Survive the roller coaster of digitalization with flexible ERP

Profile picture for user Rod Johnson By Rod Johnson December 18, 2019
Summary:
'Techquilibrium' is a balancing act as enterprises embrace agility in their core IT. Infor's Rod Johnson explores the role of modern ERP in digitalization

Roller coaster with cloud background © gdesrx - shutterstock

Technology is fueling the transformation of industries worldwide. Digital innovations are changing the way we work and live. But, enterprises often struggle to keep pace with the new demands and expectations. Remaining competitive requires investment in new solutions. Pressures to adopt modern technologies, such as artificial intelligence (AI), machine learning (ML), and the Internet of things (IoT), can push companies into projects that lack sound strategies, plans for deployment and budgets for training.

The hype surrounding digital solutions also adds to the confusion, sometimes creating expectations that are unrealistic. For some early adopters, proof-of-concept projects brought disappointing results. Plans were derailed, putting the entire IT infrastructure under scrutiny. Some industry pundits are even questioning the role of enterprise resource planning (ERP) solutions in a hyper-connected ecosystem of multiple solutions. Is an ERP solution critical for visibility and a single view of the enterprise performance? Or, does it get in the way of agility? The answer, of course, is that it depends on your ERP system, when it was updated, and if it is deployed in the cloud. Some solutions with built-in industry functionality are highly successful. Others … well, not so much.

Three stars out of five

Just as ERP systems have varying degrees of success, so do digital initiatives. Some have flopped. Others have been wildly successful. Industry observers loved to speculate on the straw that broke the GE Digital’s back. Even the wunderkind of new digital revenue models, Uber, has provided plenty of fodder for skeptics, as the company is now in hot water over its profitability and financial health. This proves once again that a brilliant idea — without sound profits and business management — is unlikely to experience long-term business success.

Gartner’s model of the typical hype cycle includes a “peak of inflated expectations,” followed by a severe drop into the “trough of disillusionment,” as early adopters become discouraged. Digitalization has been no exception to this typical roller coaster shaped curve. While we may be at a low point now, the “slope of enlightenment,” the next phase, may be only months away. Enterprises are certainly moving forward with modernization plans. Digital initiatives are still driving software sales, including migration to the cloud.

Recent Gartner research indicates that, on average, organizations have digitalized 20% of their customer-facing products, services and revenue value propositions. For internal workforce processes, 39% of systems have been digitalized, focusing on increased productivity.

However, top performing CIOs said over half their operations are digitalized and a third of their value propositions are digital.

Still, for many companies transitioning beyond proof-of-concept projects has been a challenge. Often, they struggle to integrate their new ideas into their old network. Managing the internal turmoil is time-consuming and high-stakes. Two-thirds of IT directors see digitalization and technology disruption as their number one business challenge, Gartner finds.

The digital-ready ERP system

Most industry experts agree that ERP systems still play a valuable role. Deployments, though, need to focus more on practical use-cases, creating solutions that are agile, building in the ability to scale with changes in demand and providing tools for user engagement.

Forrester recently reported on this transition stage in the digitalization process, calling out the shortcomings of outdated legacy ERP solutions:

Digital initiatives fail without the right operational systems and processes, and many ERP initiatives have failed to deliver on their promises. Today, we see the beginning of a new era of operational systems that are so different that calling them ERP no longer makes sense. We call them the digital operations platform (DOP) to reflect their agile, AI-based, and experience-driven nature and the critical role they play in digital business. 

Real digital business success requires massive change to core technology elements. The elements can be loosely coupled into an integrated suite containing such necessities as:

  • Specialized, advanced functionality – think AI-driven analytics or voice-activated digital assistants. These types of solutions lay on top of the core solution, enhancing native functionality.
  • On-demand apps – examples include mobile apps, social tools, and team sharing sites.
  • Well-integrated edge programs – an asset management program is an example. It functions largely independently, but it integrates to the core solution and shares data as needed.
  • Low-code platforms for self-service add-ons – many user groups are demanding platforms that provide easy-to-use tools for creating new forms or applications.

Balancing acts

It’s certainly time for a refresh. For many companies, their software solutions are in desperate need of an upgrade. Modifications that were once helpful have now made upgrades cumbersome. Often, updates have been delayed, as companies fear complications. 

Gartner’s recent IT Symposium/Xpo in October, 2019, addressed the issue of flexible systems and how to find success in digitalization. Valentin Sribar, Senior Research Vice President at Gartner, introduced a new term, TechQuilibrium:

CIOs should partner with their executive teams to design a value proposition that drives the right mix of traditional and digital business. When you reach this balance point, you have reached your TechQuilibrium. Individual enterprises and whole industries will have different points of TechQuilibrium. Not every industry needs to be digital in the same way or to the same extent. 

Other industry insiders insist ERP solutions should be more strategic, playing a larger role in helping users leverage data and data insights. Rob Jones, Director of Enterprise Applications at IT Lab, discusses what’s behind the ERP evolution:

As digital disruption now reaches boardroom level, senior decision makers are seeking to deploy more strategic solutions which will support business objectives, agility, scalability and growth.

The changing role of ERP and broad-reaching applications is symptomatic of a change in user requirement, as well as a change in user demographic. Notably, we have seen a shift in the delivery of these solutions, which are now packaged in ways to suit the requirements of the current boardroom. 

These new “packages” could take many forms, from two-tier systems to a hybrid approach of cloud and on-premise solutions or CloudSuites, which integrate the specific functionality the customer needs into one solution. The specifics of functionality and architecture are likely to continue to evolve. Only one tenet seems certain — future-proof solutions must be flexible, scalable, and packed with powerful capabilities.

A new world, new expectations, new software

Software must change to meet ever-growing demands. Volatility has become routine, a contradiction of terms, yet true. Shifting global economics, conflict and unrest among nations, eroding trade relations, and political turmoil create a backdrop of uncertainty in industrialized regions, as well as emerging nations. Rapid innovations, on the other hand, continue to propel growth, create new opportunities, and enhance living conditions in many markets. Servitization, the sharing economy, omni-channel sales, and on-demand manufacturing are among the concept changes that have become commonplace in an eye-blink.

Connected by satellites and mobile technology, 4.39 billion people now use the internet, an increase of 9% in just one year. Connections open doors to education, entrepreneurial opportunities, and ecommerce. Forward-thinking enterprises are embracing agility, adapting to the changing consumer market, meeting the challenges of global competition, and experimenting with new business models. Often, they are also stepping up to the role of corporate citizen, setting positive examples in inclusion and diversity, workforce development, and environmental stewardship. These are all positive steps, made possible by digital technology and innovative thinking.

At the center of many of these critical changes is one common thread — software technology. Modern software, including ERP solutions, makes it possible for enterprises to take advantage of the opportunities and cope with the challenges.

For Infor’s take on flexible and scalable ERP systems, click here.