Will Those Unhappy with ERP Shift to Application Management Outsourcing?

Software pundits have been saying for some time now that ERP needs to make some fundamental changes or it will collapse, and many a debate has risen as to how quickly these infrastructural developments need to be made. Recently, Mohammed Haque, a VP at business process management provider Genpact, surmised that companies are going to shift away from ERP implementations and focus on application support management instead. Haque’s feeling is that ERP is failing to deliver the impact and application value businesses need, and that within the next five years ERP will be feeling the effects of (sometimes) slow development.

Companies are experiencing a greater overall need for business agility, and Marc Schwarz, SVP and leader of Oracle On Demand, posits that there will be a marked increase in application management outsourcing (AMO) over the next couple of years. Schwarz states that AMO will reduce business risk, cutting costs by eliminating the need for constant operations and large development teams. True, it can be expensive providing support for a large array of applications, but outsourced support would have to be top notch for the investment to pay off.

Both Haque and Schwarz predicted improvements to AMO, and one of the main predictions is that the quality of the software used by outsourcing providers will improve. Another is a rise in integration middleware, as they expect many companies will be have multivendor systems, as a means of making the most of their current ERP investments.

The general idea, of course, is that the more often and widely something is used, the greater the chances are it will become an efficient product in a short amount of time; this could very well be the case with AMO. I’m especially curious to see if enough companies become frustrated with their ERP implementations and indeed shift focus toward AMO. Current ERP systems have their faults, but many vendors, like NetSuite, Epicor, and yes, even SAP are looking for solutions to those problems. Sometimes it seems like these changes made are “too little, too late,” but ERP fundamentals still have the capacity to change.

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