Old ERP and outsourcing vs. small is beautiful

Vinnie Mirchandani has written an interesting piece called Business Process "Angioplasty", that has been commented on by Dennis Howlett, and within a few hours  I read about Sainsbury's giving up on Accenture and insourcing their IT back home.  Vinnie's argument is that the move to major brand ERP solutions in the 90s, supported or recommended by the big consultancies, wasn't doing anything clever in re-engineering the organisation's processes, and was providing just the same old transactions with a different user interface and database.  He says:

"Implement it and magically you became "world class" was the thinking. It would get you Toyota's Lean and GE's Six Sigma - without the discipline and the investment. It was a fad diet. After ERP, we moved to SCM, CRM and other business applications."

Dennis asks if they were:

"selling snake oil?"

In Sainsbury's case the report suggests they outsourced their IT to a partner that seems to have had the appropriate expertise to manage the systems and infrastructure, but not enough understanding of either retail or the Sainsbury's business itself.  These all echo other stories we've heard of major IT projects that have gone astray.  But Vinnie's article has some important positive points.  He says:

"As I have written throughout my blog, "tiger teams" are showing huge payback from small, creative technology deployments. On the other hand, the payback from large enterprise applications in many cases has been questionable."

He spends a lot of time discussing business process outsourcing, culminating in the these words:

"Having seen IT outsourcing for 2 decades, I firmly believe in the adage  "make a process efficient before you outsource". With many business processes so broken just handing over to BPO provider will not magically fix them."

So what I draw from this is that big bang project implementations should be avoided and that small is beautiful. 

This is another indication of how the Software as a Service based solution's time has come.  The SaaS approach always starts from a small pilot, or "tiger team" approach, which is proven to work before the solution is rolled out to a wider audience.  The SaaS solution providers are also starting from the commoditised application areas, like accounting - we know how the debits and credits need to work.  The processes around how they need to be managed and reported, either for the client or the accountant, are relatively straightforward.  And unlike the Sainsbury's example, you are outsourcing the application and infrastructure management to a specialist 3rd party to relieve the IT headache, whilst retaining control of the business process and the data yourself.  That will avoid the snake oil or the need for angioplasty. 
Technorati Tags : SaaS, implementation, outsourcing, BPO, ERP

Powered By Qumana