Enterprise resource planning (ERP) are systems and software used by organizations to run their operations. It can do everything from accounting to project management. It's big business, too. The ERP software market is expected to generate $47 billion in revenue between 2017 and 2022, according to Market Research Future.
While ERP only started picking up speed in 1995, its importance is growing. Selecting the right ERP for a business is a task that takes time, resources and a gut check for a company about what makes them unique.
An ideal ERP is one that was selected for the right reasons, designed with purpose and implemented on time and on budget, and then also allowed for quick benefits realization. That would be the first stages of an ideal ERP and then also one that could scale and adapt with an organization's changing needs.
ERPs have grown up
ERPs started to become essential to business between 1995 and 2000 and mainstream by 2000. That's when Oracle went from Oracle Financials to enterprise resource planning and SAP went from being very very strong in logistics to ERP.
Clients now want that ERP but they also still want a certain kind of functionality that they have from their own systems, especially in analytics, helping them run their companies but also provide data that can help them make decisions about moving forward.
Moving to the cloud
In the last five years, there's been a rush into the cloud. Some are consolidating best practices from different products, and some have been completely re-written from the ground up, and some are right there in the middle.
Some vendors are launching on-premise versions of their cloud-based software too. There is a bit of market resistance because these cloud applications are not fully mature quite yet.
There's also not a big difference in price between premise-based licenses and cloud-based pricing but the savings "is really more coming from rapid implementations. These ERPs have more best practices and standard processes built into their systems, and companies are more willing to adapt certain processes where it makes sense to fit those in.
Moving to the cloud can save money in some less-than-obvious ways too, like with IT costs because ERP handles a lot of those functions for the company instead of requiring labor on site, according to Kite.
That will be more of a cost savings in the next 10 years. The U.S. Bureau of Labor Statics expects 1 million computer programming jobs to go unfulfilled by 2020, and companies won't need to invest in talent searches or pay the high salaries that competition for talent will drive.
Another cost benefit is upgrades can be offered more often, going from a typical two- to three-year gap where, in a cloud-based ERP, companies can have one every quarter. That means security is updated every quarter so that a company doesn't become the next Target or Sony.
In making this transition, it's really important for companies to figure out their true processes. Often companies haven't done a minimum amount of work. Getting everyone on the same page to define what makes them stand out, and what are their absolute must haves in new software, is essential.
Along those lines, companies should also dedicate resources to the transition. Often we see there's not enough allocation and subject matter expertise available to dedicate to the design and configuration of the ERP.
What to expect in the next 5 years
Mobility has been a focus on the vendor end too. We've gotten very used to the ease of use, so it's not just ease of use with what the interface looks like, but also with the ability to have it on any device, anytime, anywhere.
Clients are also demanding multidimensional reporting to drive insights. Foresight from those reports and integration allows multiple divisions within one company to work together. A lot of that comes from the customer base, and their journey to really build out end to end processes.
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