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Home > ERP strategies for CIOs |
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This guide is part of the SearchCIO Executive Guide series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of topics covered to date, visit the Executive Guide section. Table of contents ERP, Web 2.0 adoption trends cry out for long-term plan The ERP boom: Don't call it a comeback The Real Niel: Cut ERP project costs, time by 50% Butterball CIO celebrates post-acquisition SAP cutover More resources
[Linda Tucci, Senior News Writer] CIOs allocate about one-third of their IT budgets to software-related costs. How are you spending your money in 2008? According to a recent global survey from Forrester Research Inc., you are making major upgrades to your ERP systems. Integrating applications is a top priority, which means service-oriented architecture is hot. You remain cautious about open source software. But when it comes to Web 2.0 technologies such as wikis, blogs and discussion threads, you're hopping on the bandwagon. Large and small Web 2.0 deployments are planned in 2008. "The simple fact that you get more information, more capability and more features on the Web to get work done than you do in your own company, is pretty much driving these Web 2.0 initiatives," said R. "Ray" Wang, a principal analyst at Forrester, in a phone interview this week. "Honestly, I can get better services outside of most enterprise companies today." Fighting words for CIOs? Not at all, Wang said. Reality. "We need to collaborate and we need a system in case our enterprise systems fail. Corporate IT departments are trying to figure out how to incorporate Web services, packaged app vendors are trying to figure out how to incorporate them, and users are just trying to figure out what they can do and still adhere to corporate IT policies." The Forrester findings are from "The State of Enterprise Software Adoption," a report published Jan. 25. The Cambridge, Mass.-based firm surveyed 1,017 IT senior decision makers in 17 industry sectors for the study. Companies ranged in size from 1,000 to more than 20,000 employees, with the majority of respondents coming from organizations with more than 5,000 employees.
[Info-Tech Research Group, Special to SearchCIO.com] Many commentators think that the dot-com bust of the late 1990s broke the ERP bubble. The boom is back. Info-Tech data from late 2006 indicates that more than 30% of companies currently have ERP software and another 25% have deployment plans. This surge of interest must be met with analysis of its root causes and market implications. IT managers need to recognize what is driving ERP implementation and whether or not it is an appropriate solution for their enterprise. Info-Tech collected detailed ERP project information from more than 160 different enterprises. The data points to particular trends regarding business drivers, project structure, budgets and implementation concerns. Outdated technology drives ERP investment The recent upsurge in ERP interest is the legacy of the 1990s boom. Many enterprises are in the process of upgrading and replacing earlier investments.
[Niel Nickolaisen, Contributor] Over the years, we CIOs have learned a lot about ERP initiatives. Many of these lessons have come the hard way -- after costly time- and company-consuming projects left us scrambling to find benefits to justify the costs. If you ask almost any ERP (or CRM or SFA or BPM or whatever) project manager what, in hindsight, they would do differently, the answer is usually the same: "Do not customize the software!" In spite of this advice, each time an organization starts an ERP (or CRM or SFA or BPM or whatever) selection and implementation project, the going-in assumption is that the software must handle the unique aspects of the business. After having personally managed several large-scale system implementations (and consulted others on numerous projects), I developed a model to simplify business/IT initiatives. The goal of this model is to improve the likelihood that we will make more rational decisions about where to accept "vanilla," or standard, functionality and where it makes sense to customize. For an ERP implementation, I have found that using this approach reduces project timelines by as much as 50% and budgets by as much as 40%. So, without further fanfare, let me introduce this model (which I, modestly, call The Nickolaisen Model). It is a quadrant, with a vertical axis that measures the level of market differentiation, and a horizontal access that measures the level of mission criticality of our business activities.
[Linda Tucci, Senior News Writer] CIO Ron Wells says he has a lot to be thankful for. This time a year ago, his employer of nine years, Carolina Turkeys, had just become Butterball LLC, taking the famous name of the brand it bought for $325 million in October 2006 from ConAgra Foods Inc. The combined business, which is based in Mount Olive, N.C., and owned by Goldsboro Milling Co. and Smithfield Foods Inc., expects to do more than $1.5 billion in revenue this year, for a 23% market share, Wells says. The newlyweds got through the holiday season and then the fun began -- bringing Butterball on to Carolina Turkeys' SAP system, itself only a year old. We'll let Wells talk turkey -- and discuss the latest with the Turkey Talk-Line. Is the turkey business competitive? Ron Wells: It really is. You'd think with all the emphasis on eating healthier that this would be a growing market, but turkey consumption is relatively flat, so the competition remains fierce. What kind of role does the CIO play at Butterball? Wells: More and more it is a very strategic role. I'll give the Reader's Digest version of what we've been through over the last couple of years: We had a huge SAP project that went live two years ago this October. It went very well for us. We're running SAP for almost everything. One reason for that project was to help us grow. We took a look at the systems we had that were homegrown. They worked very well, but the company wanted more of a platform for growth. How prophetic. On the first anniversary of the SAP go-live, we became Butterball LLC. We acquired Butterball, but we're smart enough to take that name. Our company had been on a mission to grow a name brand. That's very costly. After many years, if you get 20% name recognition you've done good. So, kind of overnight, we doubled in size.
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