When an enterprise adopts an ERP system to support most or all administrative functions certain efficiencies are certain to be gained with the inherent integration of data. The list of employees entered in the HR module is automatically that same list available for Accounting and Procurement processes. The organization structures and physical location information is shared throughout the system, so fundamental changes need only be made once, in one place. From a technical perspective, there are often efficiencies and cost savings for be gained from the standardization of operating systems and core database technology. It becomes somewhat easier to find technical talent, as you can focus on candidates with very specific skills.
But the advantages of central ERP are starting to hamper many HR departments’ ambitions to deploy more strategic Talent Management applications. ERP vendors have only recently begun to improve or augment their Talent Management functionality in order to provide a better solution set in this area, (which is the fastest growing sector in HR Technology). Many of these new features will require entire ERP system upgrades for HR departments to try and take advantage of. Remember, ERP upgrades require all components of the system go through the upgrade. So, if an HR department wants to deploy some new Talent functionality, they will have to rally support of Finance, Procurement, and possibly other areas to agree to submit to a major upgrade.
Typically, (especially with Finance groups), those conversations do not go very well. The vast majority of finance departments prefer the reliable status quo. Can you even think of any great innovations in accounting software that would encourage a finance department to want to upgrade?
Quite naturally, either for reasons of functionality, or inability to justify an ERP upgrade, many HR departments will gravitate to third-party best of breed solutions for Talent Management solutions. But then a new challenge faces HR, namely having to convince the IT department that the introduction of a new technology won’t lead to excessive integration work, potential security issues (many of best Talent solutions are SaaS offerings), and an increase in the overall support responsibility.
So no matter which option HR chooses, some kind of internal conflict in likely to arise. For me, I am a staunch proponent of HR departments taking a strong position and advocating for the best overall solution, which more and more is a best-of-breed package. For many HR departments, the right move is to get off the ERP treadmill.
That also could be the latest ERP upgrade I have been involved in has been an unabashed disaster, but that is a post for another day.