The renaissance of the ERP?
ℹ️ This article appeared originally in the 2023 Spring edition of the SPOTSi-Schlau Magazin.
It was the best of times, it was the worst of times
The old ways of ERP systems involved custom-built software that was designed to meet the specific needs of each business. This software was typically installed on-premises, which required significant hardware investments and maintenance costs. These systems were often inflexible, difficult to customize, and required extensive training to use effectively.
In addition, the implementation process for these systems was often complex and time-consuming. Businesses had to work closely with software vendors to customize the software to meet their specific needs, which could take several months or even years. The cost of implementation was also significant, with businesses having to pay for software licenses, hardware, and IT staff to manage the system. You almost had to sell your left kidney if you merely wanted to change the background color of a button.
Finally, these systems often lacked integration with other software applications, which meant that businesses had to manually enter data into multiple systems, which inevitably would lead to errors, duplication of effort, and a lack of visibility into business operations. Sounds familiar, right?
And when things did go wrong, it might have gone so quite spectacularly. Remember the case study of Lidl and its €500 million catastrophe that I wrote about in the last edition of this magazine? Projects always carry risks, but ERP projects somehow reside in the collective consciousness as particularly risky. Regardless of whether this is true or not, the modern ERP system takes away a few hurdles that any IT project is confronted with, and massively improves the odds of a successful ERP implementation project.
The contemporary ERP
Today's ERP systems are typically cloud-based, which means that they are hosted by a vendor and accessed over the internet. This eliminates the need for businesses to invest in hardware or maintain software on-premises. In addition, cloud-based ERP systems have become more flexible and easier to customize than on-premises systems.
The implementation process for cloud-based ERP systems is also usually faster and less complex. Businesses can choose from a range of pre-built modules that are designed to meet the needs of specific industries, which can significantly reduce the time and cost of implementation. In addition, cloud-based ERP systems are typically designed to integrate with other software applications, which means that businesses can avoid the classic data silo problem.
Finally, modern ERP systems are designed to provide real-time visibility into business operations. This means that businesses can access up-to-date data on inventory levels, production schedules, customer orders, and other critical business processes. This real-time visibility can help businesses make better-informed decisions, improve operational efficiency, and reduce costs.
We’ve even come so far that people other than software engineers can create their own solutions, simply by clicking and dragging their applications and workflows together.
A child of the time
ERP systems have come a long way since their inception, from custom-built on-premises software to modern cloud-based systems that are more flexible, easier to customize, and provide real-time visibility into business operations. With the ongoing advancements in technology, it is fairly clear that ERP systems will continue to evolve, providing businesses with new and innovative ways to manage their operations and drive growth.
I have found that the overall perception of ERP has changed as well. SAP has always been the top dog, and arguably will continue to be, but other kids on the block have made ERP more accessible than ever. There’s plenty of choice with reputable vendors, while new startups try to disrupt the market and get their foot in the door with new innovations and business models. ERP in the cloud was unimaginable for a long time, while we now expect it to be cloud-first. And with AI gone mainstream, we are at the cusp of yet another digital revolution where AI takes over large chunks of work in our daily lives.
For us at Dime Software, this sounds very familiar indeed, because we feel our business is headed in the same direction. Our partners and customers are urging us to move our software to the cloud, bring some intelligence to the table, and provide a streamlined and intuitive user experience to get started immediately. It’s almost uncanny that the current trends in the ERP world happen to be the same as ours:
- Cloud-based ERP according to the SaaS model
- AI-powered insights and automation
- Customization through configuration
- Easy to use APIs to get data in and out
- User-friendly interfaces
- Mobile compatibility
If we, a modest-sized ISV, share the same challenges as behemoths such as Microsoft, SAP and Oracle, we can only conclude that their ERP products are no longer living on their private island in the tech world. Instead, they have secured - once again - their place front and center for the years to come. Heck, dare I even say that ERP is becoming cool again? From my personal experience, I’m inclined to say yes.
My very first project as a consultant in the early 2010s was to migrate a multinational’s legacy ERP to Dynamics NAV 2009. Months of preparation and dry runs of tedious ETL procedures preceded a nerve-racking migration weekend to get the company working on a piece of software that already looked outdated. After years of actively trying to avoid ERP, I couldn’t believe my eyes at how much had changed when I started working with Dime Software a few years later, and how easy it had become to hook into systems such as Microsoft Dynamics 365 Business Central. And now that Business Central is completely merged into the ecosystem, it has been an absolute joy to work with.
This is not to say that the fundamentals of ERP have altered. The pros and cons to weigh in on when considering ERP for your organization remain unchanged, however. There are many options that ought to be considered when deciding on the best approach to backing your business with technology. Even so, with the latest developments, ERP has become more accessible than ever, which makes it a solid contender for many more companies that need to step up their game and reap the benefits of a modern business application suite.
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