Attend to P&L, not ERP, advises consultant

ERP has been overhyped and some users have made regretted decisions to go with overspecified packages - though not in New Zealand, says a global IT consultancy.

ERP has been overhyped and some users have made regretted decisions to go with overspecified packages — though not in New Zealand, says a global IT consultancy.

Intelligroup chief executive Arjun Valluri acknowledges that worldwide ERP has been strongly hyped and some users have made decisions to go with overspecified packages — decisions they later regretted and reversed, though “it’s not happened here”, says the company’s local boss.

Wellington-based Intelligroup Asia-Pacific regional head Jim Brodie says New Zealand organisations look at “maximising the use of ERP” by selecting elements of functionality that pertain specifically to their needs.

This is a different picture from that seen by Intergen’s Tony Stewart. Intelligroup has assisted ERP implementation, principally SAP, for some of New Zealand’s most prominent companies such as Telecom, Enza and Carter Holt Harvey.

Intelligroup says it brings to bear tools to identify the areas of ERP that will bring the quickest return on investment and reduction in total cost of ownership for a particular user, says Valluri, who was on a periodic visit to the country. But a small or medium-sized company on the New Zealand scale of business should concentrate on the basics like profit and loss and “work on their competitive edge” before diving into ERP, he says.

Intelligroup’s Asia-Pacific operation is centred in New Zealand, since this was the first country in the region where it established an operation, in 1995. The Asia-Pacific market accounts for 8% of global IT spend as Intelligroup sees it, Valluri says, so a presence here is crucial; but the company’s emphasis is on global companies rather than those with strictly local operations.

The market has been “rough” in the past year internationally, he says, with only 10% growth in New Zealand. However, Intelligroup’s offshore development business with New Zealand customers, chiefly using developers based in India, has shown a massive growth of 200% over the year, Brodie says. He admits this is from a low base. “Over the whole business, each $10 has become $11; offshore development was about $1 of that and has become $3.”

In a refrain becoming almost a cliché among IT companies, Valluri labels 2001 “a year of consolidation. Next year will be a year of growth,” he predicts.

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