The ERP software industry is going through a major shift at the moment, with an increasing focus on ERP in the cloud. This is driven by the fact that many existing ERP vendors are already starting to focus more on pushing their cloud-based ERP systems (although on-premise and hybrid models will still be available). The benefit for them is that they typically gain more profit from cloud systems than other systems. The other factor driving this is that the cloud has finally reached the point where economies of scale kick-in, which can lead to cost-savings for many businesses; as well as the fact that many firms do not want the headache of trying to build an internal IT infrastructure.
However, just because cloud adoption is being pushed by vendors, it does not necessarily mean that it is right for every business. Having a clear vision of what you want to accomplish with your digital transformation and ERP implementation will help you to decide whether a cloud ERP system is best for you (or not).
As a result of this push towards the cloud, there are a lot of new products being developed and sold so vendors can tap into the ongoing revenue stream that comes with selling a cloud product. This rush to get products on the market means that technical deficiencies are likely to be increasingly exposed, as more and more businesses adopt the relatively new ERP software.
The best way to avoid this happening to you is to objectively assess exactly what you are buying before you purchase a new system – and an independent ERP consultant can help you to do this.
The relatively immature products that come with this rush to the cloud will leave businesses realising that one solution won’t meet the needs of every department. This means firms investing in ERP systems are left with two options:
- Accept the software as it is, with gaps in functionality
- Customise the software to fit
There is no right or wrong answer here – it all depends on your business. Your independent ERP consultant will be able to advise you on the pros and cons of each approach for your business and work out what might be the best option for you.
“Best of breed” solutions are likely to become more acceptable to businesses, particularly as a way of mitigating the lack of functionality in new ERP products. So, instead of picking one ERP system and trying to fit it to your whole business, you will instead choose a core ERP system along with specialist software for more complex areas of the business. Each specialist tool will then be tied back to the main ERP system.
This approach has been frowned on in the past as it was felt that running multiple systems was hard to manage from an integration perspective. However, considering the predictions we have already discussed, there won’t be a lot of other options out there for businesses other than to choose specialist systems and then integrate them.
The predictions we have outlined above are highly likely to increase the failure rate of ERP system implementations, but it is not all doom and gloom – failure can be avoided.
Addressing the Upcoming Challenges
Now that we have discussed the issues that may be faced by firms undertaking digital transformation in the coming year, let’s summarise how you can overcome these challenges:
- Do not let a software vendor dictate to you when you are going to upgrade your ERP system and what system you are going to go for. Do what makes sense for you on your timeframe – look at all the available systems out there.
- Have a clear digital transformation strategy. Know exactly what you want to achieve and make sure any quick wins are within that framework.
- Seek help. Find a truly independent ERP consultant, like Greenbeam Consulting, and let us help you find the best way to navigate all of the above challenges.
If you would like us to help you along the path of your digital transformation journey, then please contact us to arrange a time for an informal chat.