What does the ERP of the future look like? Questions, considerations and conundrums
- ERP needs to change - but getting there is another matter. ASUG CEO Geoff Scott shares seven keys to the future of ERP, gleaned from ASUG reports and events on S/4HANA and SAP ERP projects.
It's amazing how three little letters, configured in a certain order, can induce such a feeling of anxiety for businesses. These three letters can generate significant stress during software and system cutovers while also impacting day-to-day business productivity and operations. That trio of letters I'm referring to is, of course, ERP.
As a former CIO who's had plenty of experience rolling out ERP software, I know all about complexity and customization, integration and upgrades, and downtime and development.
While we've made massive progress in enterprise technologies of late, legacy ERP remains. The thing is, though, 2020 confirmed that IT agility is the name of the game, and modern-day user expectations are that applications should be, well, modern. An outdated ERP core saddled with unnecessary customizations, maddening workarounds, and circa-2000 user interfaces is a disaster waiting to unleash many more subsequent disasters.
Right now, there are scores of CIOs, CFOs and IT-buying committees charting the future of ERP at their companies, working very hard to answer a myriad of questions: best of suite or best of breed, on-premise or in the cloud, private or public, hyperscaler or no hyperscaler? They want to take advantage of the latest innovations — AI, machine learning, RPA — but will be stymied if their core systems can't keep up. (And let's be real here: Today's APIs are amazing, but even graduates of Hogwarts School have their limitations. In other words: APIs can't perform magic.)
There's a huge opportunity for companies who realize that their ERP options have improved. Who know they can finally clean up messes from the past. Who understand that taking the time to chart their future paths now will pay off over the long run.
At ASUG, we're focused on SAP customers, of course, and we're helping our members chart their ERPs of the future with SAP S/4HANA. But we also know that most companies' IT portfolios include a mix of vendor logos, and there are many similarities in approaches to enterprise technologies that can be shared.
We've completed several customer-focused studies recently — some on our own, some in partnership with the German-speaking SAP user group (DSAG), and others with partners in the ecosystem — and there are numerous lessons for any business to heed, no matter what vendor they decide to go with.
Take your time
We all know that few companies can afford a prolonged big-bang implementation, both from a financial and human resources perspective. But ASUG and DSAG's members told us in a joint 2020 study that taking your time can deliver big benefits.
From the respondents, the No. 1 recommendation to their peers who are involved in the implementation of their next-generation ERP system (in this case, SAP S/4HANA) is to take the time to prepare and plan for a phased approach. Budgeting as much time as possible is needed to thoroughly vet technologies and processes, engage in tough conversations with stakeholders and users, as well as gather information to feel confident about presenting the implementation to leadership.
Kill the customizations
We all know that the only thing that's truly vanilla is the ice cream variety. Big ERP from decades past included far too much customization and changes to and around the core. The top recommendation ASUG and DSAG respondents had for improving the experience with ERP systems was to reduce customizations. "Try to use standard SAP as much as possible. Custom code only creates more work in the future; try to change processes whenever possible to fit the SAP standard, not the other way around." Which leads us to….
Process makes perfect
Disparate or misaligned business processes block value. Standardized and streamlined business processes stimulate value. Across both ASUG and DSAG members, the biggest impact of a next-generation ERP rollout involves a focus on key business processes. The implementation is typically used as an opportunity to drive much-needed changes that result inefficiencies across the organization — a.k.a., rethinking "how we've always done it."
Remember the users - Part 1
Far too often, large transformational projects focus on the IT and not enough on the UI. Our members tell us that the value SAP S/4HANA offers is through mobile access to data and reporting, data processing power and speed, and user-friendly interfaces. Mobility, in particular, is a must-have.
A recent article on top ERP trends via CIO.com notes that "companies need to take core ERP data and make it accessible to employees no matter where they are working." In the pandemic we're all still in, mobile access to core data is not a "nice to have" but a "must-have yesterday" feature.
Remember the users - Part 2
During the open-ended part of our Pulse of the SAP Customer 2021 study, we asked respondents where they needed the most help with help change management. What we found is that respondents were evenly split between needing the most help with training, or with adoption and acceptance by end users. Again, don't skimp on supporting and energizing the people who are actually going to be using the software every day.
Manual testing is so 1997, right? Well, it should be. Respondents to an ASUG and Tricentis study told us that those who use automated testing when updating their SAP systems tended to experience fewer migration risks and subsequent challenges when moving to SAP S/4HANA than respondents using manual or spot verification testing.
Show some love internally
Consultants come and go. No surprise there. But the core of your internal team is often here to stay. And they want to learn what's new to not only make their jobs easier and help their employers, but also improve their skill sets.
Not having the right in-house talent and resources affects the value derived from enterprise technologies. The No. 2 recommendation for improving the experience with SAP that respondents to our Pulse of the SAP Customer 2021 study had was to identify highly skilled internal staff and help them acquire the skills and resources they need.
Hear from your peers
We all know that everything that goes with ERP can be daunting. But it doesn't have to be. If you're a current or prospective SAP customer eyeing your ERP of the future, I encourage you to drop in on any of our virtual sessions during the month of March, at our ASUG Best Practices: SAP S/4HANA Virtual Experience. It's jam-packed with customers, partners and SAP experts who have determined their ERP of the future and want to share their knowledge with you.