Enterprise resource planning (ERP) systems have been around since the late 1970s, on the mainframe at least.

Today's systems are very different from their ancestors. But the big question remains: have they delivered on their original promise of automating customers' processes from one end of the business to the other, and of providing them with consistent data that is easy to manage because it is all located in a single place?

Sadly for users, the answer appears to be no - or at least, that any success has been limited.

"ERP hasn't delivered. While people have got what they wanted to a certain extent, they've had to limit how far they've gone," says Dennis Keeling, chief executive of the Business Application Software Developers' Association (Basda).

"The original dream was to implement ERP from wall to wall, but in many cases, this just isn't practical."

Initially designed for big sites
ERP, he says, was initially designed for big sites such as headquarters and manufacturing and distribution plants. As a result, it is not suitable for small subsidiaries such as sales and branch offices, which generally end up with alternative best-of-breed systems.

Related to this, says Forrester Research senior analyst George Lawrie, is the fact that many large global organisations implemented multiple instances or versions of their ERP systems in different subsidiaries.

The reason was the rush to install them in the run-up to year 2000, or in response to local differences in policies, legislation and culture.

The result was that the intended aim of introducing standardised, predictable business processes was thwarted.

Lawrie points out, however, that while introducing uniform processes can cut costs, the downside is that it can also reduce the flexibility to react to local market conditions, so the balance is a fine - and individual - one.

Another problem with ERP, which has likewise taken its toll on customer satisfaction levels, revolves around the cost of introducing these systems in the first place. According to Keeling, this can vary from £3,000 to £80,000 per user.

Such fluctuations are due less to licence fee differentials, and more to the various rates charged by consultants and systems integrators, which can also be prone to encourage mission-creep. Nevertheless, customers have undoubtedly obtained benefits from their ERP packages.

Teresa Jones, a senior research analyst at the Butler Group, says the key advantage of introducing an integrated system is being able to access a consistent set of appropriate data, all of which is held in one place.

Importantly, customers now are starting to use this data in a more sophisticated way, particularly as improvements to user interfaces have extended the traditional end-user base from key knowledge workers to staff undertaking more generalised tasks.

Although integrated analytics software has been available from ERP vendors for some time, customers are now deploying it more widely to improve the quality of the management information that they can generate. In the past, users wanting to go down this route had to bolt on third-party tools.

But this move also relates to a more general theme, described by AMR Research vice president Bill Swanton as: "people trying to reap what they sowed with ERP to use it more effectively".

This means that there has been some interest among large multinationals in consolidating different application instances into a single system to standardise processes and harmonise data from across the business, often as a first step towards establishing shared service centres.

However, taking this path can involve re-implementing the initial system entirely to bring together different business units.

"This tends to be a project of the same order of magnitude as the original, although it's not quite as expensive as five years ago in terms of licensing and skills," says Swanton.

"But it's still a good-sized project, and we estimate that companies should budget to spend between $7m [£4.2m] and $12m [£7.1m] per $1bn [£600m] of revenues," Swanton says.

Obviously, this type of activity only applies to sectors that have had ERP systems in place for a long time.

"Less than half of the Fortune 200 companies have made a decision about ERP yet, although some sectors, such as chemicals and oil and gas, are almost entirely penetrated," says Swanton.

"While there are a few big deals out there, growth has shifted from the traditional manufacturing base to government institutions, financial services and healthcare."

Existing customers add new modules
In the main, the organisations buying ERP software at the moment are existing customers that are adding new modules, such as customer relationship management or specialist reporting.

However, many are choosing not even to upgrade older versions of systems to take advantage of new functionality. Instead they are adopting an "if it ain't broke, don't fix it" attitude.

"One of the issues here is that IT departments have experienced a couple of years of budget freezes and, while things look likely to improve somewhat next year, it will probably not be by much," says Butler Group's Jones.

"People are afraid of upgrading because of the fear of yet more change and the cost involved in buying in expertise and replacement licences.

"They have to convince the business that it's worth doing and that can be difficult unless there's a big event such as a merger and acquisition that brings about change."

This means that, despite the hype a few years ago around ERP2, there has been little movement in this direction.

ERP2 was presented as an important improvement on component-based applications that would allow organisations to extend their systems beyond the enterprise to communicate easily with those belonging to their customers, suppliers and partners.

"I've not seen any major move to ERP2 at all," says Basda's Keeling.

"It was all just a figment of the imagination and will remain so for the foreseeable future. The market's nowhere near it and it's not getting any more sophisticated."

While Keeling concedes that users do have more choice with regard to functionality, and that more specialist templates are available for companies in vertical markets, he concludes: "Customers have to have a compelling reason to move, and while the vendors are trying to work out how to persuade them, they've not got there."