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Postmodern ERP

Home / Business Philosphy / Postmodern ERP

The likes of SAP, Oracle and Mircosoft (in the smaller business realm) have done remarkably well over the last 20 years in developing and deploying Enterprise software. The approach was to build monolithic solutions that were all encompassing and catered for a full range of business needs under one proverbial software system.

Business systems and the implementation and adoption processes are subject however, like all aspects of life, to the 80/20 rule. 80 percent of the effort and cost of implementation are tied up in the last 20 percent of the scope. It is like building a house – the foundation gets laid, the walls are erected and before you know it there is a roof up and your dream home looks just about complete. The reality, at this stage, is that the project is only 20 % complete with the finishes and finer, more custom, aspects taking up a disproportionate amount of time, money and effort required to complete the project. It is the same with traditional Enterprise Resource Planning (ERP) software. The foundations and framework can be implemented quickly and serve the general market needs. It is when the businesses specific custom requirements need to be built that the cost and time of implementation are increased almost exponentially. It is from this dark space that the horror stories of never ending implementations and skyrocketing costs creep out to Freddy-Kruger-claw the client in the back. This, in many cases, results in abandoned implementations and sunken costs. When the implementation are completed they are too rigid to adapt to changing needs, technology and societal shifts, resulting in most traditional ERP systems needing to be completely replaced every 7-10 years on average. Smaller businesses cannot afford to throw away investments of this scale and try and force fit the bloated software into their environments largely due to limited alternatives.

It is not entirely the vendors fault. There are certain almost intrinsic barriers to successfully implementing any large project. With each incremental step up in project size there is an exponential increase in complexity. Business managers and IT professionals underestimate this complexity, specifically when it comes to the planning, development, and training needed.

It is because of all this that Gartner’s Denise Ganly says that the ERP ‘megasuite’ is dead and proposes an idea of ‘postmodern ERP’.

Postmodern ERP has been described as a federated cloud. Cloud federation is the deployment and management of multiple external and internal cloud computing services to match business needs. A federation is the union of several smaller parts that perform a common action. It is a bit like what Google is proposing with Ara, its modular phone. They propose that life and technology change so quickly and the way to build something that lasts is to build it modular and have parts that can be swapped out when they break or become obsolete. Rather than replacing the whole product, you just swap out the bits that are no longer relevant or need an upgrade. The end product can also then be customised according to specific required functions – and those functions could change day to day if needed.

The components of an ERP include any or all of the following: CRM, HR, Financial, Engineering (production, manufacture, building), Inventory, Supply chain. These components should be able to be added to or swapped out at any given point. If a new amazing and disruptive CRM cloud package comes on the market you should be able to unplug your old CRM “module” and hook up the new one.

Software, like many other industries is decentralising and experts are developing specific, focused and highly functional solutions for niche business needs. You should be able to fold the most appropriate and best fit components into your business software ecosystem. Postmodern ERP that allows for seamless swap outs, data migration and complete interoperability are not yet here though. Forward thinking organisations have realised the power of creating their own ERP by stringing together various Software as a Service (SaaS) platforms to create the desired “package” but they have to figure this out themselves.

Slack for instance internally uses software and systems from over 80 different suppliers. The Slack product itself is a project management tool that many companies should be adding to their stack of cloud based software. The major challenges with Postmodern ERP as I see it are twofold. 1. Identifying the best pieces of software or SaaS per function and then 2. integrating all the pieces into one effectively custom business system (or ecosystem).

The benefits, if a company is able to overcome the above mentioned challenges, are a much higher level of customisation, agility, cost reduction, mobility, less infrastructure and more resilience in an ever evolving business and tech landscape.

In my opinion…the challenges are worth overcoming!

Image Credit: Google

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