The Death of ERP (AS/400?)

Thanks to Booth Martin for the inspiration of this article. Booth asked “(speaker said) ERP is dead. When did this happen? Who is next of kin?”

As I responded to Booth, ERP was dead before they came up with the acronym. Its’ forebears were JIT, MRP II, and MRP. Same product, different wrapper. Yes, the purists will say that the forebears were not the same and from a technical standpoint (other than MRP II) they’d be right ­ but from an implementation standpoint they’d be wrong. ERP promised to be a merger of the three earlier technologies, but ended up being the same thing with some added features that should have been in the originals to begin with.

Let’s not split “correctness” hairs but, in short: ERP started out as MRP, material requirements planning. A methodology introduced by the American Production and Inventory Control Society (APICS), MRP was how our inventories were supposed to be run. MRP II (manufacturing resource planning) took into account not only inventory but plant capacity, critical paths, and master scheduling. JIT (just in time) promised that you’d only receive material from your vendors today that you needed to produce today’s products, integrated with your MRP II and MRP systems. APICS is a FANTASTIC organization ­ it just needs the authority to take a cattle prod to some of its’ members from time to time. If I had a nickel for every APICS Fellow that asked me to write a program to create a wholesale increase in lead times…

But I digress. ERP is dead because western business investment in infrastructure is dead. Western business is too busy drooling over the cheap labor in “emerging markets” to give a hoot about doing things right in the first place. The average ERP implementation takes between 18-24 months but, in today’s “what have you done for me in the last quarter” stock market, few companies have the stones to properly implement ERP. After three or more failed attempts at ERP implementation (failed because they didn’t commit the proper resources other than money), most companies just gave up. An ERP implementation, done well, should almost become a corporate religion. The desire for success of the project must come from the CEO down to middle management down to the worker on the factory floor. Instead, these projects usually start in IT and end up dying there.

The ERP software vendors are complicit in its’ death as well. Most came up with proprietary application development tools that nobody wanted to learn. Many embraced CASE, which they did a poor job of, and that acronym died before ERP did. The biggest ERP vendor, SAP, required that everyone working on their package be “SAP Certified” ­ a process that cost tens of thousands of US dollars and guaranteed a high billing rate to clients. Most other ERP vendors just charged a higher billing rate regardless of their representatives’ qualifications. The high rates virtually guaranteed that companies wouldn’t use the resources required for a successful ERP implementation, yet SSA (my ERP vendor of choice) just sold out for less money than my last three clients spent on their SSA software. Here in the Southern US, we call the latter “cutting your nose off to spite your face.”

To answer Booth’s “Who is next of kin?” question, I must give an unqualified “I don’t know.” Probably another acronym that means the same thing as ERP. Just don’t give me that “e-commerce” crap. You can’t get a decent ATP (available to promise) without having either an ERP system in place or more warehouse space than God. Note that the companies that failed last Christmas (and will probably take three or more years to recover) were the ones that took and acknowledged e-orders but didn’t know that they couldn’t fill them.

Speaking of death, the AS/400 seems to be lingering on the edge. It appears that Armonk has finally achieved what it set out to do ­ kill the best system it owned. Almost no new AS/400 jobs appear lately. It doesn’t appear that you can GET an AS/400 job unless you’re prepared to move half way across the country, despite the low unemployment. No advertising, no education, no demand. Congratulations, Mr. Gerstner. Hope that your bonus is based on those money-losing Netfinity machines…


Dean Asmussen