Dinosaurs and monolithic ERP systems

160 million years ago they were the crown of creation and voracious enemies could only be found among themselves. But 65 million years ago, it was all over for them and in a rather short span of time, they had vanished completely: dinosaurs. The reason why is still uncertain. Theories range from tectonic shifts to a meteorite impact. The most probable cause is a combination of a number of changing and interdependent environmental conditions. You could call it a combination of unfortunate circumstances for T. rex.

Or today, we would call it a disruption in the dinosaurs’ ecosystem. Back then, of course, no one would have considered – or called – this prehistoric event a disruption. Apart from the wording though, it seems that a very similar development can be observed in most recent times, too. But in quite another ecosystem: enterprise resource planning (ERP) systems – the IT centerpiece of all businesses.

Monolithic ERP systems are past their peak

Why is that? And what does this mean? Will the next ERP “heavy weights” be three sizes smaller? In my view, it’s similar to the combination of unfortunate circumstances for the T. rex. A number of factors have coincided in a short time and are driving change towards the tipping point:

Big and slow

These monolithic ERP systems have become too complex and static. They can no longer be adapted quickly enough to accommodate the changing business world. Maintenance is swallowing all available resources. Implementations are taking way too long. Businesses are often struggling to catch up with reality even before implementation has started. And importantly, human behavior towards technology is changing dramatically…

Personal expectations

More and more of us are rather spoiled by the user-friendliness of the countless apps we use in everyday life. If an app does not immediately convince us, another alternative is quickly downloaded – often within 5 seconds. For many people – not just “digital natives” – this attitude extends to all areas of personal life because there are at least three apps available for every scenario. And no one is even calling for uniform, standardized graphical user interfaces. Users only expect apps to deliver simple, quick, and situation-related solutions to problems.

Spilling over to business

And this expectation has now also crossed the doorstep to the business world. But this doorstep is no longer necessarily an actual, physical threshold to a company. Telecommuting – at its best in combination with BYOD (bring your own device) – is blurring the borders of workplace and private user conduct. The days are over when users accepted complicated, non-attractive, and static user interfaces at fixed work places.  The old and still wide-spread ERP systems with functionality-related control paradigms now really seem completely outdated.

Spinning faster and faster

This change in user behavior came about in a short span of time. In parallel to this change, the dynamism in businesses to align organizational set-up has truly kicked off in turbo mode. And there is no end to this dynamism in sight. Insourcing, outsourcing, carve-out, spin-off, investor monopoly, new competitors … – it’s all spinning faster and faster.

Anticipating process changes beyond tomorrow is nowadays barely possible anymore. The only option to handle this is a more agile management. There is simply no more time to think through processes completely, articulate them, implement them, test them, adapt them, and then set up a fixed role and rights concept valid for the next 10 years.

Because in the meantime, hierarchy structures are bottoming out, individual work tasks are changing, and teams are restructuring. Organizational borders are realigned, opened-up, and then closed again. The volatility of changes to organizational structures is at an all-time high. Those responsible for ERP systems in companies can be pitied – they can either join the (hopeless) race to catch up or thwart the pressure to change.

Will the ERP dinosaurs evolve or become extinct?

Here is what I think:

• It seems the current tendency is towards establishing a “zoo” – with a variety of different “species” of systems and applications.
• The user will become more powerful than in the past. It will be easier to quickly use an own app to manage a process.
• The nowadays almighty IT will be reduced to intelligent data management. To solve a problem, the user will simply access an application directly and independently in the cloud. And to solve tomorrow’s problem, there will be another cloud service available.
• As a result, central knowledge about what makes a company tick in detail will no longer be available in one place. A company’s “organism” will (need to) function independently – with loose links between its “organs” that regulate or destroy themselves and each other. Standard operating procedures (SOP) – especially those subject to frequent audits – will no longer form the structural foundation.
• IT as we know it today will lose its stationary character and simply act as manager of data hubs.

Challenges on both sides – provider and user

ERP providers face tremendous challenges to transform their performance and their scope of service to meet the needs of this new world. It’s quite a step up compared to the last stage of the ERP evolution, which was mainly technology-driven to offer decentralized application options through internet technologies.

The ERP providers are well aware of the centrifugal forces that – with ever greater power – tear at the borders of their core functionality. They aim to define and set up most comprehensive ecosystems around their own core to keep up with competition and meet changing customer demands.

But companies working with ERP systems also face a dramatically growing mountain of required changes that must be dealt with. The ultimate goal is to move from today’s ERP-supported standard processes to an agile organization.

Top dog example: challenges of the new ERP generation

The rollout of the new SAP S/4HANA^® suite of applications generated quite a buzz in the IT industry – and in IT departments across all industry sectors.

But despite impressive numbers after the launch of this new ERP generation in February 2015, CIOs and IT teams in companies are still discussing the best implementation strategy.

After all, it’s not just about some new business software but about companies’ IT centerpiece and their overall IT strategies for the years to come. At the moment, there are still many open questions.

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The good news: rosy future for the user

For the business software user, the prospects are excellent. In this new world of IT, there is no longer just “the user”. There is an emancipated employee who completes assigned tasks by using a variety of different applications – without being tied to a specific location or device. An individual approach to different tasks is possible, and work is managed flexibly and efficiently. Once the innovation-devouring T. rex has evolved, the business user will be empowered to perform much more autonomously.

Here is to this new world of IT – the future “zoo” with a variety of different types of applications and systems. May it grow and thrive! Fingers crossed…

What’s the ERP status and plan in your organization? Let me know, I very much look forward to your comments on LinkedIn.

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