ERP Hot or Not: Best fit or one size fits all?
This may come as a shock to some of you, but I am not exactly the most fashion-forward human being.
From a young age it was clear I had inherited two of my father's most prominent attributes; an aggressively receding hairline and a distinct inability to combine clothing in an aesthetically pleasing manner.
This potent combo resulted in what has been described as "The single worst picture of all time" (by my wife).
A framed copy of this was our gift to our parents on their 30th wedding anniversary in 2003. It’s the ultimate double-edged sword; I look like an extra from a Limp Bizkit video, but it serves my enduring purpose as the eldest brother, to torpedo any chance of them having a meaningful relationship.
I'm sure most of you remember 2003. It was a complicated time, both in choosing a brand of 'wet look' hair gel, and in technology.
Trying to bring your music with you on the train meant wrestling with the early versions of ITunes and Windows media player, assuming no one lifted the phone during the 4 hours it took to download your album.
The average UK office was also undergoing change, and 'ERP' was the buzzword of choice. New providers were cropping up every few months, all offering a 'one size fits all' package - encompassing finance, order processing, warehousing, manufacturing and payroll.
It was around this time that the big players like SAP, Oracle and Microsoft began acquiring other software houses who were specialising in CRM, service management, document management and mobility, which could further enhance their ERP offering to customers.
The 12 years from 2003 to 2015 saw the rapid growth of the ERP product, especially in the Mid Market and Enterprise sector. It worked its way into every possible area of the business - driving efficiency, consistency and transparency throughout.
Meanwhile, I had also learned to buy whatever the Topman mannequin was wearing every 6 months, which was significantly more efficient and consistent, but thankfully not transparent.
In the last couple of years, we’ve started hearing about 'Postmodern ERP' or 'Postmodern Applications' on technology forums and from our partners.
Carol Hardcastle, Gartners' Research Vice President describes Postmodern ERP as "a fundamental shift away from a single vendor megasuite toward a more loosely coupled and federated ERP environment."
Or, in English, "lots of people are moving away from one big application which does everything, to 5 or 6 different bits of software that do each of their jobs better, and talk to each other."
Sure enough, we soon started getting the customer feedback to back this up.
A Gartner report from March 2016 essentially says that companies are moving away from 'monolithic' ERP Applications that govern their entire business (think SAP, Oracle, etc etc) but provide very little flexibility, and are very hard to maintain and upgrade.
Organisations are now moving to a more loosely coupled solution, usually in order to take advantage of innovation, and a desire to get a 'best of breed' solution for particular departments or business challenges.
The gathering storm, however, is the eventual realisation that there has been no overarching 'integration strategy' and that these systems are at risk of being poorly integrated, or worse still, not integrated at all.
This has gathered pace, (largely due to the low cost of entry Cloud and subscription models), and has resulted in 'quick wins' in addressing particular departmental business issues.
Gartner predicts that by 2018, "90 percent of organizations will lack a postmodern application integration strategy and execution ability, resulting in integration disorder, greater complexity and cost."
To give you an example of what that disorder may look like, let’s say that a business’ contracts department is drowning in paperwork, and using Excel to try and get renewals sent in time, which are digitally signed.
The legacy ERP solution wasn’t designed for this volume or functionality. So, some big contracts don’t get renewed and result in costing the company money.
This alerts the board to the issue, a new budget is set, and the IT manager is tasked with sourcing a contract management system, or developing the existing ERP system to accommodate.
Development of the existing platform is possible, but slow and costly. A new Contract Management system is available immediately in the Cloud for a few hundred pounds per month. This sounds like a go-er, so is purchased (all within budget), and implemented.
6 months down the line, the board is made aware of the 3 man days per week which is required to manually export and import the financial details from the contract system into the ERP software.
12 months down the line the board signs off on Office 365 for Email and CRM. At this point the choices are to write a bespoke (and potentially expensive) integration to allow the contracts system to send the contracts via Exchange Online, and link to CRM Online, or to scrap the Contracts system altogether and use CRM Online for this.
It’s a convoluted outcome, and one which probably cost far more time and money than it should have done. Much like the gents below, this decision was made with a focus on the individual, with very little consideration for the overall effect:
This doesn’t mean that the 'best of breed' model is wrong, far from it. As Carol Hardcastle continues: "This new environment promises more business agility, but only if the increased complexity is recognized and addressed."
So what needs to happen?
- There needs to be more of a focus on understanding the client's wider business strategy and direction before thinking about solutions.
- You need to have an understanding of the current (and emerging) solutions available which can address business issues in your sector.
- You need to have the experience of technology roadmapping to ensure integration is delivered in phases towards a pre-defined end goal - which of course supports your business strategy.
While this is a new challenge for the majority of single-product providers; TSG have been providing this service to our customers for years through our Business Development Manager and Account Director teams. The last thing your business needs is a pair of baggy jeans from 2003. Trust me.
Your applications strategy needs to be as well thought out and fitted to your organisation as a well-tailored suit. Don’t be part of the 90%, speak to us and be part of the 10%.