Adopting business agility is the key to digital transformation
THERE is nothing wrong with the response that future of the ERP is on the “cloud”. But this is inevitable anyways. What is important to think about is what capabilities are needed to provide the agility that business expects. Businesses need the ability to deliver goods and services quickly, innovate and disrupt the market with new product innovations and lead through complexities. Unfortunately, most organizations underlying systems and processes hinder the effort to achieve the agility. One of the core reasons why this happen despite having ERP as operational backbone is that the data & processes are trapped in siloed disparate systems leading to inefficient processes causing incomplete or outdated information. Ideally, the processes such as “Record-to-Report” , “Order-to-Cash” , “Hire to Retire” should allow faster execution of the transactions. Businesses need single source of truth for deeper insight of “customers” , “employees” , “products “ , “assets” and so on. Such issues manifest themselves into incomplete data preventing from drilling down to underlying transactions. This in turn prevents from knowing ‘why ‘something happened and ‘what ‘is likely to happen.
To be able to drive agility, businesses today need “system of intelligence “as a layer above the SaaS based ERP with the ability to observe, sense, process structured & unstructured data with both real time and periodic intervals. Take for example, “Improving customer experience “. In this case “customer data “is in the context of experience of the customer. “Customer” as an entity with its relationships to order, price, service, product, quality, schedule , service engineer , Sales person. Every touch point customer has that influences the experience. These relationships are built through multiple connection across one or more applications as “many to many” relationships. Some are part of the ERP and some across other systems. So, in the context of improving customer experience as one of the key business outcomes, it becomes imperative to create the knowledge models of all the elements that relate to customer the experience. Similarly, there can be employee knowledge graphs, product, or services knowledge graphs and so on.
Given this trend, the next generation of the ERP systems are likely to be a combined stack of ERP SaaS (best of breed) + PaaS (as system of intelligence) as capability to not only provide a robust operational back bone but also provide the agility the businesses need today.
Value to the business from “system of intelligence” (PaaS)
– System of intelligence is real-time and is used as part of each interactions
– Ability to harness the data (customer, employee, product, services and so on) and harness the process (through process mining) . Ability to have the insights and enable workflows to automate the process.
– Ability to use the solutions (as services) on pay-as-you-go model on subscription-based pricing model
– Easy to configure, integrate and migrate by leveraging a set of pre-built API adapters and access to tool sets based on open architecture
– Cost effective and can be deployed faster as “system of intelligence” with no interference to the underlying ERP (system of records). The underlying ERP systems can be “best of breed” , therefore , if there are changes on the SaaS ERP platform , the changes to PaaS is very minimal to none at all.
– Ability to launch new business models at rapid pace.
Core capabilities of the “system of intelligence” (PaaS)
– Key criteria to determine what goes on the PaaS (system of intelligence) include 1) Create memorable experience by connecting entities with minimum friction as possible. Orchestrate the transaction flow without the user having to bother which underlying applications are involved 2) Create insights & intelligence by harnessing data 3) Ability to continuously observe and learn 4) Enable launching new products or services at rapid pace 5) Industry specific business “use cases” expressed as services
– Allow subscription-based model. Lower up-front cost by allowing the solutions (as services) on this platform to be available from a multi-tenant cloud infrastructure. Built on Open Architecture.
– Regular patch updates including mandatory security patches to ensure the platform is kept up to date. New releases follow through devSecOps to ensure speed and security allowing development teams to deliver better, more-secure code faster, and, therefore, cheaper.
– Allow ease of use. Ability to deploy faster as “system of intelligence” with no interference to the underlying ERP (system of records).
– The platform needs to be robust & secured. Designed in such a way that system of intelligence layer is common for all clients in the select industry while the system of engagement is client specific.
Next generation ERP systems
As the evolution of the ERP continues to unfold, we can expect the following possibilities:
(a) ERP product vendors to come up with the full stack capability of “system of intelligence” as PaaS – an “add-on” product on top their own SaaS ERP products.
(b) Emergence of new category of the ERP products in the market by the enterprise providers such as system integrators or by completely new set of providers focusing on building PaaS as “system of intelligence “and delivered the services on subscription-based pricing model.
(c) New category of PaaS by hyperscalers or ERP product vendors enabling all the core technology capabilities including telemetry, digital brain, IDE for low coding, APIs – making the platform as a robust marketplace for the ISVs to build applications and deliver “system of intelligence” as services. Thereby enabling ISVs to deliver the “system of intelligence” as PaaS solutions
One thing is clear: Given the agility business needs, the enterprise providers who decide to invest quickly to build a robust, scalable, state of the art “system of intelligence” as PaaS as product are most likely to lead the enterprise market to the future by delivering the value the business expects.