Every major ERP vendor is moving to a new digital platform, with huge repercussions for longstanding customers. Whether it's SAP S/4 HANA, Oracle ERP Cloud, Infor CloudSuite, or many others, these new platforms require a different set of skills to implement, administer and support. But with support scheduled to end within the next decade for many older installed versions, customers are up against a hard deadline and a potential ERP talent crisis.
This big change is not entirely unprecedented. Some of us have been in the ERP world long enough to remember the rush of implementations in the late 1990s - driven by a combination of the Y2K panic and the transition from older 'green-screen' systems to client-server and the web.
Today's transition to the next generation of digital platforms feels a bit like that big leap, when it was near impossible to find people with years of experience with the latest ERP platform because it had only been in the market a short time. Those with mainframe expertise had to learn the new client-server and web platforms, while many newcomers were recruited into the field.
The ERP talent crunch
The graduates of that Y2K transition are the gray-haired authorities on the incumbent ERP platforms today. Their wisdom is invaluable, but the catch is that many of these people with 15 or 20 years' experience are now thinking about retirement. Meanwhile, new talent isn't necessarily attracted to ERP work the way it once was.
Vendors may like to claim that the next wave of digital innovation will revolve around their latest platforms, but the best young talent is not necessarily flowing in the direction of ERP. There are too many opportunities to work with cloud and mobile apps or to create novel digital business models outside the bounds of ERP.
An ERP talent crunch was already coming, and the industry is realizing that the push for adoption of new platforms such as SAP S/4 HANA, Oracle ERP Cloud and the rest is just going to make it a bit more intense. It coincides with a surge of interest in the cloud, artificial intelligence, and digital transformation strategies, all of which come with their own demands for talent. As industry analyst Gartner writes in its report, Retirements and Digitalization Are Creating an ERP Skills Gap - Are You Prepared to Fill It? (July 2018):
One Gartner client has said that their company is in a race to finish its ERP modernization initiative before the support team retires. Replacing ERP skills isn't as simple as it was 10 years ago, because the pool of external candidates with ERP product expertise is shrinking ...
Growing demand to staff digital projects and the need for digital talent within business units are worsening the skills shortage by creating new competition for the best IT resources.
Is going SaaS an option?
Some organizations may seek to lower the hurdles by adopting the Software as a Service option, which shifts some technical responsibility to the cloud provider. But going SaaS means accepting a simplified ERP core and much reduced opportunities for customization, as vendors drive users toward what they consider 'best practices' - which is only a good thing if you agree those best practices are improvements. This option is even less palatable in many specialized industries, where vendors have not yet gotten around to replicating their existing industry-specific functions and data models on the SaaS platform.
While adopting a cloud version of the software lowers some technical hurdles, it might raise others. To be successful with that strategy, organizations may have to build up the hybrid IT expertise necessary to share data and processes between local systems and the public cloud - or, more likely, multiple clouds. Those skills aren't easy to come by, either.
Even if you hire a fleet of consultants to get you through the implementation, you will need to have people in place to support it after they are gone. All of these pressures will come to a head for platforms where the vendor has named a fixed date for ending mainstream maintenance of its older platforms, such as SAP ECC in 2025, when customers fear an S/4 HANA skills crunch.
Stick to your own schedule
But you need not go through this transition alone - or let yourself be pushed into making it on anyone's schedule but your own. A whole third-party support industry has grown up around meeting the requirements of organizations who have decided that paying for support through an ERP vendor's maintenance contract is not in their best interest. I first discovered third-party support when I was CIO of a company that couldn't afford to pay for a high-priced maintenance contract. Neither could I afford to go without support for ensuring the stability and security of a trusted ERP system with many customizations and integrations.
If you do see a business case for moving to the vendor's latest platform, third-party support can help you lower your total cost of support during the transition. On the other hand, if you see no reason to abandon your current implementation, third-party support means you can continue to operate it long past the vendor's end-of-life deadline. This gives you the choice to modernize your ERP in other ways, perhaps benefitting from economies of scale by moving your existing ERP into the cloud, or extending its capabilities with additional software and cloud services.
The choice of whether to upgrade and how quickly should be no one's but yours.