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“Do You Really Have To Upgrade Your ERP To Innovate?” by Duy Nguyen

by Debbie Wilson  |  December 10, 2018  |  1 Comment

 

For the past 20+ years, most customers have spent the majority of their time, money, and resources just to keep up with vendor’s software changes, system updates, and integrations.  With cloud vendors pushing for SaaS adoption of core ERP functionalities, customers can focus more on adopting new features and innovations.  Is this marketing hype or can this realistically be achievable?

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One school of thought from customers’ point of view is that no, they do not need to upgrade in order to innovate if they are satisfied with their current ERP functionality and performance.  If a customer has a stabilized core ERP operation, they should be able to seek new ideas which can turn into innovations that can integrated with their current ERP solution.  For example, you can implement an IoT platform without having to upgrade from Oracle EBS to Oracle ERP Cloud, or SAP ECC to S/4HANA, or Infor Lawson to Infor CloudSuite.  You can deploy a Data Lake for analytics without a “Cloud” ERP.  You can add RPA from a third party vendor to your current on premise ERP to activate process automation.

 

The other school of thought from vendors is by upgrading to their SaaS ERP, customers can leverage out of the box integrated tools to enable innovations using out of the box integrations, ecosystems of data sources and hype features like Machine Learning / Artificial Intelligence with little to no investment in a new IT footprint.  The reality is with this approach, any innovations will require additional subscription services from SaaS vendors, and will add a series of revenue streams for them.  Just like a credit card company, you want to increase your sales volume in a secure and convenient fashion, we can help but we want a piece of that profit.

A few key takeaways here are innovations tend to have a short lifespan and require some forms of investment in new technology and resources.  Regardless of upgrades to SaaS ERP or not, there are always opportunity to innovate with what you have, given that you have a stable core ERP environment to operate with.  The real question now is, do you have a stable core ERP?

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Deborah R Wilson
Managing Vice President, ERP Strategy Team
12 years at Gartner
20 years IT industry

Deborah Wilson, a recovering Gartner research analyst, leads the Gartner ERP strategy research team. Read Full Bio


Thoughts on “Do You Really Have To Upgrade Your ERP To Innovate?” by Duy Nguyen


  1. Thanks! A great article!

    #1 However, a big roadblock to upgrading to the cloud is psychological.

    That is, the sunk cost of current ERP software and the infrastructure, that is difficult to forget, especially if $250k+ has been sunk into the current situation, ERP, the server(s), maintenance, updates/upgrades, backup systems etc..

    In this case, the new cloud ERP annual bill could be similar or to current maintenance (only!) bill of the ERP.

    But even if the maintenance of the current ERP is difficult, the user-interface outdated, too complex, etc., then still, it’s difficult the make the leap – to ditch everything into which you have been heavily investing for last decades.

    Even if the current situation is bad, it’s difficult to get out of it.

    #2 A minor correction on the use of “Saas” software.
    SaaS – Software as a Service – solutions are not what Microsoft, SAP or others offer. SaaS is a multi-tenant platform, think Gmail, where everyone can come-and-go, and never have to think of the software, updates, upgrades etc. It’s all in one bill from the Software Vendor.

    On the other hand, “Private cloud” is when your server sits in a data center and it’s managed and maintained by some service provider instead of it being in your premises and maintained by your staff.

    The difference? The cost difference is significant, whereas “SaaS” is much cheaper than “Private cloud”, which is somewhat cheaper than “On-premise”.

    However, for the Enterprise user “SaaS” might not allow for enough flexibility or complexity for the Enterprise user. And “Private cloud” could be too expensive for the SME.

    A good example of SaaS software for manufacturers, as opposed to on-premise or private cloud, is MRPeasy – https://www.MRPeasy.com



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