Inventions, however ingenious, don’t just fall from the sky or happen overnight; they develop over time. And they draw on what is already available: processes that need perfecting, existing technologies, discoveries that make inventions possible… Take the radio, for example. If Maxwell hadn’t developed his theory of electromagnetic radiation in the 1860s, Marconi couldn’t have created his radio transmission system 30 years later.
What we call Enterprise Resource Planning (ERP) also has a long history to look back on. Gartner first used the term in the early 1990s, but the software had evolved from Manufacturing Resource Planning, which was based on Material Requirements Planning, a solution first used in the mid-1960s. That, in turn, would never have been possible without the Economic Order Quantity Model, a concept developed by Ford Whitman Harris in 1913. But technological changes, especially in the IT sector, have only become faster and faster over the past three decades, with experts such as McKinsey calling for more agile ERP implementation. Given this, the question arises: how long will ERP be around? Or is it already a thing of the past, as some insiders suggest? If not, what transformation will it have to undergo in order to stay relevant in an environment that bears little resemblance to that of the 1990s?
An aging system
ERP systems are meant to optimize business processes and provide access to accurate and critical data anytime, for any components of an organization. And they did that for quite a while. Even as recently as 2019, 88% of the companies asked in a survey conducted by Panorama Consulting Group (PCG) said that they considered their ERP implementations successful. At the same time, as another PCG survey carried out the previous year showed, about two thirds of the businesses said they experienced operational disruption during the implementation process. Considering that ERP should be integral to ensuring that a business runs smoothly, this statistic reveals that the software isn’t quite the be-all and end-all of integrated business process management many once believed it to be. In fact, if you think about the pros and cons, the list of the disadvantages will be much longer.
First and foremost, traditional ERP is anything but agile. It’s overly complex, with long lead-times for change requests and often manual “interfaces” like spreadsheets. This results in inefficient use of personnel, an inability to innovate quickly, and a lack of real-time data. Along with integration challenges, security risks and high maintenance costs, these are all clear signs that your ERP system is no longer up to the task and needs an upgrade – at the very least. Better still, make sure that a transformation to a more agile ERP system takes place.
Breathing new life into ERP
As Gartner analyst Tonnie van der Horst argues in a recent two-part article, “What is dead in ERP is the large and monolithic suite; ERP deployed as a wall-to-wall single vendor solution.” Companies that still run with this traditional approach have tried to shoehorn some of their business processes into ERP only to find that they don’t fit well. Over the years, many large enterprises have acknowledged this and given up on “ERP suite strategies,” moving their processes into the cloud instead – the place where ERP can not only survive but grow.
Marconi may be credited with inventing the radio, but he certainly didn’t have to reinvent the wheel: his fellow inventors and engineers’ work had paved the way for him. Similarly, as van der Horst points out, what already exists and works well in ERP systems can provide a solid foundation for a new, more efficient breed. The cloud-based ERP can remain at its core, but it must be a more modular, adaptable system. We can keep the acronym but, according to the analyst, it should stand for ‘Enterprise Runtime Platform,’ with real-time accessible data being a differentiator and the system functioning as a hub that supports a range of interconnected and interoperable components.
Following such an overhaul, the modernized ERP will have features like API-based integration, integrated analytics and machine learning, which enables it to be agile, adaptable and composable. The core ERP, i.e. the foundational platform, is still in place, but with all these additional capabilities it ensures better execution and seamless operation, which in turn means delivering more value and first-rate service to customers. Any organization that aligns the “reborn” ERP with its business strategy can expect to enjoy substantial long-term benefits. And the prospect becomes even more exciting when you throw low-code development in the mix.
Hyper-agile ERP with low code
A major drawback of traditional ERP customization is that it’s a long and slow process, with rollouts often taking years. The concept of hyper-agile software development is a way out of this that takes agile to the next level. By enabling citizen developers to create solutions using low-code development platforms, it eliminates much of the red tape of traditional software development, empowering business users to take charge of their own digitalization. Since there are fewer documentation requirements and streamlined IT governance, citizen developers can put forward ideas more easily, based on which they can then design, develop and deploy effective solutions.
So add low code to your ERP, and you can build a custom interface or a whole custom module in weeks. A few low-code platforms are able to integrate with any ERP system – and now some ERP vendors have taken the next step, integrating low code directly into their platforms. This allows customers to easily make changes, even to the core itself. What they get is hyper-agile ERP, which streamlines the development process, allowing companies to adapt their business immediately and deliver faster. In short, it helps them continuously improve their results and stay ahead of the competition.
So, ERP is likely to stick around, but with low code giving it the makeover it so badly needs, it will live on in its new integrable, adaptable format. Just think about what happened to the radio: what once was a transistor radio set is now an app on your cell phone. You still tune in to your favorite station – but now it’s a smart station that adapts itself to your tastes.
