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Enterprise resource planning (ERP) platforms are an old-school software concept that’s working hard to stay relevant in this new age of smaller, more focused cloud service applications. In a nutshell, ERP software is software that’s typically delivered in a modular fashsion—a financial reporting module, a human resources (HR) module, a sales pipelining module, and so on—with customers choosing which modules they need to completely address every operational aspect of their business. When compared with smaller, more nimble cloud-delivered apps that many companies (including enterprises) find so attractive these days, the problems inherent with the old-school approach boil down to price, customization, and feature relevance.
Many ERP vendors are addressing the pricing problem by dropping the cost of their individual modules to compete with their cloud service competition, often moving to cloud delivery in the process. Customization is less easily handled as many ERP platforms rely on complex scripting languages to manage customization, often requiring value-add partners with scripting expertise to add their costs onto an ERP implementation simply to get customers up and running. But that’s also changing as many ERP platforms move to a design specifically aimed at easy cloud delivery and application programming interface (API)-level integration, like Oracle NetSuite OneWorld or SAP Business One Professional .
Feature relevance, however, remains an unsteady variable as some vendors excel in this area while others aren’t as agile. Because an ERP framework attempts to address all or at least most of any particular company’s operation, introducing new features or technologies is more difficult since the stack those technologies address is much larger. It becomes incumbent on customers then to more thoroughly test the capabilities of any potential ERP tool purchase to make sure it will address their feature needs in the future. To help, we have compiled this short list of five trends that any potential ERP tool buyer should consider in 2019.
1. Competition from Disruptors
The ERP behemoths that have traditionally dominated the industry are facing stiff competition from new, often Software-as-a-Service (SaaS)-only startups as well as the proliferation of new trends threatening to disrupt how enterprises gather and process data, and also operate. Companies such as FinancialForce (founded in 2009 and already having more than 1,300 ERP customers) and Kenandy (founded in 2010) are building solutions on the Salesforce App Cloud to make their solutions more appealing to users of the most popular customer relationship management (CRM) and sales automation tool. However, while having your ERP app delivered via SaaS has its benefits—most notably, cost and scalability—it also brings up the usual questions surrounding any web hosting project, especially performance and security questions.
On the disruption side, big data, data visualization, and artificial intelligence (AI) top the list of new technologies that threaten to fundamentally alter the way ERP systems are built and used. Enterprises looking to upgrade or migrate their ERP systems in 2019 will need to pay attention to how their new prospects handle these trends. Database performance will be a key performance indicator (KPI) for ERP in 2019, even moreso than it is today. Meanwhile, how the database handles big data warehousing and querying will also be important.
And once data is gathered, how users are able to visualize and present it for consumption by themselves and their colleagues is another important criteria. Microsoft Excel may still be the most popular data visualization tool on the market, but that’s changing as new tools such as Tableau Desktop (Visit Store at Tableau) or even Microsoft’s Power BI are giving users new options for data processing and consumption.
2. ERP, SaaS, and Hybrid ERP
Traditional ERP apps are stored on your servers, which means you’re responsible for upfront hardware costs, long-term hardware maintenance and expansion, and data backup and recovery. SaaS-based apps are stored on cloud-based servers, which are much less expensive, much quicker to update and scale, and don’t take up any valuable office space with clunky servers. The hardware difference alone can mean a savings in the tens of thousands of dollars in terms of total cost of ownership (TCO), facilities management, and per-seat licensing costs.
In several other business app sectors, including CRM, HR, and talent and procurement, SaaS has become the default deployment model for new implementations, according to Forrester Research’s “Vendor Landscape: SaaS ERP Applications, 2017” report. For ERP systems, the report says, “the shift to SaaS will accelerate over the next three years and become the preferred deployment option for many types of businesses. For large enterprises, adoption will be more restrained near-term, but solutions are maturing quickly, and we will see significant adoption at scale for complex businesses within five years.”
If you’ve already heavily invested in your vendor’s on-premises ERP tool, then don’t immediately jump ship to the same vendor’s SaaS product. Your incumbent on-premises ERP vendor may offer an attractive migration path to SaaS, and also remember that ERP isn’t an on-premises or off-premises decision. Hybrid ERP systems aren’t just possible: they’re becoming popular in some segments as long-time ERP customers enjoy the ability to move certain ERP functions to the cloud while maintaining tighter, on-premises control over other facets, especially those most vulnerable to compliance regulation.
ERP is generally focused more on operations than marketing, but those modules that address sales will need to become social media-savvy in 2019. That’s mainly due to the massive user base that social media will enjoy in the coming year—upwards of 2.77 billion users according to research from market research company eMarketer (see infographic below). For digital marketers and other roles, including product planners and support managers, that’s simply too massive a customer footprint to ignore. Future ERP systems will need to be able to incorporate direct marketing and data gathering links across multiple social media channels to remain competitive.
Also, social media has disrupted the way certain business disciplines operate. For example, HR managers routinely use social media to scour for new employees and as background check and even performance management indicators. These changing trends in how business operates need to be reflected in any competitive ERP platform.
4. ERP for the Subsidiary
Another cost-controlling trend becoming popular even among midsize businesses with multiple subsidiaries is to ignore ERP’s goal of managing the entire enterprise and simply deploy those pieces that make sense at any particular location. As more ERP systems are being delivered via the cloud, it’s becoming easier to deploy such SaaS-based tools incrementally through the enterprise.
Rather than replace ERP whole-hog, large companies are choosing one slice of the business and plugging in SaaS ERP on a trial basis. This approach lets businesses monitor SaaS ERP performance to determine how it might fit into the existing on-premises ERP implementation—or whether it should replace on-premises ERP throughout the entire organization.
Where this can become complex is when IT professionals consider security and compliance requirements. While chaining campuses together with virtual private networks (VPNs), identity management and similiar baseline IT security measures is certainly core to success. Mapping those features across individual field offices and subsidiaries can become complicated and even burdensome, both from a managerial as well as a network performance perspective.
5. The Internet of Things
Accept it: The Internet of Things (IoT) is here and it’s going to stay. As more devices and products become connected to the internet, more data can be automatically funneled into the ERP system, and that’s imply too valuable an advantage to ignore. This trend gives you better oversight over things such as the supply chain, your shipping partners, and appliance performance, and it also provides more data to your overall data pool for better overall decision making.
That’s exactly where it bumps hard into ERP, which is a software philosophy that shares the same goal. Harnessing this data could prove beneficial across any industry. From health care sensors that inform electronic medical records (EMR) management to robotic sensors on the factory floorm and even to data monitoring devices mounted in delivery trucks sending information back to fleet management software, IoT devices are becoming indispensible to competitive operation.
Where this complicates things for ERP is, unfortunately, across the entire stack. From an ERP platform’s back-end database on up to its most forward-facing features, especially reporting and data visualization, incorporating IoT capabilities efectively can have enormous impact. To stay on top of this trend, businesses need to stay conscious of the IoT technologies they have, and more importantly, intend to deploy in the near future. They need to know what kinds of data they’re expecting back from that deployment and how they intend to use it to improve operations. Only with a very clear understanding of these fundamentals will ERP purchasers be able to intelligently distinguish between the slew of new IoT features that ERP makers such as Microsoft or SAP are bringing to market.