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March 20, 2015

ERP is dead: long live ERP

Is ERP still able to deliver value? Is ERP still a worthy investment?

By Cbr Rolling Blog

With ERP (Enterprise Resource Planning) celebrating its 25th birthday, it’s likely that most medium and large companies have employed an ERP solution in some way to help plan, manage and control their resources. And while ERP has helped countless businesses to evolve and improve their operations, in a frenetic technological landscape where the very premise for ERP has changed, is it still worthy of investment? Is ERP able to deliver value to the business in the same way or has the time come for it to die gracefully?

Over the years ERP systems have developed alongside the needs of business, so much so that they’ve become complex beasts with a depth of functionality not replicated in other newer business applications. However the advent of ‘game-changing’ technologies such as the Internet, mobile, wireless, and indeed the consumerisation of IT have all changed enterprises’ expectations of what can be achieved. Focus has shifted from the functionality of software (what it does) to the strategic importance (what it can be used for).

As a result of these changes ERP systems face some serious challenges. Firstly, the increasing need of businesses to collaborate inside, across and outside of the organisation means ERP solutions need to be simple and flexible to support access and interaction from anywhere, by anyone. Secondly ERP needs to overcome its poor implementation history. According to Panorama Consulting’s 2014 ERP report in 2013, 72% of ERP projects overran and 54% went over budget.

Following implementation, ERP vendors also have a responsibility to ensure that businesses derive full value from their solutions. Yet the Panorama report confirms that users remain unaware of their ERP system’s capabilities and many features remain untouched.

Yet within each of the challenges there are opportunities for ERP to live again. As the development of the Internet of Things (IoT) continues apace for example, ERP has the potential to become more responsive and useful alongside it. The impact of IoT will be felt across the manufacturing and engineering sector. Production equipment, transportation and even logistics networks will become more connected and ERP can support and, more importantly, make sense of those connections revolutionising the industry.

Traditionally ERP was considered to be the engine of the business, but with internal processes adapting and changing so quickly, ERP has an opportunity to become the controls and dashboard as well as the engine. But to do that well it must become more intuitive – providing the intelligence to support better and more effective decision-making and not just supplying executional data.

As people, processes and businesses become more connected though smart devices, wearables and apps so the need to speed up data collection, interpretation and dissemination grows. ERP is well placed to solve this challenge if it can integrate itself, and support business automation and the decision making process.

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How can ERP incorporate these opportunities to ensure it’s as relevant in 25 years time as it was 25 years ago?

– Focus on delivering process efficiency. As ‘doing’ business gets more complex, simplicity of business processes is key
– Integrate – be behind the process (whether that’s improving connections or collaborations) but in front delivering value and information through a joined-up approach
– Simplify – ERP needs to be easier to use. Keep the complexity behind the scenes and not at the front end
– Understand that it’s the user who’s in control and not the technology. ERP needs to feed the business need and not dictate it
– Be agile – ERP can deliver a better implementation experience and increase its usage internally by simply providing more agile and adaptable choices customers – whether its cloud or on-premises; on a desktop or smart device; whether it’s social or not

To ensure its rebirth, ERP vendors, including ourselves, must achieve two objectives. Firstly to keep up with innovations and drive incremental advances to our solutions, but more importantly to re-define what ERP is or should be and how it meets the need of the business now and in the future. This second objective will take the industry on a new journey, one that seeks to fundamentally shift the future position of ERP within the organisation.

So is this the death of ERP as we know it? The answer is yes. But with 59% of IT decision makers in Europe planning to implement or upgrade their ERP solution (according to TechTarget/Computer Weekly’s 2014 IT Spending Priorities Survey) and the ability of the industry to meet the market challenges head on, we’re at the start of the (r)evolution.

By Martin Hill, Vice President of Marketing, EMEA, Epicor Software Corporation

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