E-business—a brief history of trying

Oil IT Journal editor Neil McNaughton introduces this month’s special edition on e-business and Enterprise Resource Planning (ERP) software in oil and gas. He observes that things seem to have calmed down since the last time we looked—back in the heady days of the dot com boom. What’s left of technical to business integration? Where are the exchanges of yore?

To a person with a hammer, everything looks like a nail. To an Enterprise Resource Planning (ERP) vendor, all enterprise IT looks like a potential target for integration. ERP holds, as it were, the purse-strings of the enterprise and is indeed in an enviable position to offer an integration platform for a diverse and varied range of business activities. Talking to vendors and users of ERP systems (or of ‘e-business for that matter) is a hazardous venture. You may know what you mean by ERP, but the chances are that your interlocutor has a different slant—or possibly a totally separate world-view.


What is ERP? At its most simple (simple ERP—a fine oxymoron!) ERP is a fancy way of describing accounting and finance. The core component of ERP is the ‘transactional’. Things are bought and sold—the numbers are captured once and for all—and all the other information processes, consolidation, reporting ripple through the system. Information thus captured can be re-used for decision support analysis and forecast—greatly leveraging the system from its simple accounting role.


But the leveraging potential of ERP, along with the ERP vendor’s need to show revenue growth by expanding into new sectors are also a potential pitfall for implementers. Because the transaction is at the heart of so many business processes, it is tempting for ERP deployers to let project scope creep get the better of them. This problem is compounded by the way ERP systems are sold. ERP systems do not come ‘shrink wrapped’! They are delivered as tool kits which have in the past proved too much temptation for systems integrators and seekers of synergy.


The last time we looked at ERP—back in 1999, such scope creep was all the rage. Technical to business integration (T2B) was one buzzword that kind of infused corporate IT with promises of massive synergies and savings. With the dot com boom raging in the equity market, the end of the last millennium was not exactly a time for half measures. Nothing short of a radical new way of doing business was likely to excite any enthusiasm from anybody for anything.


I mention the dot com boom partly because I am in the middle of an excellent book – ‘Dot.Con’ by John Cassidy*. This short history of the internet bubble relates how vast amounts of more or less innocent folk’s cash was extracted from their pockets and 401(k)s and pumped into ridiculous valuations of companies with crazy schemes. I particularly liked his qualification of the ‘greater fool’ theory of investment – where you know that the stock you are buying is overvalued, but you believe that there is a ‘greater fool’ out there who is ready to pay more for it than you paid.


Our re-visiting of the ERP space (see pages 6&7 of this issue) shows a distinct cooling of the ERP ardors. On one hand, T2B seems to have retrenched. On the other hand the mainstream ERP implementers seem to have had a hard enough time simply deploying their software to worry much about what’s going on around the periphery of their field of view. This reining-in of the expansionist view of enterprise IT is due to the fact that expansion can create an unwieldy mass of complexity revealing weaknesses in design and problems of scope and demarcation. ERP systems are unlikely to be delivered shrink-wrapped.

Thorny issues

Customization during and after implementation means that systems may come from the same vendor—but end up significantly different. Maintenance and upgrade become thorny issues. Companies may be more concerned about getting the core components of finance and accounting to work properly first. This can be a significant problem as our study reveals—many companies are still fighting to get their reporting back to the state it was in before implementing ERP! Another argument against excessive expansion is the fact that in most peripheral domains, there are already specialist incumbents who are leery about the ERP vendors intent. There is a fascinating dynamic here, played out time and time again between vendors, consultants and in-house development teams. One result of this rapport de force is that an ERP vendor (like any other major integrator) will encourage dilettante in-house developers and consultants to ‘integrate’. But such a facility may be denied to incumbent vendors operating in spaces close to, or overlapping with one of their intended expansion targets. Vendors astutely allow their clients to ‘buy AND build’ - providing them plenty of rope to tie themselves in knots with. This behavior has been a major contributor to the ‘tower of Babel’ type deployments we see today.


A degree of constraint on ERP is very much in line with modern thinking of enterprise IT. Decoupled systems and lightweight messaging with XML are all the rage. We report on one outsourced provider for whom this activity itself is core business. These fascinating developments may cause some to reflect on how much ‘integration’ they really have within the company firewall. Integration is no longer about who does what or where. Integration is a state of mind which comes from a close coupling of IT strategy with business objectives.

* Dot.Con—The real story of why the internet bubble burst. John Cassidy 2002. Penguin Books ISBN 0-141-00666-8.

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