3 ways cloud is changing ERP forever

Profile picture for user Eric Tiden By Erik Tiden July 19, 2015
Cloud is changing ERP and transforming the way we think about applications, organizations and business models, writes Unit4 CTO Erik Tiden

Change ahead sign with clouds in sky © bahrialtay – Fotolia.com
Cloud has changed what’s possible in enterprise computing. It dictates how organizations are built today and has changed software development forever. The key to improving our experience of workplace enterprise applications is the ongoing growth of cloud and its widespread acceptance as a key component of corporate IT strategies.

1. New innovations and service-led business models

The City of Port Coquitlam in Canada became the first Canadian municipality to host public data in the cloud this year, marking a significant change for public sector IT in the country. The organization’s director of corporate support, Robin Wishart says:

We are in the business of supplying services to our end users. With the Internet of Things and embedded digital connection it doesn’t matter where your network resides or how data processing takes place or gets stored.

As more organizations adopt cloud computing, the focus on services is shifting from front-office applications such as customer relationship management (CRM) and other customer service mechanisms to the back office. At the same time, applications like ERP — that have been consigned to the back office — have potential for the first time to deliver valuable end user experiences.

A report by PwC at the end of last year predicted that by 2016, investment in SaaS solutions would more than double to $78 billion. This surge compares with investment in traditional ERP systems which will decline over 30 percent to less than $15 billion. PwC researchers argue that:

... monolithic legacy, on premise ERP systems have often been designed to match a predictable drumbeat of production. However, that’s not going to work today. Customers are redefining the way business is done and non-standard is quickly becoming the new normal.

PwC’s analysis also shows that ongoing costs for hybrid ERP systems can often be higher than traditional ERP systems. For enterprises to get the most value from hybrid ERP, they should make them catalysts of strategic change, not just rely on them for cost reduction, says the study.

The rise of new services organizations is a result of these new business models and the benefits afforded by cloud-based ERP. In many cases they are true examples of innovation born out of the possibilities created by new digital technologies. Companies like Uber, Netflix, Amazon and Airbnb epitomize the digital economy having succeeded in delivering digital, service-led business model innovations.

2. Systems that know what you want before you do

The cloud is having a huge impact on the ability of companies to deliver self-driving business applications, tied to machine-learning, predictive analytics and in-memory technology. For example, modern cloud platforms like Microsoft’s Azure offer predictive analytics services such as Machine Learning, Power BI and Stream Analytics that redefine business intelligence. Organizations can make smarter decisions, improve customer service and uncover new business possibilities from their structured, unstructured and streaming Internet-of-Things data.

With ERP systems providing the IT engine for enterprise, this capability will enable them to revamp ERP in a dramatic way, designed for people and not products. Professional services firms will be able to combine an analysis of historical data with predictive analytics to gain valuable insight on which projects to bid for. Public sector organizations will improve fraud detection on bill payments with advanced pattern recognition and machine learning. Not-for-Profits will have the ability to match campaigns to donation patterns and target donors more effectively.

We accept that cars will drive themselves in the near future. Software is taking over the driving functions of automobiles by collecting data from a number of sources and smartly interpreting it to deliver a seamless user experience. The ultimate in customer service will be when your car simply takes you where you want to go in the most efficient way. It will gather data from sources like external sensors, satellite navigation, knowledge of road layouts, speed limits and even congestion, road works and accidents (which will become infrequent incidentally), almost as they happen. This type of automated capability can also be applied to applications, and we’re now entering a new era in enterprise computing with the emergence of “self-driving” applications such as enterprise resource planning (ERP).

Thomas Staven, head of product management at Unit4 explains this in his article From UI to UX — the journey to self-driving enterprise IT.

New predictive technologies provide huge opportunity for assisting users and eliminating as much manual data entry as possible. Analytics is the core to fully automating any process and analysing data is the core of understanding the surroundings, identifying patterns, predicting behaviour and identifying exceptions, as well as screening to make data personal and relevant. This is making the most of the power of machines. Users should be involved only when really needed, that is, when common sense is required. When users interact, business systems must deliver a great experience, similar to the best experiences we have from our favourite personal applications, from any device.

This is no small development. A truly self-driving application, made possible in great part by the latest advanced analytics technology, can lead to huge productivity gains for organizations, as well as significant improvements in customer service.

3. People will rediscover the value of business computing

Self-driving applications leverage predictive analytics, social media, mobile devices and machine learning to create context. As it applies to ERP, self-driving applications allow users to spend less time on repeatable, manual tasks, so they can be more productive and efficient and ultimately deliver improved service to customers.

One of the key benefits of this approach is that it can lead to higher-quality and more relevant data being fed into ERP systems. Typically, traditional ERP platforms provide non-intuitive blank forms for users to complete with the necessary data.

But this process is time consuming and can result in non-intuitive data entry, as well as the introduction of multiple errors per transaction. Inaccurate data, in turn, can lead to such problems as the wrong contact information being associated with particular clients, or the wrong services being assigned to customers.

Self-driving ERP makes data collection a lot simpler and the data a lot more meaningful and relevant. It takes advantage of the latest predictive analytics tools to provide context to the information. This allows for more intuitive data entry based on pre-populated forms. As a result, companies can provide not only a better experience for workers regardless of the type of device they’re using, but significantly improved services for customers.

Successful services companies will be self-driving

The greater focus on people that’s enabled by self-driving ERP is especially important for companies in industries that provide services, such as education, not for profit, professional services and the public sector, where delivering customer service excellence is vital to success.

With ERP becoming self-driving and enhancing workers’ ability to deliver better service, the advantages enabled by the cloud will become even more important for companies.

At a time when many services-based companies are looking for an edge, the combination of the cloud and self-driving ERP can offer a huge competitive differentiator. Customers are demanding and expecting a higher level of service from their suppliers. Those businesses that offer enhanced services through self-driving ERP via the cloud will not only increase worker efficiency, but stand out from the crowd.

Image credit: Change ahead sign with clouds in sky © bahrialtay – Fotolia.com.