Enterprise applications face lukewarm adoption, even when they've been customized, according to a Butler Group report.
Posted Mar 9, 2006
Enterprise application suites are valuable because of their broad functionality and guaranteed interoperability. Despite this, a new study shows that fully half of a CRM or ERP suite's capabilities go unused by companies that have them. The Butler Group report "Exploiting Enterprise Applications" reveals that many businesses deploy applications for the wrong reasons, and demand customizations that they subsequently fail to employ, adding time and cost to implementations.
None of the 60 organizations Butler Group surveyed reported using more than 50 percent of the functionality of their installed applications. This figure, derived from the respondents' application log files, leaves no room for error--either a function has been used, or it hasn't. One reason for the lack of use is that desired cost savings or a perceived competitive gap, rather than organizational objectives, are still too often the main motivations for technology investments, says Teresa Jones, senior research analyst and report author. "The selection process is broken. All too often, the new executive doesn't listen to the salespeople and others who really know how the business works. Maybe you don't need a full ERP or CRM system, rather, just a few applications that meet your needs."
The misalignment of capability and need extends beyond out-of-the-box functionality. "[Companies] are actually paying to have customizations done and then not using them," Jones says. "Sometimes they pay for a customization then discover the basic package already has the function; other times they customize and then decide they don't need it or want to use it." But when it comes time for maintenance, updates, or license renewals, these custom modules must still be tested and accounted for, slowing the process and adding unnecessary expense. This requirement for customization also indicates that standardized functionality is a myth.
Once the application or suite has been chosen, Jones says, the company must ensure that it is fully integrated with objectives, business processes, management, and infrastructure to exploit full value. "Implementations should always start from the situational concern, deciding what's best for the business." To succeed, any implementation must consider customer needs as well as end user requirements. This is made easier by employing the intelligence and analytics capabilities built into many suites and easily integrated third-party modules. In addition to helping a company to understand and refine its own processes, BI can provide competitive advantage going forward, as well as provide visibility and insight to meet regulatory requirements.
"Enterprise application suites have always been sold on the basis that they are valuable because they provide a wide range of functionality," Jones concludes. But if businesses deploy them for the wrong reasons or fail to use what they have deployed, she warns, "it is very difficult for these solutions to provide real value after all."
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