What’s the first thing that comes to mind when someone says “ERP?” Probably not “innovative and flexible.” ERP suites of the past weren’t designed to be either.
Gartner coined the term ERP in the early 1990’s to describe the expansion of MRPII to include more of an enterprise focus. The term ERP has endured for over 25 years. ERP served a purpose and solved the problems enterprises were having 20-25 years ago – non integrated siloed systems that created data and process inconsistencies. But ERP wasn’t flexible enough to meet the changing needs of the 21st century.
We’ve been writing quite a bit of the last few years regarding the changing nature of ERP. About 7 years ago we coined the term “Postmodern ERP” to describe the initial move away from a monolithic suite of applications to a more loosely coupled environment. It took a few years for that phrase to become commonplace. A postmodern approach to ERP essentially described how clients were creating more flexibility and proper “fit-for-purpose” in their enterprise applications. This included apps from different vendors, hybrid on-premises and cloud deployments, etc. Yet the focus was still at the enterprise application level. For example, replacing HCM, CRM or Supply Chain functions delivered by the ERP vendors with a specialist s olution designed for that functional area.
As with many things related to technology these days, things on the ERP front are changing fast – faster than ever before. While “postmodern ERP” is still a valid approach to how organizations might approach their ERP suites, it is only part of the solution.
ERP’s Fourth Era – Enterprise Business Capabilities – coincides with what Gartner is describing as the Future of Applications. Future application experiences will be built from composable business capabilities that can quickly enable new business scenarios. Application development will come from non-traditional sources. Leading organizations are empowering business units to directly and actively participate in the design of their application experiences.
These application experiences will require a reliable core – a stable foundation for the ever changing capabilities and experiences today’s consumers demand. Otherwise you could end up with a jigsaw puzzle of hundreds of applications. This is now the role of the 4th era of ERP or what have defined as EBC – Enterprise Business Capabilities. An ERP core surrounded by a platform that permits rapid adoption of emerging capabilities and technology. A platform beyond enterprise application functionality that enables new apps to seamlessly integrate and access data within the enterprise application system.
I am sometimes asked “Do we still need ERP?” Not really – as long as you don’t have to produce financial statements or file tax returns. I haven’t run across any of those organizations.
So, yes, you need ERP – but it needs to be configured to support the emerging future of applications and ever changing experiences. We started writing about this last year – and the focus of the ERP team’s agenda this year will be advising our clients on how to manage this transition to the next era of ERP.
Believe it or not, some of the ERP capabilities being delivered by vendors these days are in fact “innovative and flexible”. Never thought I’d be around to hear it.
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2 Comments
Thanks Mike for sharing your experience. ERP was coined dead many times – and for sure, it will be again. Sailing on the backwind of the digital transformation a promise is out from many companies: “Dear Customer, I am a service-oriented company, and I will treat you exceptionally well.”
Solely focussing on Experience and CRM on the back wind of this promise, many companies sit on scattered data sets and solutions without the ability to plan, execute, and steer their businesses in real time to ultimately keep the promise. I firmly believe that we are at the next inflection point of ERP,
Interesting subject and solutions must keep evolving to ensure that companies can get real value from investments into ERP/EBC or whatever the next TLA is going to be!
I do believe that we are at an inflection point at the moment and those companies that want to challenge their industry must have a core solution that can take advantage of technology but importantly use the technology in the right context of what they do.