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by Lauren Gibbons Paul, Contributing Editor Posted on Monday, October 29, 2007 1:15:55 PM   | Abstract: | No longer just wishing and hoping, many customers are now consolidating their ERP systems down to one instance and one database running in one place. Here's why. |
Talk about unintended consequences. Just as a ploy by mainframe programmers to save space ended up causing the infamous Y2K bug, so too did globalization spawn the problem of multiple instances of ERP. Offshore outsourcing, mergers and acquisitions, and far-flung operations have resulted in many different versions of ERP applications running in different locations or, worse, applications from different vendors. ERP installations seem to grow like kudzu, increasing in complexity every day, as users clamor to keep using the local ERP instance. The problem is, multiple-instance ERP is difficult to manage and hampers enterprise visibility. Worse, it is a huge waste of money. Why maintain many different servers for different geographies when you no longer have to? Top executives at manufacturers all over the globe are asking themselves that very question. Rationalizing their ERP systems down to one version of a single vendor's application and database running in one location appears to be the holy grail for larger companies, which often find themselves running a tangled mix of systems. Enterprise software vendors are only too happy to help with consolidation, which involves porting legacy applications to the new platform, training users on the new system, and helping with change management issues, which can be immense. "Multiple databases, multiple vendors, multiple instances — it happens all the time," says Sharad Vajpayee, vice president at 3i InfoTech, an enterprise software vendor. Vajpayee notes this is a pressing matter for large companies, though mid-size manufacturers are interested in it, too. Commonsense guideline: The more instances, locations, and versions you're running, the harder it will be consolidate into one instance. Single-instance ERP was nothing more than a dream until recently when international telecommunications costs dropped exponentially. Now that geographically dispersed users can access an application across continents thanks to a high-speed, cost-effective Internet connection, running a single instance becomes a much more plausible goal. "Cheaper, easier, more reliable communications — that got executives thinking about whether they needed to have a separate instance," Vajpayee says. Then, given the brutal margin squeeze — another consequence of globalization — manufacturers quickly wised up to the potentially great cost savings of consolidating ERP. ERP provider Oracle Corp., for example, itself just finished a two-year rationalization effort that saved the software giant millions annually. "We originally had some 40 data centers and dozens of versions and databases worldwide," says Jon Chorley, vice president of supply chain management and e-business strategy for Oracle. "We merged them into a single 6.5-terabyte database, and we were able to reduce our overall IT cost by 46%." Coming on the tail of a strong acquisition streak — most notably Oracle's 2004 purchase of PeopleSoft — the consolidation effort was "a lot of work," Chorley acknowledges. But, like most ERP vendors, Oracle is finding single-instance ERP to be a hot topic among its customers, with cost savings being the top driver. Driving Forces There are compelling reasons to do this beyond cost, however. Having one database for customer and transactional data provides the elusive "single version of the truth" that enables consistent customer service, as well as cross-selling and up-selling opportunities. In addition, single-instance ERP greatly eases regulatory compliance. "The cost of auditing and signing off on your SOX [Sarbanes-Oxley] compliance sheet is dramatically lower," Vajpayee says. Page : 1 2 ... NEXT |