It wouldn’t be an overstatement to call ERP (enterprise resource planning) the brains of an organization’s IT infrastructure. After all, an ERP system streamlines, standardizes and integrates a wide range of vital business processes across various business functions.
Implementing an ERP solution ranks among the most capital intensive projects an IT manager will undertake. In addition to substantial investments, the solution has the potential to impact all strategic business units of a company. It is therefore imperative for a CIO to follow best practices for deploying an ERP solution and then closely monitor the trends shaping it in the future.
Here’s a look at how the ERP category has evolved as an enterprise-wide solution and how these trends are impacting IT managers.
Personalization gives way to standardization
The traditional practice of enterprise technology leaders customizing an ERP solution to meet the specific needs of their company or business is giving way to implementing an out-of-the-box solution. A major driver of this is the high cost of resources to keep custom implementations up to speed with the latest features – a cost that many CIOs forgo in favor of stagnation or risk falling behind.
“There are regular ERP updates, which can take the form of features and functionality that are pushed into the live environment. If there is a high level of personalization, a CIO will need to adjust the update in the context of personalization. This is tedious and leads to additional costs. By opting for a standardized ERP solution, IT managers can avoid these issues, and most are following suit,” says Abhishek Mundra, enterprise platform services practice director at research firm Everest Group.
Implications for CIOs: In addition to avoiding cost and complexity, deploying an out-of-the-box ERP solution also helps speed time to market and make the business agile. “Previously, due to customization, the implementation lifecycle took four to five years. With an out-of-the-box solution, implementation now only takes six months to a year,” says Mudra, adding that IT managers using out-of-the-box solutions can better spend their time modernizing processes.
The best solutions go beyond the enterprise-wide approach
Previously, CIOs deployed an ERP solution and gradually extended it to the various strategic business units of the company. However, rapid digitization and the SaaS revolution are pushing IT decision makers to take a different approach.
“Enterprise technology leaders are aggressively undertaking digital initiatives such as marketing automation, customer experience, social media marketing and HR transformation,” Mundra says. “However, in these areas, cloud ERP solutions still lag in functionality compared to their on-premises versions. So, for a core function like finance, CIOs opt for a cloud-based ERP solution from a leading vendor that meets their requirements, but for other areas, they adopt the best point solutions.
Implications for CIOs: To get the most out of the best SaaS solutions, IT managers need to shift their focus from implementation to integration. To get the best of both worlds – an ERP for their core functions and a myriad of targeted solutions for critical business needs, such as Workday for HR or Salesforce for CRM – CIOs must undertake process modernization and assume more of an orchestrator role. role.
Integration at the center of attention
With the emergence of next-generation technologies such as IoT, analytics, and AI, companies are looking to reap business benefits. Leading ERP vendors are following this trend by integrating their solutions with these emerging technologies, and IT managers are following suit.
“With the availability of web services and JSON, it has become easy to integrate an ERP solution with other satellite applications,” says Achin Sharma, VP IT at logistics company Movin India.
Abhay Bapna, CIO of fast-moving consumer goods company Adani Wilmar, agrees: “We have thousands of sensors in our factories and each sensor sends data every 15 seconds. With the migration from ERP to the cloud and the integration of technologies such as real-time analytics, huge volumes of data can now be processed on the fly.
Implications for CIOs: The integration of ERP with other technologies has greatly relieved CIOs. For example, the financial module is a key element of an ERP solution. In the absence of real-time data, at the end of each month, it took a few days to run the numbers and finally produce the management reporting. Now, with near real-time replication, CIOs can close this month-end activity the very next day, making the whole process seamless and fast. Similarly, in healthcare, electronic medical records are integrated with the ERP solution, providing better information to healthcare professionals.
The rise of industry-specific solutions
Given the diversity of needs in each vertical, a one-size-fits-all approach doesn’t meet the expectations of business and technology leaders. This gives rise to ERP platforms that offer functionality aimed at specific business sectors.
“Industrial ERP solutions are finding more and more favor with CIOs. There are emerging vendors who have found their vertical niches. For example, Infor offers an ERP solution for the manufacturing industry; Salesforce offers its ERP for the healthcare, banking and financial services verticals; and ServiceNow is strong in the telecom and public sector,” says Mundra of Everest Group.
Implications for CIOs: Industry-leading cloud ERP solutions allow CIOs to gain insight into best practices followed by their peers. Additionally, having a large customer base provides a better likelihood that the solution provider will invest in product development and innovation.
The move to the cloud
Enterprise technology leaders are replacing their legacy on-premises ERP solutions by moving to the cloud. While the benefits of leveraging the cloud were already recognized, the pandemic has further underscored its value as it enabled employees to work from anywhere.
“Currently, around 60% to 65% of the ERP market in India is still on-premises. This will change over the next three to four years, when cloud overtakes on-premises with approximately 55% to 50% deployments. This trend is catching up fast,” says Sheetanshu Upadhyay, head of research at global market research firm Strategic Market Research.
Gartner defines the cloud ERP market as an application technology market. According to the technology research and advisory firm, in addressable market segments, public cloud enterprise IT spending will exceed traditional IT spending in 2025. It projects that nearly two-thirds (65.9%) of application software will be directed to the cloud. technologies in 2025, compared to 57.7% in 2022.
Implications for CIOs: By moving their ERP solutions to the cloud, CIOs can benefit from reduced costs, new features, mobility, easier deployment, elasticity, less need for internal IT resources, and ability to easily add users and functions to accommodate business growth.