- Classification of Tier I ERP system will become obsolete. Although the systems themselves may not become obsolete, the definition of and difference between Tier I, Tier II and Tier III ERP systems certainly will. There are simply too many options and sophisticated technologies in the market to think that the big 3 incumbents (SAP, Oracle and Microsoft Dynamics) are the only packages capable of addressing the needs of large, upper mid-market and high-growth organizations. Even the biggest and most complex organizations have a multitude of options at their disposal. Our classification of Infor as the new Tier I system earlier this year was the first domino to fall in the demise of this dated and arbitrary classification scheme.
There is a degree of truth in this but I would rather argue that the most action will be seen in the Tier 2 space. The Tier 1 market isn't going anywhere. There may be a shuffling of the decks but unless companies are prepared to make wholesale changes then it's business as usual.
- Increasing adoption of ERP systems among small and mid-size organizations. Up until recently, larger enterprises had a big technological advantage over their small and mid-size rivals. However, new SaaS ERP software and mobile technologies are becoming more cost-effective and easier to deploy, which is causing the smaller and mid-market to catch up to their Fortune 500 counterparts. Gone are the days where a company needs millions of dollars to deploy new enterprise technologies, which will make ERP systems, CRM software and other business technologies accessible to most.
This really follows on from #1 above. However, there are still are functional gaps to be covered by the newer players who are all developing as fast as they can in order to ensure they can meet those SMB needs.
- Cloud ERP becomes a non-issue. The buzz behind cloud ERP systems is finally starting to die down – largely because most ERP vendors and third-party hosting providers have provided plenty of affordable options for companies wanting to migrate to the cloud. Research and data outlined in our 2015 ERP Report suggests that this trend will continue for the foreseeable future, but the big difference is that it will become a normal and accepted part of most ERP systems rather than a trendy buzzword hyped by industry analysts. The question is no longer about whether or not the cloud trend will continue, but it is instead about which organizations will move in this direction and which ones won’t.
I'm not so sure. SAP and Oracle have done enough in the market to keep their best customers thinking rather than moving wholesale. But that is not a forgone conclusion. Headline making companies like News Corp, Starbucks and GE regularly hit the headlines on the topic of innovation. These are businesses that are not following the 'normal' pattern. As they establish clear water between themselves and competition, others may follow suit. And let's not discount the emerging megacorps like Uber and Tesla. While they tend to be secretive about their technology usage, you can be sure that they consider ERP as a commodity
- High-profile ERP lawsuits expose the causes of ERP failures. Our ERP expert witness practice is growing like gangbusters, which is a reflection of the state of ERP implementations. Too many are failing and getting mired in lawsuits, many of which are very high profile and will expose the industry’s shortcomings. The parties and issues involved in these lawsuits are likely to underscore the reasons why ERP implementations fail, and more importantly, what can and should be done to avoid them.
I'm not going to argue this point and here, the vendors don't do themselves many favors, setting up customers to pay more for less.
- Increasing gap between ERP implementation success and failure. ERP failures do not appear to be dissipating anytime soon. On the other hand, there are still plenty of success stories out there. The difference between the two extremes, however, will continue to become more apparent. The successful ones will do all the right things – effective project management, business process reengineering and effective organizational change management for example – while the failures will continue to ignore or underinvest in those areas. The differing results between these two groups will be even more extreme.
No argument here either but then I believe it is time to shine a light on the successes rather than concentrate on the headline grabbing failures. Here, our SaaS colleagues might well lead the way.
- ERP project recovery becomes a hot skill set. As ERP failures continue to accelerate, those that can recover troubled ERP implementations to get them back on track will be in high demand – perhaps even more so than traditional project managers. It requires a unique skill set that can get to the root cause of what is causing the failure, which is why our project recovery services are in such high demand at the moment. Add to the fact that ERP failures are not likely to slow anytime soon, and it’s easy to see why these skills and toolsets are so hot right now.
Ever it was so but is the pressure really there?
- Best of breed makes a comeback. For the last several years, single ERP systems with very little integration to other third-party systems have been the name of the game for most organizations. However, the increasing ubiquity of Salesforce, Workday and other functionally-focused enterprise systems has provided viable alternatives for companies looking for solutions that aren’t trying to be everything to everyone. Look for these best of breed solutions to take an increasing share of the market from incumbent ERP vendors.
Read my lips: the suite always wins, or rather, in the brave new 21st century world, the platform wins. The examples quoted don't make the case at all, since both Workday and Salesforce are de facto platforms, as are Microsoft, NetSuite, SAP and Oracle. That's to to say it is business as usual and especially so if you agree with HfS that we need to see a roboticization of functions like finance where deep functionality is a must.
- SOA and technology integration becomes cool again. I’m not sure how cool it ever was – and there are certainly plenty of organizations that have been burned by trying to integrate a hodgepodge of ERP systems – but there are plenty of tools that are making this a feasible option for many. Given the rise of best of breed systems (see prediction #7), integration-related skillsets and toolsets are becoming important to a growing number of organizations and IT departments.
Cool is not a word I associate with SOA but integration most certainly is and will become a top of mind problem as companies seek to take data from their ERPs and apply to revenue generating applications. And vice versa.
- Customization becomes more accepted by the mainstream. For as long as I’ve been in the ERP industry, the word “customization” has terrified CFOs, CIOs and other executives. As outlined in our 2015 ERP Report, 9 out of 10 ERP implementations require some sort of customization in order to meet business needs, suggesting that this is a hard risk to hide from. Current ERP systems are making this concern a more acceptable and less risky form of implementation. It’s a slippery slope for certain, but one that can be managed in small doses.
I hope Panorama is wrong on this one. Art least as it relates to ERP. I can go with configurations but customization is the cause of more problems than enough. Modern systems should, by now, have covered most eventualities including those that would have been hand coded in decades past.
- Techies begin regaining control of ERP implementations. The previous three predictions are in many ways shifting the balance of power back toward the technical types and away from business stakeholders. Technical complexity typically increases dependence on IT and creates the risk of underemphasizing the business transformation aspect of ERP implementations and other enterprise software initiatives. This is not a welcome trend by any means since it escalates the risk of failure and runs counter to the fact that ERP implementations are more successful when treated as business transformations, but it is the reality of the current technological landscape outlined above.
Panorama's #9 prediction sets up the scenario for this to become a reality. I am not convinced, Most of the technical people I've met in recent times want to work on cool stuff. Customizing and integrating ERP is not high on that list. Having said that, there are many programmers whose lives revolve around proprietary ERP technologies. They're not going to disappear any time soon.
Panorama is dealing with this part of the market every day of the week so what it says should be considered as valuable, based upon the experiences they see. However we have a wider context for observing change and so while I don't believe Panorama is a million miles apart, they certainly provide good food for thought.
One thing I'd like to see but which may be more wishful thinking - an increased emphasis on vertical market functionality. There's been good progress among some vendors but others are lagging desperately. After 40 plus years, customers deserve better than cookie cutter ERP.
That's my two penn'orth. What say you - anything fundamental missed?
Disclosure: SAP, Oracle, NetSuite, Workday, Infor and Salesforce are premier partners at time of writing.