For many organizations across the globe, 2018 is bringing together transformation and integration across their IT ecosystems.
One of the biggest transformational changes IT can expect is that enterprise resource planning, or ERP, will become more integrated as we move into the “Postmodern ERP” phase.
According to Gartner, Postmodern ERP is a strategy that automates and links administrative and operational business capabilities – like finance, HR purchasing, manufacturing and distribution – balancing the benefits of vendor-delivered integration against business flexibility and agility.
There are two Postmodern ERP strategies to consider: service-centric and product-centric.
Service-centric industries, which don’t need operational capabilities, can focus their strategy solely on administrative functions. An administrative ERP strategy focuses on primarily financials, human capital management and indirect procurement.
Meanwhile, companies in product-centric industries like manufacturing, distribution and retail should employ an operational ERP strategy. These companies should organize their ERP strategy into operational areas of focus, including order management and supply chain. When combining these two areas, companies can realize benefits they may have never seen before.
What does this mean for your organization?
ERP systems can help enterprises across industries uncover valuable insights, which enable smarter decision-making, which in turn streamlines and enhances business capabilities. From a functional perspective, better integrated ERP systems will help IT leaders discern application usage and peak activity time to help them understand where – and how – they can save money.
Many IT leaders across industries are already benefiting from the wealth of data their ERP systems generate, especially with the rise of connected devices in the Internet of Things. Per IDC, worldwide spending on IoT is expected to reach $772.5 billion this year, an increase of almost 15 percent over 2017. Organizations must consider this IoT boom from a business perspective and how they can take advantage.
However, it’s important to keep a few things in mind. For starters, though we have more data at our fingertips than ever before, companies must maintain quality data capture and governance. Analytics and algorithms are helpful, but if the quality of data is poor or compromised, that analysis won’t be worthwhile.
Additionally, there’s a new set of rules to play under. Postmodern ERP requires a far more collaborative and agile strategy than we’ve seen in the past. It’s all too easy for organizational functions to operate within individual silos, but that mindset must shift with a postmodern ERP approach. Each business unit should work together to develop strategies which, in turn, will reduce the amount of time and resources needed by the company as a whole.
This change in thinking needs to happen across teams and functions. Otherwise, the company will continue to instill more tactical processes instead of an overarching holistic approach. That can be fine in the short-term — for instance, maybe creating a new app to deal with an existing problem will be a fine solution for a few months. It will catch up to organizations in the long run, though. Think of it like a shoring up a building: you can patch cracks in the foundation, but if the building isn’t structurally sound, it’s not a long-term solution. Ensuring your existing ERP deployment is in a good place prior to adopting an ERP strategy will help.
Luckily, you don’t have to tackle the complexity of ERP systems alone. Contact Rackspace Application Services to learn how we can work with you to automate ERP applications and determine where your organization’s ERP applications should live. You’ll be able to take advantage of all the flexibility, choice and cost savings a multi-cloud infrastructure provides.