There’s no doubt that the digital revolution is here and that companies need to take the opportunities and the power of the digitalization to stay ahead of the competition. According to Gartner, close to 25 billion “things” are to be connected by 2020 in a wide range of industries and the IoT will touch every role across the enterprise and McKinsey state the Internet of Things will create over $6 trillion in economic opportunities by 2025.
Opportunities like Internet of Things and the ongoing digital transformation must be taken seriously. We have seen disruptive technologies change the game plan a number of times before in the history where new companies has entered the market while others have been forced to leave it. Kodak, Facit and the record industry are a few examples where disruptive innovations have totally change their position in a very drastic way. Uber and Alibaba are two examples that have used to opportunities in the digital transformation to compete with traditional companies and to change the playground totally. Neither Uber nor Alibaba owns any inventories, but Alibaba is anyhow the highest valuated retailer in the world. So, don’t say that you haven’t heard this happening before and there is no other way to stay ahead of the competition than to stay ahead of innovation.
Companies that manage to adapt quickly and keeping the complexity low will also be able to be in driver’s seat when entering the digitalized world. The complexity built up during decades cost, according to the Global Simplicity Index around 10% of the profits for the 200 largest companies in US. Add to that an increased complexity also creates less motivated employees and makes customers frustrated is also well-known.
The ERP-systems can play a key role in this transformation but the ERP leaders and the CIOs must take a step ahead and lead the development from a slow-moving elephant, which is costly to maintain, towards a responsive, agile and fast panther. The ERP-solution plays a very important role in the digital transformation as the heart for core functions, but also to provide the enablement into the digitalization by new technological innovations.
In-memory computing (like the SAP HANA), will be a key technology to enable the speed and simplification needed in the new digitalized world. This new technology will allow real-time data to be processed in the ERP-system directly from the transactional database. There will be no need for use of aggregates or transfers via ETL-tools to a separate business warehouses that increases complexity and reduces accuracy and speed). The background processing can be done in real-time, leading to that planning, forecasting and simulation can done on transactional data directly from the ERP-suite without a need for separate planning system (CPM). The MRP-run can be done more frequently and predictive maintenance can be used to identify when a component is to be exchanged before it happens etc.
When all these things come together with simplification, speed and transparency the ERP-system will become the playground for innovation. This will enable opportunities for dramatic business Innovation.