Companies may need to change the way they approach their large corporate systems…again. Several years ago, the conventional wisdom among analysts and consultants was that “Enterprise Resource Planning,” or ERP, applications–large software programs that businesses use for everything from accounts payable to inventory management–were on their way out. But the systems never went away. And today, ERP is more important to businesses than ever.
computerIn a new study, the research firm AMR forecasts that the ERP market—served by companies like SAP and Oracle–will grow 11% a year between now and 2011. “We are seeing a much broader and more pervasive deployment of ERP,” Jim Shepherd, a vice president at AMR, tells the Business Technology Blog. “These systems are moving into every aspect of a company.”
The reason is twofold: 1) Companies have learned that there really isn’t an alternative to automating the business tasks that these systems perform; 2) Buying separate software for each task–say one program for sales forecasts and another for supply-chain management—makes the collection hard to support and harder to integrate. Shepherd says that so-called “software as a service”–a model in which customers access software over the Internet and store their data remotely on the software vendor’s servers–isn’t a threat to traditional ERP systems that companies own and operate because large companies are just too nervous about having sensitive product and employee data reside on someone else’s servers.
Even companies that already have ERP systems should expect to invest anew in the technology. This is because right now only about half the employees in a given company have access to the systems. Taken together, Shepherd doesn’t see any competitors to ERP arising any time soon. “It’s time to start thinking of these systems as 15- to 20-year investments,” he says.
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