R “Ray” Wang – “Here’s why cloud is a better fit for your ERP.”
How do top tech analysts see the future of ERP playing out? There are more “key trends” from ever before – and that means more strategic decisions that must be made – and made right – by leaders.
At this year’s Experience4U, we invited Ray Wang – founder of Constellation Research and one of the foremost experts in enterprise tech and leadership – to offer us his perspective on the issue. In this session, Ray focused on the topic of cloud migration. And why far from being a risk, making the move for your ERP is vital to strategic and operational viability in the years to come.
We’ve all seen the difference between companies with a mature digital strategy and those without in the past few months.
Those who took the time to insure themselves against technology’s changes and disruptions have been able to bend and weather the storm. Those who haven’t have struggled. Some haven’t survived.
And companies not surviving is nothing new in the era of digital disruption. In fact, since the year 2000, 62% of the companies listed on the Fortune 500 have disappeared from the index. That’s 310 of the world’s biggest and most successful businesses gone in just 20 years.
This trend is being driven by a variety of technologies that were playthings a few years ago but are now key strategic components of your enterprises’ survival in the modern world. Things like mobile technology, AI, cloud computing, and big data.
What does this have to do with ERP? Well, these technologies have converged to create a new truth for enterprises and how they procure, deploy, and use software. They create a world in which the future of ERP is defined by three qualities.
The future of ERP is people-centric, AI-driven, and autonomous.
ERP now – challenges and opportunities
But if that’s the future, what does the present look like? Constellation research asked 250 industry leaders what their ERP looked like today – particularly with a view to on premise systems – and the challenges they face.
They told us their 3 biggest challenges were:
- Access to accurate analytics and reporting
Reporting is now something we need immediately – we can’t afford for it to be retrospective.
It’s not so much that licensing on-premise systems is expensive. It’s the maintenance of the system and the cost of upgrades and integration.
- Low value add
We’ve spotted a trend towards demand for 3rd party management for ERP. Why? Because organizations simply don’t feel they get much value from their ERP systems. They want to do more, they want to customize to industry needs, and capitalize on brand new business models. And they feel like they can’t.
These main challenges paint a picture of companies that don’t feel their needs are being met. Legacy ERP systems are designed for the logic of the factory floor – not for the modern, people-centric knowledge economy. And that’s a big problem – because people centric ERP can’t be bolted on as an afterthought – it has to be built in from the start. A product-centric system can’t be made people-centric retroactively.
Which brings us neatly to cloud.
How can the cloud solve the challenges of ERP in the present day?
Far from being a new trend, people have been moving to the cloud for the past 20 years. (Don’t worry – nobody’s going to fire you for moving to the cloud.)
But what’s surprising is that globally, less than 20% of all workloads have actually made the move.
So what’s in it for you? As well as more utilitarian benefits like regulation-as-a-service (cloud service providers have to keep their systems compliant to trade – taking the burden of regulatory upgrades off your shoulders), the cloud can help your company to navigate many of the macro-trends reshaping industries today.
Collapsing value chains, the need to orchestrate better customer and user journeys, and the need to integrate different departments within your business to provide greater visibility – such as in the case of integrating Finance and HR to create a better picture of the health of the business and the real demand for and cost of talent – can all be more easily facilitated through a cloud-based approach for ERP.
Why do cloud ERP platforms have the edge?
Furthermore, features like the ability to support an analytics-first approach to data and reporting, a more powerful ability to verticalize, and the luxury of elastic pricing dependent on actual usage and need represent huge advantages for cloud-based ERP systems.
But perhaps the most important contribution of the cloud to the future of ERP will be in providing the infinitely scalable computing resources necessary to realize the next big shift in enterprise evolution: the “autonomous decade”. The ability of “unlimited” compute ability allows us to automate precisely the kind of tasks humans are worst at – low level, repetitive work that isn’t hard, but is time consuming and boring (a perfect recipe for systemic errors over time.)
This will mean a huge step change in the way we manage IT – and the entire enterprise. Competencies will have to reflect digital skillsets and capabilities, but we’ll also need to begin reimagining the way we structure our companies from the ground up. But rather than seeing this as a chore, we should see it as newly-found liberation. Allowing us to take a brand-focused approach to building businesses, focusing less of our valuable time and attention on the nitty-gritty of operational efficiency and regulatory compliance – which our technology can increasingly manage for us.