Not only is ERP difficult to install, it's difficult to change. A favorite barb of critics is that an ERP system is like concrete- -you can do anything with it as long as it's "wet."

But the problems large companies have with ERP may not be so bad at smaller companies. Large companies usually require multisite systems running on complex networks, supporting hundreds or thousands of users. They may need to make a costly switch from a mainframe to a client/server environment. And they need the long-term services of expensive consultants to make everything work. A smaller company, by contrast, may need only a single-site, single- server system, running on a local-area network- -an installation that can be bundled and implemented by a competent third party.

Also, ERP systems reduce the high cost of systems integration. "We think the ERP-centric approach is pretty ingrained--that using it as a backbone for an organization is something people like," says Jim Holincheck, an analyst at Giga Information Group. "As the ERP footprint expands, the need for integration diminishes."

Even more important than technology considerations is how the software dictates a business will be run. Larger companies complain about process upheaval; they have different processes that need to be standardized, points out Holincheck. And an ERP system offers "a generic solution," writes Thomas H. Davenport in a recent issue of Harvard Business Review. "In many cases, the system will enable a company to operate more efficiently than it did before. In some cases, though, the system's assumptions will run counter to a company's best interests."

Still, smaller companies--which often have labor-intensive processes, or software that automates inefficient practice--may welcome a new set of current business processes. "It becomes a standardizing factor within an organization," says Michael Cipriano, CIO of $200 million General Scanning Inc., which is nearing the end of an Oracle installation. "We don't have to think about everything we do-- this is the way we do it, from payroll to A/P to MRP to inventory."

Finally, many companies say that ERP works as advertised: it tightens up the supply chain, increases productivity, and provides new insight into things like product costs, supplier performance, and inventory levels.

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