Even contemplating trends in enterprise resource planning (ERP) software might seem like a strange idea. After all, ERP sits at the heart of business operations and, as a result, is hardly as subject to fads and shifts as consumer IT is.
That’s not to say things do not change, though, and today, with a rise in interest in using data to assist in decision-making, not to mention a general desire to stop being held back by IT systems, significant shifts have occurred in ERP.
“Generally, people want to move to software as a service,” said Ian O’Toole, managing partner at Lumenia Consulting, specialists in ERP and digital transformation.
“The choice of anything other than that is becoming less and less common. That background trend of ERP moving to the cloud has been going on for some time,” he said.
On-premise holdouts typically remain on-premises as they want ultimate control over things including upgrade cycles.
“In life sciences and areas of manufacturing where there are rigorous regulatory regimes, they don’t want to do upgrades as often as cloud providers might want you to,” O’Toole said.
Because you’re looking at changing how things are done, it really is a transformation project. It becomes about change management
In either case, though, Lumenia’s clients come to it seeking expertise for a number of reasons, including its independence from software vendors, and its ability to analyse business needs.
Indeed, the individual needs of clients, and the situations they find themselves in, vary widely.
“I think it tends to be ‘We’ve outgrown our current system or systems’ for a number of reasons, such as ‘we’re at scale-up stage, and we need something bigger’. Acquisition is also a really common one, as you can end up with multiple ERPs, so you should ask have [just] one and, indeed, is any of them the right one,” O’Toole said.
“Another common reason is that they are using an ageing platform, an old SAP or Dynamics or whatever it is, from a previous generation,” he said.
The question of ageing systems is an interesting one, though: why would any organisation fail to upgrade and potentially get itself into a situation where its software is holding it back?
The answer, O’Toole said, is because upgrading is a nerve-wracking process, and, when done poorly, it can be extremely disruptive.
“People often hold off as long as they can as it’s a big project. It’s a transformation project, and often they have [software] customisations that they don’t want to recreate,” he said.
Cloud has changed this somewhat, as software as a service tends toward standardisation and iterative upgrade cycles. This is of obvious benefit to vendors as it allows them to enjoy economies of scale, but it can also be a benefit to end-user organisations as it allows them to escape the tangle of complex software customisations.
If they need customisation, then, it can be done more rationally. Instead of rewriting core applications, a modular building block-like approach can be taken.
“It’s just a different way of thinking about it. You have apps that sit outside [the core ERP] and talk to the app through open APIs. You can still build a complex environment, but if you are going to do that you have to have the ability to manage it,” he said.
This is attractive because many organisations have been burned by the complexity, or potentially impossibility, of upgrading heavily customised on-premise software.
However, O’Toole said, critical business systems such as ERP should not be replaced simply for technological reasons. Instead, the focus should be on the business goals.
“Because you’re looking at changing how things are done, it really is a transformation project. It becomes about change management,” he said.
This means bringing people along with the change, explaining why it is happening, and how it will change jobs.
Similarly, as ERP is a core data repository, there is also an opportunity to integrate artificial intelligence (AI) – something that, again, is easier with staff buy-in.
Done right, however, AI can already provide real benefits.
“Every software vendor, of every shape, is talking about AI now, but you are beginning to see it embedded in ERP platforms. They are pushing it, but we can see the [clear] use cases starting to appear, such as forecasting and looking at trends and coming up with more accurate models,” O’Toole said.
Indeed, despite interest around generative AI, some more quotidian uses for machine ‘thinking’ have made themselves clear.
“Companies that are using machines, getting to predictive maintenance rather than planned maintenance, using data coming from sensors, and the one that has been there for a while is speeding up repetitive data processing,” he said.