Ever-Changing Landscape of ERP
The Upswing of Cloud
Cloud computing will play a significant role over the next 5-10 years for companies that have deployed an ERP. Both SAP and Oracle have openly stated their strategic direction is to focus on Cloud. R&D investment for both providers has already shifted toward more robust Cloud solutions away from the traditional on premise solutions. On premise solutions will not disappear, but more advanced ERP functionality will be delivered through Cloud solutions. This shift will force companies that have deployed an ERP to migrate over time, if their goal is to continue to leverage new functionality. I believe companies should seriously consider Cloud and begin developing their Cloud migration roadmaps now. IT organizations managing large IT infrastructures and spending millions on Enterprise Resource Planning software upgrades is a thing of the past.
One of the most challenging questions a business faces is, “what KPI’s/ Measures are needed to manage the business”? Companies have spent millions of dollars trying to answer this question, only to develop an Enterprise Data Warehouse or Data Mart that never seems to have all the data, or the most effective data to meet the business needs. When you dig deep, what you find is that it’s difficult to build a static environment for a business that is continually changing.
An analytics platform that is dynamic is necessary to be able to support a dynamic business. My belief is that organizations that have deployed large complex and global ERP solutions, need to deploy an analytics platform that enables the ever changing business. The delivery mechanism is to develop a “data lake”. Data is replicated from one or multiple ERP platforms, into a “Big Data” platform that is flexible and provides a reporting engine that allows an analyst to more easily get to their data and to report on it anyway they see fit. No more complex data models. No more complex ETL solutions. No more large, difficult to modify data warehouses.
Over the next 10 years, companies that have been steeped in manufacturing hard goods will find themselves in unfamiliar territory. A trend is emerging rapidly, where traditional manufacturers are incorporating software along with hard goods sales. The challenge with these companies is they are unfamiliar with how to sell, license, maintain, distribute, support and upgrade software. The digitization of products is the next revolution, where 50 Billion devices will be connected by the year 2020. The companies selling these products, now with software, need to prepare for the reality that is just a few years off. Most companies don’t realize the impact their ERP systems will have when they begin selling software. My advice to any company evaluating Internet of Things and other disruptive technologies, is start planning for the impact your organization will be faced with when you need to sell both hard goods as well as software.
Harnessing New Technologies
I believe IT organizations should be focusing on platform architectures that enable multiple technologies to come together more easily. As the major ERP suppliers move to the Cloud, one challenge they will face is how they keep their customers sold on “best in suite, versus best of breed”. My belief is that companies that have traditionally been just SAP or just Oracle, as they evaluate Cloud solutions will tend to look at point solutions outside the traditional ERP stack. The challenge for IT organizations will be to have robust, secure integration architecture. The CIO of the future should be more concerned with “I”ntegration instead of “I”nformation.
Role as a CIO
The best advice I can provide to any of my colleagues is to always have an open mind and be willing to accept change. A short eight years ago, my CEO said to me, “should we be considering Cloud”? After I picked myself up off the floor, my initial answer was “NO”. Cloud computing was new, unsecure, bleeding edge, and most of all not very robust in the offerings that were available. After some deep thought and analysis, I went back to my boss and said, “I stand by my answer of ‘NO’. Cloud, will take decades to advance and will probably be no better than what we see in B2B, B2C or B2E solutions”. Obviously, I was naïve, short-sided, and yes dead wrong in my thinking. My perspective in this area has changed dramatically. I am a firm believer now that Cloud computing is the future, and not just for ERP. I would like to think that I learned my lesson and I can live by my own advice. When my new boss asked me to work with R&D on IoT, Machine Learning, Big Data/Analytics and Augmented Reality, I didn’t say “NO”. Instead, I embraced the opportunity to understand what this meant, and better yet what I could learn from this seemingly uncharted territory.
Curbing the Costs
I believe Cloud computing has the best opportunity for mitigating the rising costs of ERP. Many companies will jump into the on premise ERP pool, without a life vest, only to find that in a short period of time, their ERP is not at the most recent patch level. They only find this out when they log a support ticket with their ERP vendor and the response is “you need to upgrade to the latest patch level”. Start planning on moving to Cloud now, and let the ERP vendor be responsible for upgrades.
Moving to the Fore
We’ve all heard, “implementing the ERP software isn’t the difficult part, it’s the change management”. I believe this to be true, but I also believe that change management shouldn’t stop once the implementation is complete. ERP implementations are difficult, and once complete, most organizations leave them as is, without change to the system or organization. While this is understandable, it shouldn’t come at the expense of driving as much value as possible out of the investment that went into the original implementation. Companies implement ERP systems for a reason. In most cases, it’s to gain a single view of the customer, or to improve supply chain efficiency. While these benefits need to be realized to justify the original implementation, organizations need to continue on the Change Management Journey. Don’t give up on the opportunities to leverage and optimize where possible. The good news is, whatever changes are needed, there isn’t a scary ERP implementation looming over the change.