Is ERP in the Current Scheme of Digital Transformation or is it Shaping as a Behemoth Bottleneck


Digital transformation leverage innovative technology to improve current business models and materially disrupt legacy & inefficient business processes. ERP’s on the other hand facilitate standardized transactional activities with integration of defined business functions into a single database (data often captured in a retrospect basis), keeping the business model as it is.

 

ERP vendors may need to revisit the central premise, the concept from which its name was derived – Enterprise Resource Planning. Limiting to basic transactional functionality within an Enterprise alone may result in other technologies like distributed ledgers (like blockchain) to garner higher adoption in future.

 

ERP costs, it’s maintenance sucks away significant part of the IT spend. Further owing it’s widespread usage across departments, geographies, user requirements, errors & issues are considerable, change requests high. SAP support team’s bandwidth gets choked with these operational issues. Most often these changes, new requests in ERP originate from those who are responsible for making data entries (mostly in retrospect and often reconciled) – and do not dial in greatest business outcomes. Barring exceptions, rarely do you find companies leveraging MRP runs –part of Operations management, inventory control or processing real time info through their ERP’s. Many others who run MRP do not find it fully relevant considering it’s reliance on 100% clean datasets (including Master data and Transactional data) –a wishful state.

 

In this part of the world, whilst companies of all shapes and size readied themselves for (ever changing norms) GST –the new taxes order and it’s invisible impact aside, technology and consulting teams across organizations were completely subsumed in related developments, issues. For many enterprises it was (and still continues to be) a nightmarish experience since the ERP vendors interpretation of the law, back end development of their GST ready applications were far from being exact (in scope coverage and timelines). This, in a world wherein there is enough and more buzz on quick configurable, adaptive, self-learning Tools.  

 

Question is for evolved enterprises which seek visibility of end to end value streams through integration of related systems. Current gen ERP’s with their tight licensing terms defy this very integration. A cause of concern is that the licensing terms (in Licensing agreements) evolve (in complexity) with time to make the ERP’s more impermeable. This is compounded with the fact that within the ERP vendors teams, countable few can correctly interpret (and then advise on need basis to user orgs) the licensing terminology.  From the ERP vendor’s standpoint this ensures that their revenue model is sustained, grows and a window of vulnerability remains in the user community. For end user companies playing it safe is a preferred option for any audit avoidance, hence they prefer to maintain their ERP’s as a silo/island.      

 

In sync with applications used in their personal lives, System Users (particularly the millennials- most believe that an ERP eats like an elephant) seek a cool, intuitive & highly responsive experience in enterprise technology. In contrast, legacy and even the current gen ERP’s are still largely transaction code driven, which makes it’s use cumbersome, complex -far from the sought Wow and Allow factor!

 

What got you here will not get you there - this applies to both ERP vendors, their product offerings and users of such systems lest the complacency leads them to state similar to forgotten mammoth foundations of large ancient cities. Aspects like Consolidation, collaboration & driving agility which are key in digitalizing an enterprise need a higher play in their offerings. In the current world order, multiple startups are already endlessly eyeing opportunities to disrupt established industries with use of modern, agile technology. Necessity being the mother of all inventions, choice is clear -perform as the new order seeks or perish.

 

Your views…


(This blog was originally published on LinkedIn.com and has been re-posted here.)

(Image Courtesy:Pixabay.com)

Categories: Digital

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Atul Govil

Atul Govil is Chief Transformation Officer and Head (SAP-IT) - Corporate, India ...

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