The paradigm shift in traditional ERP
The paradigm shift happening in traditional ERP systems
Why is simply thinking about changing or upgrading a company’s ERP system so heart breaking? Moreover, how do companies have an earthly chance of preparing for unpredictable technological developments?
I constantly hear in the media that technological changes are happening faster than ever and that we can hardly keep up with developments.
I hear that it is difficult for companies to create strategies for more than six to twelve months in advance because the world is in constant motion.
Our way of understanding our own business and value chain is changing faster than textbooks can write it down, and if we are not ready to act in this new reality then we will fall behind.
ERP implementations is still huge projects
Customers today cannot wait for years to get value from the investments they make today in ERP systems. Strangely enough, we still implement ERP solutions as huge building projects, with a very long payback time.
Today most ERP suppliers’ implement systems in the same way as in the 1990s, with long analytical processes, long development processes and long training processes. This method is now obsolete due to market forces, and today we can see that some of the major ERP systems are losing market share due to this.
I think on the contrary that we will experience a fundamental paradigm shift also from the traditional ERP systems.
A shift where the systems that win new markets are those that can meet the rapid changes that companies have to operate in every day. A shift where the foundation is not locked in, but where systems are dynamic, and it is possible to turn them up and down as needed, both in terms of the number of users and server power, but also in terms of functionality and not least, data structures.
It is a foundation that can be scaled up and down for all parameters, just as I can do today with my iPhone.
Are we to throw “good money after bad”?
There are many companies using ancient ERP systems. That is not ancient in comparison with the stepping-stones in Pompeii of course, but seen in comparison to how new their mobile phones or computers are, their ERP systems are deeply outdated.
ERP suppliers are forced to get into action
There is no other way around it. ERP suppliers have to learn how to implement solutions with the best functionality much quicker than is the case today.
It must be scalable functionality which makes it possible to choose exactly the functions that are needed, and with a flexible foundation where you can easily edit and change things as the world changes around you.
The solution should create value for the customer from the start and with implementation in several stages, so you can meet the customer’s greatest needs first and then build on the system and create more value. This is undoubtedly a huge paradigm shift for us ERP vendors!
Read more about this topic in the free book: The Profitable ERP Strategy
I have written a book with input for your ERP strategy, and you can read it for free.
It contains 7 recommendations for a healthy and changeable ERP system:
1. Consider a Cloud Strategy
2. Focus on value and readiness for change
3. Select “best practice” scalable standard functionality
4. Have a strategy for flexible management of master data
5. Select ongoing operating costs rather than large investments
6. Consider a strategy for upgrades where only relevant data is included
7. Select a needs-driven ERP strategy – perhaps with different platforms?