The conventional wisdom is that an ERP system implementation is supposed to replace all the legacy solutions an enterprise has added over the years with a single, integrated framework. Not much debate there. Until you can get all of an organization’s transactional data into a single, standardized database, you can’t begin to reap the efficiencies ERP systems promise. CIOs adhere to that conventional wisdom; they seek to justify the multimillion-dollar investment many ERP systems represent, and maximize ROI, by banning the addition of disparate systems, or solutions that aren’t integrated into the standardized framework.

ERP System

Should CIOs integrate Performance Management into their ERP system or does it deserve it’s own silo?

Like lots on conventional wisdom, though, this single system strategy can go to far. And it does when it comes to Performance Management (PM) applications. While they certainly can and often are integrated into an enterprise’s ERP foundation, there is really no hard and fast rule that they must be, and lots of reasons why PM should stand on its own.

It comes down to one simple idea: ERP is about how a company does things. PM is about what a company should be doing. ERP’s impact is at the transactional level of operations. PM is strategic in nature. With ERP, you are streamlining processes and automating operations. The emphasis is on perfect execution. PM, along with Business Intelligence (BI), are tools senior management uses to uncover opportunities and set direction. ERP and PM are fundamentally different beasts.

Today, more than ever, companies seek the special insights and the ability to model various outcomes that PM brings. The bottom line is that if PM is what you need, you should get the application that best meets your need and not make a single concession to its ability to plug in to the ERP system. In fact, the opposite is true. Your ERP system needs to be accessible by your PM system as just one of the heterogeneous data sources it will need to tap into. PM is used by a different set of users than ERP systems, and actually combines business intelligence, some of the ERP system’s report generating capability and special analytics software. Unlike ERP, where processes are mapped out on paper before they are implemented, and function precisely the same way each time they are used, PM is a journey, a quest where one answer might lead to three new questions. It is iterative, creative and qualitative.

Another aspect of PM is that it is largely self-service in nature, where the users “own” the system and develop the expertise to create their own reports and construct their own formats as necessary. Users need answers and need them fast and can’t wait for IT staffers to get around to their project. At the same time, IT bears the responsibility for securing and maintaining systems, and must control issues such as access to data and performance management capabilities, consistent data definitions and formulas for common calculations—such as revenue, cost, etc.

That balance is what ultimately allows systems to be successful, and in the end, IT and user requirements are best answered by a complete performance management  system. The key issue is manageability for both parties.

Written by :

tracey boxer