The Echo Boom is Upon Us
December 12, 2008 Leave a comment
ERP Boom in 1990s
An enormous number of companies installed ERP solutions in the 1990s in the run-up to Y2K. It was a huge bulge, much like the baby boom in the 1950s. My children are part of what is called the echo boom – the upsurge of births from baby boomer parents like me.
Huge Number of Aged Implementations
The ERP installations from the boom time are now 10 to 20 years old. We are at the start of a huge replacement cycle. The world of technology has changed dramatically during the past 20 years. Cobol, RPG, and Progress have given way to HTML and Java. Big iron and expensive Unix machines have given way to commodity Wintel servers. Traditional disk storage has been eclipsed by SANs and NAS.
Enormous Business Drivers to Replace ERP Now
The ERP (or often MRPII) implementations in the 1990s were driven by the finance and accounting people who wanted standardization across the enterprise. That wave did consolidate many disparate packages and homegrown applications but the focus was relatively narrow – the front office, the “knowledge workers”.
Many argue that the big ERP implementation projects undertaken over the last 15 years did not generate the ROI that was expected. In my opinion, that is because they didn’t address the core of the enterprise. Most of the activity in a manufacturing company occurs on the shop floor and on the shipping and receiving docks. These areas are not under the purview of legacy ERP solutions. There is a tremendous amount of savings to be gained by automating and integrating all the operations within a company, not just the financial and procurement functions.
New Generation of Software
Today, there are software products that make everyone in a manufacturing enterprise a “knowledge worker”, that tie together the shop floor and the “top floor” seamlessly. It just makes sense to capture and validation transactions as they happen rather than write down the details for a so-called knowledge worker to keypunch into the system later.
The move to replace aging legacy ERP solutions will accelerate over the coming years as more manufacturers realize they can run a comprehensive, next generation ERP2 solution for about the cost of just maintaining the long list of applications they are using now.