We hear about disruptive innovations again today. In IT, Social, Mobile, (Big Data) Analytics and Cloud have been identified as major drivers for these disruptions.
Will they also disrupt ERP solutions as we see them today? So what will ERP of the future look like?
ERP and its evolution
We start with some history. When IT was introduced, individual departments decided on its usage to address a specific requirement using a point solution/legacy solution. As a result, there was a mushrooming of multiple point solutions developed using disparate technology options available at that time.
These solutions either operated independently or as a loosely connected unit. Inefficiencies due to data redundancy, complexity of integration, inability to scale and multiple skills required to maintain these solutions had to be addressed.
Since many of these solutions were developed using technology that fast became obsolete, adapting new features available through latest technology was not possible.
On the other hand, as IT evolved, business requirements moved beyond report generation to process automation.
It started from Materials Resource planning in manufacturing and developed into a full-fledged Enterprise Resource Planning (ERP) over the next few years.
The adoption of ERP accelerated when companies like SAP introduced a single database based solution. This was a major disruptive innovation at the time as it addressed many of the inefficiencies of legacy systems.
Having a single database meant reduction in data redundancy, tighter integration of processes across multiple departments, and a single toolset for maintaining these solutions.
Though single database based systems provided lots of benefits, there was an inherent problem. Most of the vendors offered what is called “packaged” solutions.
The idea behind this was twofold:
- Reduce the implementation time (which is questionable as most of earlier projects would last a couple of years or more)
- Availability of pre-packaged business best practices in automating certain core processes, like order taking or logistics processes to name a few.
But in reality, each organisation is unique even though it shares a degree of process similarity with other organisations in the same industry vertical.
An ideal IT solution should have been able to support and enhance this uniqueness while at the same time provide all benefits available through common practices and technological advances.
Getting this combination right has been a real challenge till date. A few companies adopted a ground up approach for a purpose built solution but then they were shackled by the limitation of the existing technical solutions as the world outside made rapid technological strides.
Many tried the packaged solution route to benefit from best business practice and technological advances. This however meant compromising on the uniqueness. Another issue with predominantly on premise packaged solution was the cost of expensive upgrades to avail of new technological advances.
Given that it was the best choice available at the time, many organisations opted for this route and had definitely reaped benefit while comprising on uniqueness.
While packaged solution providers like SAP offered a large portion of enterprise applications on a single database layer and using a common toolset for configuration and development, organisations continued to face the challenge of achieving uniqueness. They evaluated the use of best of breed solutions rather than realising them through SAP extensions. We saw the emergence of specialist systems like i2 in supply chain planning, and Siebel in the CRM space.
As satellite system implementations were commissioned alongside the main ERP systems, landscapes became complex, resulting once more in integration and data redundancy challenges
Service Oriented architecture
As the landscape became complex, there was a realisation that an IT landscape with multiple software vendors was a reality. Innovations around integration became paramount. Hasso Platner from SAP began advocating Enterprise Service Oriented Architecture, based on the concept of web services and ability to engineer solutions at one level above the ERP. There were multiple SAP TechEd’s dedicated to E-SOA, and the importance of this architecture. In reality, customers could not embrace this in totality as this required changing the complete solution.
PaaS and its potential
Can PaaS be the panacea to this long standing requirement of companies and offer the right level of granularity to the building blocks? Imagine that all business objects are available prebuilt with their attributes and functions. Imagine new age digital UI technologies which enable deployment on multiple platforms and devices. Imagine a very strong integration capability to other systems, social engines and to the world of Big Data. Customers can then fully leverage all this to achieve the uniqueness using the latest technology.
Only time will tell.