How to Understand the Problems with Bias in Enterprise Software

Executive Summary

  • The Objectivity of Those that Work in Enterprise Software.
  • The Hidden Income that Gravitates to Those that are Subjective.
  • Why Being Objective is Bad for One’s Career.
  • The Assumption of Objectivity from Information Providers.

Introduction

This sub-blog focuses on how little evidence there is that the most popular software category in enterprise software — ERP — provides benefits beyond costs to the companies that implement it. This is the topic of my book The Real Story Behind ERP: Separating Fiction From Reality.

However, ERP systems continue to be popular, and beyond that, there is zero questioning regarding ERP.

The lack of objectivity extends to just about every other area of enterprise software. Here are some examples that I have witnessed.

  1. Most software vendors exaggerate how good their application is versus the competition. They not only amplify to prospects and clients, but to anyone they interact with.
  2. There are very few employment positions where one can be objective without negatively affecting one’s career. Obviously, if one works for one software vendor, one cannot say good things about competing for software – however, the lack of ability to be objective extends to consulting companies and IT, analysts. As a consultant working for a consulting company, the policy of what software to recommend is made at a very high level with those below senior partner positions having substantially no input. As an IT analyst, due to the need to sell services to software vendors, one cannot realistically be objective as an analyst and expect to have a good career. IT journalists also must write articles that pass their editor’s review, and that means those that make their advertisers happy — which are the large consulting and software vendors. Conferences also have specific funders and do very little to mitigate the bias of the presenters that provide information to the conference attendees.

Conclusion

There is essentially no objectivity in the enterprise software market because there is no way of making a living from being objective. All the income resides on the side of being subjective. Much of how the revenue flows to influence bias is hidden. For instance, some journalists received direct payments from software vendors.

Consulting companies recommend one software application, but don’t mention that their opinions are highly influenced by the fact that they can make the most money from that particular application.

Gartner and other IT analysts hide the fact that they receive income from software vendors, they also hide who they receive income from, and there is no way to find out — either from their website or even from their annual reports. Rather than declare their sources of revenue,

Gartner proposes that their funding is irrelevant and that they have an ombudsman, which is a false position that in effect does nothing to mitigate the effects of vendor money on Gartner, but instead acts as a PR function, to convince customers of Gartner’s objectivity. It allows Gartner to continue to take large sums of money from the biggest software vendors — which then highly influences their ratings — that they then also sell to enterprise software buyers. This is all covered in the SCM Focus book, Gartner and the Magic Quadrant: A Guide for Buyers, Vendors, and Investors.

Interestingly, there is the assumption that information that is provided — either by consulting companies or IT analysts or other entities is objective — if this were not the assumption that there would be little reason to listen to information in the first place. Furthermore, almost every entity that provides information in the enterprise software space claims they are objective. They just happen to hold the views that line up 100% with their career and compensation structure. It is truly an amazing coincidence.

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References

Brightwork Explorer for ERP Parameters

How to Tune ERP Systems

ERP applications require MRP parameters to be optimized externally to the ERP system. Having analyzed many ERP systems, we developed the Brightwork MRP & S&OP Explorer. It is free to access until it sees “serious usage” and is free for students and academics. Click the image to find out more.

The Real Story on ERP

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion