Monday, January 30, 2012

Vendor lock-in

Kids ask the most interesting questions; they make you scratch your head and think. I had this experience recently when interacting with a gathering of B-school kids. The occasion was an event organized by the students with the industry exploring insights and networking. One such session was around the challenges and opportunities for the CIO. The CIOs presented were heartened that the role is one of the aspirational careers.

The question that stumped some of us went something like this. CIOs take decisions on IT strategy and architecture thereby setting the foundation of the technology that will enable the enterprise for a long time. So when selecting an ERP or similar system what are the criteria to select one over the other considering that once a specific technology is chosen, it will stay for a really long time. It’s like a lock-in because no one changes ERP systems normally. How do you then manage cost escalations and support ?

Now as I know the question is largely accurate portrayal of reality. Every enterprise when selecting an ERP has painstakingly reviewed most options before assigning the family jewels to the solution. Such magnitude of projects is always launched with fanfare with senior management speeches and project naming ceremonies. Committees are formed with best intent and sooner or later the project goes live. I am not getting into success or challenge that typical projects face; that’s another story.

Over the years with increasing licenses and customizations, the sustenance cost starts to hurt; CIOs find ways to reduce support costs or squeeze licenses deployed to keep operating expenses low. The thought of replacement is rarely tabled and considered impractical. How can such a change be ever executed ? Who will drive this ? Change will be disruptive to the business. The cost of replacement will be extremely high and not worth the effort.

I am sure that these reasons have some echoes for every CIO. Change is indeed a herculean task when it impacts almost everyone in the company; especially so when the change will have the biggest impact on the IT organization. Apart from the change that every employee will have to go through, the IT teams will have to get out of their comfort zones and drive the change from the front while keeping the lights on and business chugging along as usual.

So is ERP replacement the peak that no CIO wants to even attempt ? Or is it only for the few brave expedition leaders akin to climbing the Mount Everest ? Yes the biggest peak has been climbed a few times and so has ERP migrations done with sparse frequency. Why this reluctance in proposing the change or embracing the challenge to climb mountains ?

I believe that the vendor lock-in created around the difficulty of ERP change is to some extent promulgated by the CIO. It is time to abandon this myth and start exploring new horizons in the new world being created around us. We can be part of the creators rather than accept status quo irrespective of whether we were part of the original decision or not. Every decision taken is based on facts that that time and is largely a correct decision. Should we allow this to constrain the future ? After all if you keep climbing smaller mountains, no one rejoices with you as much as if you did climb the Mount Everest !


  1. Anonymous10:31 PM

    It is definitely a peak that nobody wants to climb. High risk with low reward. It consumes too much people bandwidth across the company for a project with low reward. However, the day is coming when more ERP work can be done in a cloud setting and that will force a closer look.

  2. I agree fully. It's time to explore new waters. Let technology biggies face the heat from their assumed assured revenue.