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Guide EFIP AND THE STANDAFID, STANDAFID E}LUEPFIINT

Designing business processes is difficult, time consuming, and very expensive. Highly trained experts con-

duct seemingly countless interviews with users and domain

experts to determine business requirements. Then, even

more experts join those people, and together *tis team invests

thousands of labor hours to design, develop, and implement

effective business processes that meet those requirements.

All of this is a very high-risk activiry prone to failure. And it all

must be done before IS development can even begin.

ERP vendors such as SAP have invested millions of labor

hours intb the business blueprints that underlie their ERP so-

lutions. Those blueprints consist of hundreds or thousands

ofdifferent business processes. Examples are processes for

hiring employees, acquiring fixed assets, acquiring consum-

able goods, and custom "one-off" (a unique product with a

unique design) manufacturing, to name just a few.

Additionally, ERP vendors have implemented their business processes in hundredS of organizations. In so doing, they have been forced to customize their standard blueprint for use in particular industries. For example, SAP has a distribution-business blueprint that is custom- ized for the auto parts industry, for the electronics industry, and for the aircraft industry. Hun- dreds of other customized solu- tions exist as well.

Then, the organization must remove that difference, which

can be done in one of tlvo ways: It changes business pro- cesses to fit the standard blueprint. Or, the ERP vendor or a

consultant modifies the standard blueprint (and software solution that matches that blueprint) to fit the unique requirements.

In practice, such variations from the standard blueprint are rare. They are difficult and expensive to implement, and they require the using organization to maintain the variations from the standard as new ver- sions of the ERP software are developed. Consequently, most organizations choose to modify their processes lo meet the blueprint, rather than the other way around. Although such process changes are also difficult to implement, once the organization has converted to the standard blueprint, they need no longer support a "variation."

So, from a standpoint of cost, effort, risk, and avoid- ance of future problems, there is a huge incentive for orga-

nizations to adapt to the standard ERP blueprint.

Even better, the ERP ven- dors have developed software solutions that fit their business- process blueprints. In theory, no software development is re- quired at all if the organization can adapt to the standard blue- print ofthe ERP vendor.

As described in this chapteq, when an organization imple- ments an ERP solution, it iden- tifies any differences that exist between its business processes and the standard blueprint.

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Source'. @ Gilly Smil

Initially, SAP was the only true ERP vendor, but in the meantime other companies have developed and acquired ERP solutions as well. Because of competitive pressure across the software industry, all of these products are be- ginning to have the same sets of features and functions. ERP solutions are becoming a commodity.

All of this is fine, as far as it goes, but it introduces a nagging question: If, over time, every organization tends to implement the standard ERP blueprint, and if, over time, every software company develops essentially the same ERP features and functions, then won't every business, worldwide, come to look just like every other business,

worldwide? Howwill organizations gain a competitive ad- vantage if they all use the same business processes?

If every auto parts distributor uses the same busi- ness processes, based on the same software, are they not all clones of one another? How will one distinguish itselP How will innovation occur? Even if one parts distributor does successfully innovate a business process that gives it a competitive advantage, will the ERP vendors be conduits to transfer that innovation to competitors? Does the use of "commoditized" standard blueprints mean that no com- pany can sustain a competitive advantage?

trlISCUSS!c,N OIJESTIclNSi

l. Explain in your own words why an organization might choose to change its processes to fit the standard blue-

( +.yhxplainthe following statement: An ERP software ven-\a6r can be a conduit to transfer innovation. What are the

What advantages accrue by doing so? consequences to the innovating company? To the soft- ware company? To the industry? To the economy?

5. In theory, such standardization might be possible, but worldwide, there are so many different business mod- els, cultures, people, values, and competitive pressures,

can any two businesses ever be exactly alike?

how competitive pressure among software ven- dors will cause the ERP solutions to become commodi- ties. l.Mhat does this mean to the ERP software industry?

3. If two businesses use exactly the same processes and ex- actly the same software, can they be different in any way at all? Explain why or why not.

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