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Do Mad Men Deserve ERP? (Part 1)
Perhaps the first axiom of ERP selection is to buy a system built from the ground up for your specific industry, with all its special needs and unusual practices and built to address your particular points of pain. If you are in the advertising industry, you might be shocked to discover that such a beast does not exist.
Advertising is a big business, with domestic spending in the Q1 2011 of $32.5 billion Ad spending is surging around the globe, especially in countries like India, China, Russia, and Brazil. Typically, software vendors are pretty good at spotting thriving markets and quick to develop solutions for them. A a brand new Aberdeen study, “ERP in Professional Services: Managing Costs When People are the Product” (November 2011indicates that well over half of professional services firms are already using some variation on an enterprise application, advertising agencies, apparently, are not among the early adopters.
That may be because ERP vendors have generally approached the ad industry with a generic set of functionality. Obviously, they need to make the effort to understand these customers and then develop ad-specific functionality that would make ERP a “must-have” solution for agencies just as it is in so many other industries. This series of articles explores the lack of ad industry-specific solutions deficiency from several vantage points. First, this situation underscores the importance of requiring industry specific functionality. Next, it provides a insights map for prospective software vendors on what kind of functionality ad agencies would require. Finally, it provides a review of where ERP systems might be a good fit functionally for advertising and where they might come up short.
All professional service firms have similar needs in many dimensions, such as time capture by project. Advertising and marketing services (public relations, promotions, marketing) agencies have their own unique requirements which, to make it all the more challenging, are in a state of flux right now due to major changes in the media marketplace.
Donovan Data Systems and MediaBank, recently merged, are examples of vendors who have created software systems specifically for ad agencies. And both have been quite specific because they, in complementary ways, have created solutions for buying media—TV time, newspaper or magazine space, billboards, etc.—where clients spend the greater part of their ad budgets and agencies make most of their profits. Neither software solution, however, were ever meant to be more than media-buying tools, and certainly not end-to-end solutions, like ERP. They haver virtually no back-office functionality (e.g., financials, human resources [HR]) and project management. ERP systems,on the other hand, offer very strong back-office and project management functionality, but provide virtually no ” e.g. media-specific functionality, which they would view as simply “supply chain” issues.
In order to better understand how vendors are approaching the advertising and marketing services space, we need to first understand the specific business software needs of the agencies. We’ll do that in Part 2.
Continued in Part 2