecture (SOA).
Rettig doesn’t offer any encouraging words about SOA as an ERP
workaround. SOA may take years to come to full fruition, not in enough
time to help beleaguered companies, she says. And SOA may simply be
too slow to keep up the dynamic business environments of today. Not to
mention technical challenges. Rettig says that SOA increases complexity,
as it becomes “additional layers of code superimposed on the
existing layers,” and she doesn’t buy the Lego-block concept that underpins
much of the thinking about SOA.
Let’s put it this way: aside from SOA, what is the alternative? No one
is willing, or can afford to, to stay with the rigid, stovepiped systems in
their current form. One solution is just throw the entire mess out, and
buy a huge, well-integrated, modular application. But no one has the
time or budgets. The only workable approach, then, is gradual integration
between systems, and gradual, greater agility — if not through SOA,
then how? SOA, pure and simple, is the first step to software industrialization
— creating massive, adaptable systems in an automated and
modular fashion through greater economies of scale. ERP was a step in
this direction, since it modularized, and brought many vital pieces of
the business together into a single standardized system. SOA takes it to
the next level, beyond the domain offered by a single vendor. That’s the
core value proposition of SOA. — Joe McKendrick
From the Deal Architect Blog
www.dealarchitect.typepad.com
The good news is [Ms. Rettig’s] article will get executive attention. Not
that they do not know. I recently met an executive at a client about to
start an ERP implementation. He sounded like a man headed to the gallows.
Nervous, not excited about the project. (That afternoon, I felt
really embarrassed for our industry that after 100K+ ERP projects, we still
cannot make it a no-brainer.)
But it is way past talking about messes. Companies are in various stages
of ERP hangover management, not always looking at software as a service
(SaaS), as those vendors would have you believe — it’s not that easy to rip
and replace a backbone ERP solution — but software as a customized service
(SaCS). [Those companies are in] aggressive re-negotiation of ERP
maintenance contracts or moving to third party maintenance.
The only ones who do not seem to realize the party is over are the
vendors, who are using service-oriented architecture (SOA), compliance
and more low payback justifiers to extend the run.
— Vinnie Mirchandani
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