Top Ten ERP Trends

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Posted December 21, 2012 By Drew Robb

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From the cloud to social, how are software trends impacting ERP? And is the economy
impacting ERP choices?
There is a lot going on in ERP right now. But what are the dominant trends? Enterprise Apps
Today asked the experts.

Customer Power
Allan Davies, chief marketing officer of Aldata, Inc., thinks the major trend in ERP over the past
year was a change of focus from supply-led to customer-led business.
The massive take-up of mobile devices and their ability to understand, compare, order and share
information across social groups means all ERP systems have to think of the customer first and
adjust their supply, manufacture, logistics and marketing operations to fit what the customer
wants, when and where he wants it, he said.
In 2013, Davies believes the same trend will accelerate so that customers will be an integral part
of the supply planning process. The ability to interact with them at all levels at any time means
that new product development, introductions and deletions can be driven by direct customer
interactions rather than by market studies.

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Prices can be tested and adjusted, service levels compared and changed, and margin models
created by sharing social and incentivized communications, Davies said.

Tighter Purse Strings, ERP Delays

After the 2008 crash, money hasnt exactly been flowing freely to IT projects. But there has been
an easing of the purse strings over the past few years. Eric Kimberling, managing partner at
Panorama Consulting Solutions, thinks that budgets are going to tighten up a little in the coming
year.

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Most companies are facing an uncertain macroeconomic environment, which is likely to cause
CFOs to keep a tight handle on investments in ERP, he said. This is likely to result in less allin ERP investments and more low-hanging fruit investments focused on specific functionality or
processes to help drive stronger ROIs and lower risk.
A consequence of the economic climate will be more ERP proposals taken off the table, POs not
approved, and projects delayed or even canceled entirely. But companies cant entirely abandon
their existing ERP investments in the face of stiff competition. So if they arent going to leap
headlong into new ERP projects, what will they do?
More companies may opt out of ERP investments and focus more on re-engineering processes
and providing better training to employees to get more out of their current systems, said
Kimberling.

Best-of-Breed Revival
Another possible choice might be augmentation of the major ERP investments companies have
already made. Thus in 2013 we will see a shift in the eternal battle between best-of-breed
systems versus all-encompassing ERP platforms by the likes of Oracle and SAP.
When economic pressure is combined with the continued growth of software-as-a-service
(SaaS), it will result in momentum away from single ERP platforms and toward best-of-breed
solutions, Kimberling said.
Companies will be more likely to look for best-of-breed solutions for CRM, HCM and
financials and phase those rollouts, rather than trying to implement more complex and costly
single ERP systems, said Kimberling. This will put more pressure on companies to address
integration and solution architecture.

Legacy ERP Cost Crunch

While there are plenty of shiny modern ERP systems out there, the bulk of systems can be
classified as legacy 10 years or more old. R "Ray" Wang, principal analyst and CEO at
Constellation Research, sees a trend toward many of these legacy transactional systems being
consolidated, upgraded and stabilized.

The goal: drive down operational costs to fund innovation, Wang said. For instance, he noted,
Many companies are moving to third-party maintenance to reduce costs.

Best of Both Worlds

Another cost cutting strategy being employed by those with older systems is one designed to
milk maximum longevity out of older systems. The idea is to use the older systems for traditional
transactional and ERP functions while adding new functionality via the newer Web-based
application vendors.
We are seeing a growing trend toward legacy ERP being surrounded by best-of-breed SaaS
applications, said Wang. The bottom line is that a lot of innovation is now coming from these
SaaS-based providers. However, when you follow this path, integration becomes a key
competency.

Desire for Quick Results

Microsofts take on the economy is a little different. While the company sees signs of a recovery,
it says that one dimension appears to have permanently changed the way in which businesses
look at software projects.
The era of IT projects centered solely on a technology agenda, scoped as wholesale systems
replacement, or with investment extending over multiple years against a promise of future
benefits is over, said Mike Ehrenberg, Microsoft technical fellow and chief technology officer
(CTO) for Microsoft Business Solutions. Time to value is now an essential component of any
investment shortening the time between initial expense and positive economic benefits returned
to the business is critical.
As a result, users want to pay for capability and capacity as used instead of up-front investment
for anticipated usage.

Forecast: Gradually Cloudy

Derek Singleton, an ERP analyst at Software Advice, said the ERP industry tends to evolve more
slowly than other software segments such as customer relationship management (CRM). Still,
megatrends such as cloud computing are beginning to make an impact.
ERP got off to a slow start in terms of adopting cloud technologies, and the industry was unsure
whether it could be a viable model for delivering ERP software, Singleton said. But now
everyone is now trying to figure out how to design and develop their ERP software for the
cloud.
SAP, for example, got into the game with the release of Business ByDesign and Oracle is
working to develop its Fusion Cloud ERP. SAP's and Oracles recent acquisitions of
SuccessFactors and Taleo, respectively, demonstrate the growing importance of cloud solutions.
Other major players such as Infor, Epicor and NetSuite all have Cloud ERP offerings.

Analytics for ERP

Analytics has long been the province of business intelligence (BI). But the advent of simpler BI
means it is finding its way into broader usage and that includes ERP. Theres a major focus
on developing technologies that help companies make sense of all the data generated by their
ERP system, Singleton said.

Going Slow on Social ERP

Lots of software is going social right now but not ERP applications. As the world goes mad for
social channels like Facebook and Twitter, Singleton said ERP vendors have been reluctant
and/or slow to attend the party.
There have been moves to incorporate activity streams into ERP software to improve internal
collaboration. Yammer, for example, has a partnership with NetSuite and it recently opened its
API for integration with SAP. Salesforce, too, has been pushing its collaboration tool Chatter in
large enterprise deals. It also pushes Chatter directly through Kenandy, a Cloud ERP system built
on the Force.com platform.
Meanwhile, middleware provider TIBCOs Tibbr product is able to draw on machine information
to create what it calls an application event stream. Tibbr can pull information such as days sales
outstanding (DSOs) from an accounting application and create an event stream that employees
can see and then add their qualitative assessment of the data, which others can follow in an
activity stream.
Despite these offerings, Its difficult to tell whether social functionality is something that will
make a discernible difference in ERP, Singleton said.

ERP App Stores

Inspired by the Apple App Store, the ERP App Store is coming. Vendors such as SAP, NetSuite
and Microsoft are actively building app stores to provide smartphone access to ERP data. As
these ecosystems mature, we'll see more native apps built out to connect ERP systems to
smartphones.
ERP is being impacted by mobility and the proliferation of smartphone apps, Singleton said.
Right now, there is a focus on building out an ecosystem of apps that will run with native
functionality on the iPhone and Android.
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in
California, he is originally from Scotland, where he received a degree in geology and geography
from the University of Strathclyde. He is the author of Server Disk Management in a Windows
Environment (CRC Press).