by Marnix Theijssen and Ruben Spekle
For more than 20 years Enterprise Resource Planning (ERP) applications have been at the core of many organizations, imposing their monolithic character on everything from business processes and information, to the IT release calendar. Despite efforts by many organizations to reduce customization complexity and the number of instances in use, ERP systems still tend to use the larger part of the IT budget simply to keep up and running, while differentiating solutions are found elsewhere and unfortunately do not get the same attention.
In recent times there has been a shift to delivering ERP as a set of services that form a stable platform for linking other (more volatile and value creating) services. In addition there has been a trend to support industry specific needs on top of supporting a generic enterprise model. This paves the way for a new kind of ERP: no longer as an expensive, slow, messy and unmanageable oil tanker, but rather as a high speed freight train, running to a precise time table to allow other (edge) solutions to thrive.
This is the future role of ERP presented in Capgemini’s TechnoVision 2014, released last month. It positions ERP, and basically the enterprise application landscape as a whole, as a stable ‘Sector-as-a-Service’ that has a natural place within the technology clustering of TechnoVision.
It is in the comprehensive view on technology of TechnoVision that the new style of ERP shows its full potential as the back bone of the Digital Enterprise: it could be truly “vanilla”, really be based on out-of-the-box solutions without customizations. And it paves the way for adopting cloud-based Software-as-a-Service (SaaS) solutions, or at least for a rationalization of existing applications to leaner, simpler versions that are easier and less costly to maintain.
Oracle as a vendor has shown to move in a similar direction. The launch of Oracle Cloud Applications demonstrate that the future of Oracle ERP lies in the direction of the ‘Sector-as-a-Service’:
- Enterprise Grade: spanning complete business processes.
- Integrated analysis, actionable insights
- Built in Social and Mobile functions.
Moving towards this future does require embracing some key insights:
- If it’s not cloud, you better stay at home. Migration to cloud-based enterprise SaaS solutions will happen, simply because its economy of scale is where the next major cost reduction will come from for those organisations ready to adopt the SaaS level of standardisation. But what processes/modules can come first? How to address industry or region specific challenges? How to solve multi-tenancy? How to ensure security?
- Being a stable ‘Sector as a Service’ means that any necessary flexibility needs to come from other technology clusters, predominantly the ‘Process on the Fly’ cluster (creating a close link to Business Process Management solutions such as Oracle BPM). Flexibility of the new style ERP solution is limited compared to traditional ERP custom implementations, instead there is a strong focus on configuring the organisation and not the application.
- ERP should Thrive on Data: away with the minimalistic approach of transaction capturing (only fill in fields mandatory for processing) and the aggregation paradigm for financial reporting. Allow ERP to become ‘big data’. Embrace Data Driven ERP, but keep controlled alignment with the ERP accounting backbone.
- ERP is a Business solution, running on IT. There should be a single (enterprise) architecture, a comprehensive portfolio of services (menu card) and a mutual approach to change that focuses on dialogue, understanding and agile development.
At Capgemini we believe this future is there for the taking and this is why today we launch a series of blogs to show the future of Oracle ERP in the light of the TechnoVision 2014. We will address Digital Transformation as a concept, the TechnoVision Design for Digital principles and each of the six technology clusters of TechnoVision in context of Oracle ERP.
Series of blogs:
- Introductory blog, announcement of series (this blog)
- ERP as a driver for Digital Transformation
- Design for Digital – ERP re-born in the cloud
- ERP-as-a-Service – Introducing industry standards
- Data Driven ERP
- Flexible processes of a stable platform
- You Experience ERP
- Social ERP
- Approach to ERP Innovation – Configure the organization
These blogs will be released with a monthly frequency, the next being posted coming May. We sincerely hope this will enable you as a reader to digest the TechnoVision in context of ERP and to see the potential benefits that lie buried beneath the buzz words.