Awesome to See Enterprise Software Adding Value…

(warning – highly sarcastic blog title)

I’ve just read a couple of stories that add to my belief that traditional enterprise software is on its way out. First up apparently a Colorado retail chain has just filed for Chapter 11 bankruptcy. Nothing unusual about that in these trying times you say?

Well it seems that part of the reason for their demise is that they apparently entered into a contract with SAP way back in 2005 for a “highly sophisticated ‘point of sale’ and inventory management system” at an original cost of USD8 to USD10 million and a one-year project schedule according to the court filing. But costs, as they do with enterprise software projects, ended up at USD36 million and the project extended to 32 months, finally being livened in September 2007.

The company subsequently found that the system “did not yet provide accurate inventory count numbers,” causing it to become “substantially overstocked with inventory, and with the wrong mix of inventory,” the court documents say. The system “became stable and functional” toward the end of 2008, but still does not deliver “the full functionality originally contracted for”.

Amusingly enough a Google search for the company brings up on the first page a link to a SAP press release touting the implementation as a win for both partners.

Second up was the news that anther business had put their SAP implementation on ice as part as a cost-cutting effort (and allegedly with much shareholder pressure as well). Select The company said that ending the SAP project would help it save about $15 million annually.

Now I know that lots of SAP projects are ongoing and that SAP has been a positive move for a number of businesses but I also know that the tide is slowly turning and that the disadvantages in terms of time, cost, complexity and sheer big-ness are becoming more and more stark when compared to the agility, economy, simplicity and nimbleness that well integrated, but discrete solutions can bring.

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Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. His business interests include a diverse range of industries from manufacturing to property to technology. As a technology commentator he has a broad presence both in the traditional media and extensively online. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

More about Ben here.

4 responses to “Awesome to See Enterprise Software Adding Value…”

  1. dahowlett

    @ben: “I also know that the tide is slowly turning and that the disadvantages in terms of time, cost, complexity and sheer big-ness are becoming more and more stark when compared to the agility, economy, simplicity and nimbleness that well integrated, but discrete solutions can bring.” – that’s one heck of a stretch. There is no evidence to suggest what you are saying is right. 5 years’ down the track then maybe – possibly. But right now?

  2. Ben Kepes

    Dennis – I believe that what small, nimble and connected solutions are bringing to the market place is *big co* functionality at a much more realistic price point. Case in point would be to compare the cost, complexity and time-to-implement of Cognos versus the http://futrix.com/ product (not completely apples with apples but still).

    I think we’re seeing things today that bear out my contention (at a stretch) and that this stretch will become progressively smaller with time

  3. Zoli Erdos

    Ben, I tend to disagree with some of your conclusions, but the space for comments is too limiting: will do a counterpoint post soon.

    That said we certainly agree that SAP installation for a $200 business should not be anywhere close to $36M (5% of that or less …)

  4. Ben Kepes

    Zoli – yeah – the title of my post and some of the conclusions were *perhaps* a little knee jerk and provocative.

    Keen to see you take on things at some stage….