CIO.com recently published (and Coupa sponsored) an e-guide on What’s Next in ERP, which includes a great article on Why ERP Is Still So Hard.

Ten years ago, organizations feared business would grind to a halt on January 1, 2000.  I remember being part of a task force to ensure our departmental systems were Y2K-compliant (remember that term?).  There were countless audits, and mind-numbing meetings to endure.  That scare had a predictable outcome in the IT world: an overwhelming desire to standardize and mitigate the risks that come with maintaining too many disparate applications. For mission-critical applications like core financials, that meant standardizing on a single ERP platform.

That rush to standardize has come with a cost.  Just 7% of ERP implementations come in on time, the average implementation costs over $17M (for SAP), annual support and maintenance costs an additional $1.2M per year on average, and when you finally get to the light at the end of the tunnel, you can expect fewer than 50% of your employees to adopt the new system.

No wonder just 4% of IT executives consider their ERP system deployments to be differentiators for their business, even though 85% agree that their ERP implementation is core to the business.

Unfortunately, there’s really not much that companies can do to course-correct.  The only pain worse than going through an ERP system selection and implementation process is doing a “rip-and-replace” on that system, especially when the “replace” part of that process could include applications or systems from multiple vendors.  Nope, once it’s in, your ERP system is like that big honking console TV in your grandparents’ living room.  That thing isn’t going anywhere.  It might as well have been built into the wall.  It’s a permanent fixture.  Give it a pension.  Unless someone burns down the business, your ERP system isn’t likely to change.

The challenge, then, shifts to understanding why ERP systems don’t deliver the expected impact, and figuring out how to strategically extend those systems so that they do.

Think about it.  By definition, ERP systems include a lot more than the core accounting and financial systems that tend to drive the initial selection.  Most ERP platforms include modules or applications for everything from product lifecycle management to supply chain management to sourcing to CRM to customer service to human resources management.  And while most companies eventually get to stable-state with their ERP implementation, look at their primary usage scenarios.  I’ll bet they are characterized by heavy usage from a relatively small set of power users and business analysts.

Any traditional ERP module or application that requires broad adoption across non-expert users will undoubtedly fail.  There just aren’t many examples of companies successfully using an ERP module very effectively for customer service, sales management, performance reviews, or purchasing – all functions characterized by broad adoption and use of technology to manage those processes.

Which begs the question:  can the new generation of easy-to-use cloud-based software-as-a-service applications carry your ERP systems that last mile, and help companies solve the broader adoption issues? Can SaaS solutions be deployed to co-exist with (and integrate to) existing ERP applications and strategically extend the value of those tools to transactional areas like customer service and purchasing?

At Coupa, we believe that they can, at least for purchasing, and in the coming months we plan to demonstrate how.  For now, though, the bottom line is this: don’t let that old console TV limit you.  While it may seem easier to deploy the ERP purchasing modules thrown in for “free” with your multi-million dollar ERP investments, it is unlikely those modules will meet your business needs, engender enthusiasm from your employees and help you grow the percentage of spend under management.  But you do have the option to strategically extend those ERP applications with SaaS solutions like Coupa designed with the end-user in mind, that can truly make corporate cost-saving initiatives a company-wide endeavor that starts at the point of demand – the requisition.

Stay tuned for more on this topic…