Enterprise IT application consolidation made easier

Chief Information Officers (CIOs) and their teams are changing the software environment at large and mid-size organizations. Often in conjunction with the wave of data-center consolidation in the hardware space, CIOs are consolidating and eliminating software applications that facilitate financial, sales, and other management systems.

Why Consolidate Now?

Over the past few years, major acquisitions by the largest software vendors - Oracle and SAP in particular - have changed the market landscape. Conversely, players in the mid-sized market - Piviotal, Great Plains, Navision, Axapta, Systems Union, and Damgaard - have been acquired. Customers must look to larger vendors for more concrete roadmaps - forcing many organizations to consider switching software platforms.

Legacy applications are also under review in response to the need for software flexibility and the demands of new network architecture from fewer data centers. In an August 2006 benchmark survey of 1000 manufacturers, Aberdeen found that 13% had software more than 15 years old and 18% had 10-15 year-old software. With software fully amortized and 50-80% of IT budgets earmarked for maintenance, CIO's and operations executives need to reexamine the operational fitness and strategic usefulness of existing applications in new environments.

Standardization makes it easier to audit, manage and secure software applications and enforce compliance. However, standardized application deployment is not the norm. According to the recent Aberdeen report, "The ERP in Manufacturing Benchmark Study," only 20% of large manufacturers ($1 billion or more in sales) have implemented a single ERP system and 1/3 such companies have four or more systems. Even reports of using a single system may not take into account that some software may be as many as two or three versions behind the latest release. While all this variation may increase IT management complexity, it will not necessarily improve IT effectiveness.

The User Challenge

Management generally considers consolidation as part of a business process optimization initiative. In reality, users must relearn their jobs when IT software and processes change. The results, unfortunately, are often sub-optimal.

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