New to ERP? Better Watch out!

New to ERP? Better Watch out!

Approach with caution. Keep your eyes open. And know your own limits.

That's the advice of experienced users and analysts for companies that are looking at enterprise resource planning applications tailored for industries beyond traditional manufacturing sectors such as chemicals, pharmaceuticals and electronics.

The software rollout problems that have recently bedeviled some early users of vertical-industry packages from SAP AG underscore the complexity of installing ERP systems, especially new products that haven't been widely used yet.

"Don't underestimate the size of the project or the time it will take to get things up and running," said Dan Zirbes, information technology manager at Mercedes-Benz U.S. in Vance, Alabama. "It's a huge job, and it involves everybody in the company."

Mercedes-Benz U.S. was an early user of Baan Co.'s ERP applications in the automotive industry and worked with Baan and IBM's consulting unit to develop auto-related functionality now being sold to other companies. Business users "have to be committed to change" to make ERP projects work, Zirbes said.

Moving beyond the manufacturing realms that have been the main arena using ERP applications "is a pretty radical step for both the vendors and their customers," said Jim Shepherd, an analyst at AMR Research Inc. in Boston.

And it isn't a case of "SAP doing a bad job of this and everybody else doing a good job," Shepherd added. For example, he said, a software bundle Oracle put together for consumer packaged goods companies has had a bumpy road because it lacked tight integration.

ERP vendors also usually lack "the iron will to say no" to users who may not be prepared for the rigours of installing a new application, said David Dobrin, an analyst at Benchmarking Partners Inc. in Cambridge, Massachusetts. That can be dangerous because early users are basically acting as software test sites, he added.

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