UK firms lukewarm on ERP upgrades

UK IT chiefs remain sceptical about investing in modular application

Many UK IT chiefs do not see the value in software-as-a-service (SaaS), Web 2.0 or service-oriented architecture (SOA) technology to revamp existing enterprise resource planning (ERP) systems, according to new research from management consultancy Accenture.

Only seven per cent of UK firms polled believe that current ERP systems would be replaced by new technologies any time soon. This compares to 15 per cent in the US.

Accenture questioned 150 UK and 150 US IT directors from the largest 2,000 companies in both countries. Its brief was to gain a better sense of those firms' attitudes to existing ERP systems and the extent to which they were interested in augmenting them with new delivery platforms, web services and integration capabilities to help them manage core business processes more efficiently.

"We are talking about the ERP systems used to run a business or enterprise, typically based on SAP or Oracle, for example," said Jeremy Oates, Accenture UK head of systems integration and technology consulting.

"It varies between different organisations, but we find some are using them [new technologies] in some parts of the business, like HR and financial services for example, but not in procurement and other divisions. And they are not integrating those systems, or using all of the functions they provide."

Of those questioned, only 12 per cent of UK firms said they used almost all their current ERP system’s functionality, compared to 24 per cent of US respondents, with 60 per cent saying they used "a greater percentage" of the functions available.

Half of those not using all their system’s functions said it was because they don't need all capabilities, but Oates insists there are other reasons involved.

“It is more a case that the education and training is not there, and that people do not spend time to see how those functions could be used,” he said.

The absence of available budget to spend on system upgrades is an obvious barrier to the implementation of extra functionality - widespread predictions from analysts indicate that enterprise spending on new software will remain stagnant this year.

Oates argues that this is more down to the additional work required to manage and integrate those capabilities, however.

“That challenge is less to do with cost and more with the need to adjust business processes and the way the company does business in order to take advantage of them,” said Oates. “It is about thinking about things in a new way, which is an inhibitor, but in today's world there is more focus on cutting cost than taking hold of new opportunities.”

But some market watchers disagree with the survey's suggestion that UK companies do not see the value of implementing SOA.

A Forrester report, SOA is far from dead – but it should be buried published in May 2009 challenged the notion that SOA projects are on hold. Forrester calculates that the majority of large Global 2000 organisations (75 per cent) already use SOA to some extent, and 60 per cent plan to expand the reach of their SOA systems in the future.

"The larger the enterprise, the larger and more complex its technology base and thus the more immediately apparent the value of SOA," wrote Forrester analyst Randy Heffner, in a research note.

Meanwhile analyst firm Gartner last year suggested that enterprise adoption of both Web 2.0 and SOA would be on a two- to five-year lifecycle, which will not culminate until 2013. This reinforces Accenture's conclusions that may UK companies' awareness of the benefits they provide remains patchy.

The Accenture survey also found an ambiguous attitude to data mining, analytics and sharing among those it polled. This suggests that IT leaders are either unaware or sceptical about the benefits they may derive from classifying and analysing their data, and the advantages of linking their ERP systems with those of their customers or business partners.

Only 15 per cent of UK firms said they were fully integrated with customer systems (13 per cent for supplier systems), and 37 per cent said they had little or no data sharing set up with either.