Pink Elephant Blog
The Rise & Re-Integration Of The ERP Empire - Part 3
Context: This series of posts represent a companion white paper I developed based on collaborative research conducted by Pink Elephant and BMC. The goal of this research was related to understanding the adoption of IT Service Management within organizations that support a major ERP suite. The results of this survey can be found on the Pink Elephant website at the following link: Survey Results Trends For Organizational Design & Common Process Implementation As was stated in an earlier post, many ERP organizations chose to replicate or re-create a subset of their IT organization as a separate and distinct function. This enabled organizations to manage their ERP solution in isolation as a means of gaining higher control, availability and reliability for their key business systems. However, over time many more business applications have become business critical as the majority of primary business processes slowly but surely become absolute in their dependency on digital automation. However, rather than repeat the expensive solution that was applied to the ERP system, IT executives have had to address the root cause instead of the symptom because of the overall cost of redundancy. Today IT organizations are re-organizing around a shared services model in part due to economies of scale, lower transactional costs, and a growing realization that IT has to evolve into a services organization. To accomplish these goals, the senior leadership who manage these organizations are adopting new enterprise IT management roles, processes and tools that tie the disparate technology domains into a unified service organization. A key tool being employed to achieve these objectives is the implementation of enterprise IT processes that span technology silos in support of service delivery, security, risk management, quality, control, and support. These process projects in turn support the cost and efficiency-driven technology consolidation projects focused on shared data centers, shared business applications, and the inter-connectivity of common network backbones. In support of this movement, a trend can also be observed towards integrated IT management tools in support of a shared service model that is strikingly reminiscent of the business case presented by SAP and its competitors over fifteen years ago. From this perspective, we get a nickname for this tool trend called ERP for IT. However, the largest hurdle that these trends face is the organizational and cultural changes they represent. The survey clearly indicated that most SAP organizations struggled with culture, resistance to change and cross-organizational/silo collaboration. Interestingly, these are the same major challenges faced by the ERP groups as they implement their business-focused process tools in the business units. While these industry changes are positive for enterprise IT and its business customers, they present an interesting dilemma to the classic ERP organization. For many companies, the creation of a separate SAP group was a necessity due to the lack of maturity in the general IT environment; however, what happens to the business case for retaining a separate and distinct ERP group when the general IT management organizations' practices become mature enough to support business critical IT services? The answer of course is that the business case for the separate and sometimes redundant IT organization for managing a key but single business solution begins to erode. This is demonstrated today as companies begin to re-centralize key elements of the ERP group back into the general IT resource pool. Among the first elements centralized are the dedicated ERP infrastructure components. These IT resources are often consolidated as part of the data center consolidation project under a central infrastructure and operations group. With the integration of SAP into the general IT environment, it now becomes one of many business-critical application services supported by IT. Troy's thoughts, what are yours?
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