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Nearly all cloud ERP projects will 'fail' by 2018, reckons Gartner

Cost overruns, complexity... stop me if this sounds familiar

Anybody who thinks cloud ERP is the answer to their monolithic, on-premises vendor pain is wrong – according to Gartner, anyway.

Gartner has projected a near 100 per cent fail rate for cloud ERP projects by 2018.

Ninety per cent of those rolling out what the mega-analyst has defined as “post-modern ERP” will succumb to the traditional ERP headaches of higher costs, greater complexity and failed integration by 2018.

Their Achilles Heel will be lack of an application integration strategy and related skills.

Gartner defined “post-modern ERP” as systems that are federated and loosely coupled and no longer from a single, monolithic provider – such as Oracle or SAP. This is what defined the big ERP rollout wave during the 1990s that, presumably, Gartner defines as the "modern" ERP age.

Eighty per cent of those will lack the capability to successfully deliver on their postmodern ERP strategy, Gartner said on Tuesday.

Carol Hardcastle, Gartner research vice president, said in a statement: "This new environment promises more business agility, but only if the increased complexity is recognised and addressed. Twenty five or more years after ERP solutions entered the applications market, many ERP projects are still compromised in time, cost and more insidiously in business outcomes."

There’s a dawning recognition that post-modern ERP is “no quick nirvana” with companies moving from on-prem to cloud lacking little or no skills to integrate applications. Mistakenly, they assume the vendors peddling cloud will take care of it. When – inevitably – they don't, customers are the ones left scrambling.

As in the pre-modern world of the 1990s, it’s the hard push from business leaders and vendors that’s setting up today’s looming problems for cloud ERP.

“Organisations need to resist the temptation to succumb to pressure from business leaders to get started before the organisation is really ready – and without a business-agreed ERP strategy. Business leaders must understand what it will take to ensure success,” Hardcastle said.

Nobody was singled out by Gartner, but it’s been the iPad toting, cloud-friendly sales and executive classes who have driven uptake of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach.

However, according to Gartner, vendors are also guilty, putting self-interest ahead of their customers.

“The blame for this, however, does not lie solely with end-user organisations that lack the experience and expertise to avoid many of the pitfalls. System integrators and ERP vendors have to be accountable to their customers in this respect,” Hardcastle said. ®

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