ERP is one of the biggest investments a CIO can make. That means it’s also one of the biggest decisions for an organisation — and getting it wrong can be disastrous. The good news is that most organisations started their ERP journey decades ago — some as far back as the 1960s. The bad news is that many of these systems are up for replacement or major enhancement. Much of this is caused by a rapidly changing business environment or, in some cases, technological advancements such as cloud, IoT and in the future AI.
The question is not just: Should I change the ERP in my organisation? It’s also: What should I change it to, and how do I approach it?
The how to change and what to change to is a choice based primarily on the situation you are in. This week in the IDC Digital Leadership Community (DLC) we are getting together to discuss what the IDC research shows as the preferred choices and to hear from each other the decisions that are being made. Please come and join us by contacting me at mdowd@idc.com if you would like to take part.
The question we can look at here is why you might want to consider changing. It might be because you are under pressure from the supplier of your current ERP to upgrade. This is important, but you might be interested to know that IDC research shows that the proportion of clients who succumb to this upgrade pressure is actually much lower than the suppliers would have you believe.
The Business Value of ERP
Another reason is to get business value that is not being captured at the moment. It might be that the old system is no longer fit for purpose. It might be that you have not implemented all the modules that your business needs. The question here is: Do you do a straight addition of modules by your current supplier, or do you go for “best-of-breed” functionality supplied by a third party? That used to be a simple question when you had no choice and ERP integration was the only goal. Nowadays integrating best of breed is quite acceptable for many.
So, what new value can you get from ERP? ERP is about integrated data and processes. It always has been. What has changed is that with the increase in use of the Internet of Things (IoT) we are seeing an explosion in data capture. As my good friend Andrew Vorster said this week, “IoT is misnamed — it should be the Internet of Data.” In addition, significantly more data is coming from the ecosystems we are creating with partners and clients.
Limiting Your Future with Bad ERP Decisions
When you think about data, it’s obvious that collecting static data is not very useful unless it is used. Because of AI/ML and robotic process automation (RPA) we are starting to see data being used more effectively. I say starting because AI/ML has only just got started. In the near future the increase in low-code/no-code development (maybe even by citizen developers — we are doing an IDC DLC session on this on July 22) and advanced analytics means that data use will increase in organisations.
For the decisions to be good they must be based on good data. That is where ERP and cloud come in. Cloud because it facilitates gathering and using data (we will discuss how to avoid the traps of cloud on August 19 in the IDC DLC).
So, back to ERP — is your current ERP gathering enough of the right data and is it enabling the processes your organisation needs now and in the future? There is a feeling among your peers that ERP is good for core elements such as financials, but the time has come to lose the technical and, more importantly, the functional constraints that old ERP has put on users. Is this the time to take stock of what is holding your organisation back?
Maybe now is a good time to look at this:
Compared with the past where initiatives took years to come to fruition, the
COVID-19 pandemic has galvanised organisations to realise that months and
weeks are achievable timescales for significant change.
I hope this is not a burning platform for you: that you have no option but to change and do it fast. At the same time, I would caution you to consider what an ERP change could do for you. You may be able to put off making a change for a while, but the upcoming leaps in functionality brought from data use may not be easy to get if you leave it too long. At the very least, evaluate your options. They have changed, just as the reasons to change have evolved.
If you would like to discuss your plans with your peers, or hear what they think the priorities are, we encourage you to join the IDC Digital Leadership Community to talk about these and many other important topics.