The New ERP will be CEO

SUMMARY:

A response to Brian Sommer’s polemic about the future of ERP. It could work…

zombies-hand-dark-night-HD-desktop-background-wallpapersBrian Sommer’s polemic that starts with portending the death of ERP got the predictable Bronx Cheer from some of my favorite people. It’s understandable.

Some of us have been living in the old, dull world of ERP way longer than is probably good for us. Many of us are tired of hearing about ‘the death of ERP’ only to see [name your favorite vendor here] continue to crank out sales figures that appear to defy gravity.

Even Sommer’s ‘ray of hope’ doesn’t really cut it. To that extent Sommer’s missives are incomplete and our friends can, maybe, sit back and relax for a few more years. I’m not buying that but then I’m not necessarily buying the ‘old’ as equivalent to the ‘old ERP’ either. Here’s how I see the problem and what I think needs to happen.

ERP in the 90s and 2000’s has been dominated by two topics above all: accounting and HR. Both of those functions are administrative and add not a single penny to profit or cash flow. Both are subject to intense levels of regulation across multiple geographies, state and national boundaries. In short — they’re complicated. But as Sommer acknowledges, they have brought with them a degree of automation and efficiency that is only possible by applying technology.

That. Work. Is. Done. Any company that believes it needs much more than regulatory compliance updates and bug fixes is, quite frankly, firmly in the laggards corner. Those companies will likely perish in years to come. Any refresh should be about optimizing those processes, and considering more cost effective methods of execution. Using modern software, that might well get you a bonus in improved agility.

Instead, I see the ERP tomorrow as being CEO — Customer Experience Optimization. In fact I already see it. The Infosys story that talks about IT and LoB operational alignment is a case in point that reflects the ‘new and renew’ strategies the company has developed in the last year. It isn’t perfect and it isn’t yet optimized. But notice the key difference in approach:

…we started from the end user’s point of view, working with them to understand what they needed and then working needs back into the new solution.

It is this ‘starting from the end user’s point of view’ that provides the key to getting CEO right. Think for one moment about how ERP evolved. At the beginning, it was all about getting the transaction into a system. It was never about getting anything out the other side.

The net result? We have two major technology blocks to manage: ERP AND reporting, which in turn morphed into business intelligence and which today is being swamped by so-called ‘Big Data’ while at the same time we see EPM (Enterprise Performance Management) aka budgeting, planning and forecasting coming back into fashion as vendors find new ways to make the old stuff work better.

Regardless of any excitement that Sommer may have about ‘Big Data,’ and advances we have already noted in going from POC to in production Hadoop systems, I am depressed. Why? Because however useful it might be and whatever problems it may help solve, the kinds of thing we do see sit in the middle or at the side of where we really need to be.

Instead of solving for an outcome while efficiently managing processes that, themselves, will likely need to change, we have a spaghetti monster of half baked solutions coming down the pipe.

There is an alternative. In principle, I am much more hopeful about SAP’s CEC than anything else I’ve seen come out of SAP in a long time. Or out of anywhere else for that matter. But that’s just the front end of what has to be an end to end process. SAP intuitively understands this but is it capable of delivering? Right now the answer is no. But from what I have seen and what I presume, they can get most of the moving parts assembled in an attractive fashion.

The back end supply chain element has largely been ignored — a piece that Sommer conveniently forgets while proselytizing the “as a Service” economy.

Nice try mate but regardless of the digital economy bullshit, almost everyone I know needs clothes on their back, food and other essentials that are physical in nature. Where does the ‘getting shit done’ element that fit in? No vendor has adequately resolved those problems.

SAP ought to be in the best place to get that done, but I have yet to see signs of life that convince me that is a central part of their equation. But then no other vendor is talking similar ‘stuff.’ So maybe we move along in a sea of PR bullshit around ‘Big Data’ ‘Internet of things’ ‘Bullshit 4.0’ or what not until the point where CXO’s say – ‘Oy – give us answers.’

My take. He who solves the back AND front end issues will surely be the preferred supplier du jour. Who’s up for that? Who is going to do that in a sensible manner? It should be SAP — and I say that without preference or the fact they are a long term premier sponsor but based upon the gobs of the technology they have to hand that others don’t and which they have failed to exercise as obvious connection points.

The monumental question must be: Can SAP persuade its whole customer groups to trust it to take it down the path that ensures transformation to a digital business before the likes of Accenture and IBM show a more alluring future?

More to Sommer’s point – is there anyone else out there that has the capabilty to assemble a cogent and believable story? Oracle will try at the upcoming Open World but even given its advances, it will take some persuading – except of course, those idiots who think that Oracle DB is the center of the 21st century universe. Which it isn’t.

