ERP Ahead

ERP may have grown up with a chip on its shoulder thanks to a number of controversial failures, but the market has come a long way since then. Nathan Statz reports on the once treacherous realm of the ERP project.

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By  Nathan Statz Published  April 25, 2009

"ERP is just a first step, or a backbone. It is not everything but it is a really basic thing that you have to have a good backbone in place," says Somani. "You have to have a very clear type of plan within the organisation about training, change management, commitment of the management and the involvement of the people."

According to Somani, when the final product is selected, before an enterprise even starts the implementation the thing to keep in mind is that you own it, so you should know what the software can and can not do. This means there should be no questions later on regarding why the system can not do something.

The first year of an ERP system you need to struggle and fix things here and there, after that you will see the benefits of that system.

Despite the bad reputation that ERP once had, the technology has taken off in the Middle East, with significant vendor presence from the top dogs and smaller niche players. SAP expanded their presence here six years ago and now boasts operations that are on par with their deployments anywhere else in the world. Microsoft is also looking to take a slice of the pie with its Microsoft Dynamics suite, which caters for ERP and CRM.

"Recently we are seeing customers who are about to sign up with a package - who really do not want it take to years and cost millions of dirham - come to us and ask how can you help me do that?" says Tamer Elhamy, business solutions lead for Microsoft Gulf.

Elhamy explains that the Dynamics software is typically for smaller scale implementations, so they are usually finished in six months. Microsoft has run into the problem of being well known for other products, such as its office applications, and not so much for its ERP suite like the SAPs and Oracles of this world.

"It is a difficult one because the brand of Microsoft sometimes helps us and sometimes it doesn't," he says.

ERP vendors in the Middle East are also claiming that the global economic slowdown is not really translating into decreased demand. Navneet Tandon, vice president of ERP and services at Raqmiyat believes that enterprises need to take a segmented view of the market in the United Arab Emirates.

"Within the market right now, there are ERP projects going on in different segments. The first is a lot of projects within the so-called new government companies," says Tandon. "These could be companies within the umbrella of Dubai World or these could be the companies in Abu Dhabi which have recently sprung up due to the developments and the actions of the government."

Tandon admits that enterprises have taken a little bit of a back seat because of the slowdown, but new ERP implementations are springing up in the government and public sectors.

When you consider that an economic slowdown does not seem to be denting the gleam in a vendor's smile, the 80% failure statistic for ERP is looking increasingly outdated. Ian Fleming, managing director of IFS in MENA and South Asia, believes there will be a variation of demand in the future.

"The demand will vary by segment, obviously our vertical focus will link to that going forward, but I think we are well positioned in what we see as the growth sectors - that being infrastructure, public services, utilities, telecommunications, aviation and defence," he says.

The ERP market does not stop for the financial crisis, according to Fleming, as there are companies looking to invest and others who have invested and are looking at upgrading or extending their solution.

"As a result of what is happening in the market a lot of organisations are increasing their focus on ERP," added Fleming. "They say the main factors behind doing something are pleasure or pain and of course pain is the stronger driver."

While ERP may have grown up with a chip on its shoulder thanks to the media ravaging the charred remains of failed projects, the market has matured to the point where most CIOs know that many ERP projects do in fact succeed.

This does not stop a weary glint in the eye of vendors when a journalist comes knocking to speak about the current state of the market, but it does mean that the message is out that ERP is an important building block for your business.

The statistic that four out of every five ERP projects fail may finally need to be put to pasture, though it has given rise to CIOs and IT managers going above and beyond due diligence when investigating a new ERP venture.

Going for growth

According to Madar Research, the ERP market in the Gulf will witness a compound average growth rate of 14% in the next five years. The growth rate worldwide is expected to be 8.3% over the next five years.

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