Just a few years ago, Enterprise Resource Planning seemed to have been a big trend in the Caribbean; now it is no longer in the fore. Why?
At least three to five years ago, ERP, Enterprise Resource Planning, was all the the rage in the Caribbean. Mid-sized and larger organisations were eager to introduce this new system, and there was great demand for the requisite expertise to support implementation. However, today, the excitement around ERP has waned considerably – to the point it appears to have died a natural death in the region.
What is ERP?
Before we discuss what might have happened to ERP in the Caribbean, to be clear, ERP is an integrated software platform businesses use to manage their information and processes. As a result, it tends to comprise several modules, depending on the business and the processes that are being integrated, which could range from sales, marketing, finance/accounting, inventory management, to manufacturing and shipping/delivery.
Essentially, the goal – and ultimate benefit – of ERP is to have a single platform that allows all of an organisation’s information to be stored in a central repository. When such a system is in place, information can be easily shared across the organisation, which in turn can significantly improve responsiveness, productivity, and even decision-making.
With all of those benefits, what’s the problem?
Unfortunately, most organisations tend to have a piecemeal approach to the digital systems and processes they implement. Frequently, the systems are not implemented based on a holistic framework, but rather on an ad hoc basis and in isolation to the other elements that have already been implemented. It therefore means that although each module may work relatively well and fulfil the needs envisaged, invariably, there is no interoperability between them, resulting in a silo-ed existence.
Hence, when ERP is being considered, essentially, the organisation may need to start with a clean slate. Typically that would require a common platform to be identified upon which the needed modules can be added, whilst still maintaining and allowing an integrated approach to the digitisation of business processes.
Having said this, ERP is costly to implement and maintain. Depending on the size if the organisation, the initial setup can cost hundreds of thousands, to millions, of dollars (United States Dollars), to cover, among other things, the equipment, software, licences, and required expertise. Further, such systems are likely to cause a dramatic change in how the organisation functions, thus also requiring change management support to manage the transition.
Finally, implementing an ERP, which may require an organisation essentially, to throw out its current systems and processes in favour of something that is new and very expensive, is a risky undertaking. There is no guarantee that the new platform will work flawlessly when implemented, and will satisfy all existing and (a good proportion of the) future needs of an organisation. It is therefore not a initiative that should be approached lightly and without a clear and detailed strategy.
So is ERP dead?
It is interesting to note that in developed countries the scale of an enterprise is different than what obtains in the Caribbean. For example, a ‘large enterprise’ would have a minimum of 1,000 employees, whilst in the Caribbean the same term is frequently used for organisations with over 250 employees. Hence the economies of scale and scope that can be enjoyed in a 1,000+ organisation, versus a 250+ organisation, is considerable.
Having said this, ERP is not dead. However, what is now appreciated is that only certain organisations truly have the appetite and wherewithal to allow comprehensive implementation. Further, ERP is a solution for large enterprises, of which there are actually very few in the Caribbean, and perhaps fewer that might be prepared for withstand the disruption (and cost) of its implementation.
Image credit: scribbletaylor (flickr)
___________________