Disclosure: SAP and Oracle are premier partners at time of writing. SAP pays most of the author’s costs of attending SAP events. Oracle does similar regarding Open World.

Image credit: businessman hand touching digital tablet © peshkova – Fotolia.com

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    1. says:

      Shirts on the backs, food in the bellies, getting shit done’ stuff needed to be said by the analyst community — big props for being first to say so publicly. Having been a part of number of these platform shifts in SME ERP at scale, I’d say this new platform is already well underway already being dogfooded somewhere in the Pacific Northwest. In the mean time all the best listening to the Bronx cheer.     

    2. says:

      Hi Den,before we start to celebrate our customers as those who keep us alive and give reasons to stay in business, large organizations will necessarily remain hierarchical. they will transform, convulse, and come out on the other end – renewed. and so will the software that helps them along the way, whether we call it ERP or not. it’s just an old term coined in the 90’s on the heels of BPR and MRP, so arguably has reached its shelf life – simple core, anybody?. i do get a little bit of a chuckle when i hear accountants discussing CRM. it’s very dear to their hearts but C is not for customers but rather for cost, relationship becomes revenue and management is just a match. so there’s no need to call it accounting when blockchain goes all out for ledgers, currencies, and cryptography, but that’s what it comes down to eventually, doesn’t it?Cheers,greg

      1. says:

        Blockchain @commonledger story, that should set the cat among the pigeons, and not far fetched (see the patents ICE aka NYSE purchased).

      2. says:

        I dunno Greg – hierarchies to survive? Annual reviews – already done. Re-orgs – x2 a year in many places. Supply chain shifts – alarmingly common. 

        CRM was never the right TLA. 

    3. says:

      All good points, any enterprise software vendor that doesn’t realize CEO is in trouble. But we should not expect one vendor to have all the answers. The nature of the new digital era is to give us easy access todifferent services from different vendors.

      For example, I may love Apple, but still use Spotify on an iPhone. I may love Uber, but I use other transportation services in regions where Uber is not strong orpresent. The digital world has become a mix and match economy, and this is true for the next generation ERP market as well.

      In my opinion, ERP vendors have to deliver Customer Experience Optimization through the right combination of traditional ERPcapabilities plus capabilities exciting customers in the new digital world. Why? Let’s look at another example.

      Customers love the cool loyalty programs at Starbucks but at the same time Starbucks’ management still has to organize which barista works which shift etc, like every coffee shop in the world. I think we can all agree: fundamentals of the traditional business will remain relevant. So what is the secret sauce of new generation ERP thatdelivers on superior customer experience? In my view it comes down to the requirements of new vertical market business models.

      Some examples from people-centric businesses include:- Education institutions want solutions to transform their ability to manage students and deliver them asuperior digital experience – Non-profits want to engage withdonors, not just collect donations- Professional Services organizations are interested in their digital reputation and the sentiment of discussions between the project team and the customers, while traditional payroll services are essential to pay their peopleThe key to the new generation of ERP is to blend leading edge technology with deep vertical expertise.

      Approaching ERP software design from vertical sector requirements is essential. This way we can gain a deep understanding of the markets customers are in which is key to CEO.

      1. says:

        I didn’t say any one vendor would fully control the end to end process and I don’t think they will in many circumstances but the supply chain elements in the middle of all this have been woefully neglected so ripe for a do-over IMO. Who will do that?

        1. says:

          We all saw the interest in middleware disappearing. Based on what you say it might soon be back, with a different meaning though! 

          1. says:

            I see the smartphone “app store” model rearranging SMB ERP. Architected right for scalability it can cover tier 3, some of tier 2, less of tier 1. The new middleware is hyper connected low latency cloud. Apple and Salesforce have both proven the appstore marketplace provides economic incentives for ISVs. SAP HANA has toyed with, and GE’s predix appstore is coming. All it needs is for one ERP monster to create the platform and all the pieces will fall into place.

    4. says:

      I think you are right. From almost all the customers we have, 80% aprox. come to us because their fancy SAP or Oracle ERP can’t deliver a complete cover on operational areas. We are a proud mexican ERP which begun as a family business and we are getting bigger customers every day because one reason: excelent customer service, better usage experience and most important: modules and functions focused on the operation of the mexican enterprise (even some trasnationals). The bad side is when a company interview us and think we are not as good as SAP because…you know…”we are not SAP”. So the big names are overrated here but are not solving the daily basis operational needs of big mexican industry…and we are 🙂