The evolution of Enterprise Software (ERP)... !

In an exciting interaction recently with the BA & Product Manager community we were discussing on how the roles of a BA / PM had transitioned / transformed and its way forward. We were conversing around different domains and then hit upon the aspect on how the world of ERP has transformed over the past two decades and what it means for this group here.

From a traditional back end sort of applications, Enterprise software (or enterprise solutions as they are now known given the breadth of their end-to-end offerings) have become more robust, smart, intelligent solutions that help decision makers not only run their operations effectively but also most importantly assist / suggest / predict / equip the stakeholders with the required ammunition for making business critical and real time decisions. Penning down some thoughts on what has changed and what still stays put in the world of ERP....

Aspects that have Changed:

Consumerization & User Experience

• The line of distinction between B2B and B2C is disappearing especially in the user experience space where the user expects an intuitive, simple, seamless, personalized, clean and a nice look and feel of the application that he / she is spending his time with. ERP is no more a forte of experienced users or a repository of complex functionality or a cluttered interface.
• Onus and focus beyond user requirements on usability, user journeys and behavioral patterns have taken prominence in the B2B space as well.
• With the onset of more and more self-service applications, expectations from organizations and end users is that their user experience is similar to any of their other day-to-day applications / websites like e-commerce with an intuitive, self-starter interface and an approach that resonates with the human mental map. (Self-service has crossed the boundaries where in the end-users are not just employees or contractors but vendors, customers, auditors, other intermediaries as well who definitely need not be experts with the underlying solution but are key stakeholders and so intuitiveness and simplicity is a must).
• Mobile first approach and design thinking has ushered a different mindset for the enterprise solutions. Cloud based and Multiple entry points like Mobile, tablet and even starting points like 'Search' / 'Scan' have brought a paradigm shift in the way a task or a business process is initiated / achieved.
• Even within the ERP vendor community, the User experience and a clean interface started becoming more prominent even for large enterprises vendors and not just for the players who were targeting the small and medium sized market segment.
• Customer-centric focus was always prevailing and user-centric designs and experience is an added key variable in the ERP space.

 Shortened cycles

• Procurement Cycles & Sales process - Gone are the days where there used to be a long and time consuming procurement process especially in the large enterprises market segment. With the influence of Consulting firms, research firms, social platforms coupled with the old school avenues of references, prospective buyers are well informed and are aware of the capabilities or pitfalls of a potential vendor even before inviting them for bids. (Ready-made RFP's, questionnaires and checklists are now available, even industry-wise within groups & forums :) ). The concept of story telling has taken more prominence here as well given that a demo duration is very short and has to be compelling enough to impress the audience.
• Implementation Life cycle - Gone are the days where companies boasted of massive multi year timelines for the implementation life cycle. Organizations are preferring an approach of short (sometimes incremental), easy to implement, easy to learn & adapt, minimal effort / impact on legacy data conversion / legacy features and so on.
• Shortened release life cycles - This is a change observed more from the advent of technology and competition than the end users where Features are released in shorter cycles with minimum / no impact on upgrade effort through a process centered around optional features / extended capabilities / feature flags, robust release guides with clear impact statements, etc.

 Cloud Offerings:

• From a typical On-Prem deployment model to a Hosted services model and through to pure SaaS based models, Enterprise solutions have come a long way battling its way through security, infrastructure, designs and privacy concerns on one hand VERSUS its benefits in terms of lowered TCO and 'Pay as you go model' on the other hand for buyers.
• This has paved a new way of developing features, multi-tenancy capabilities, subscription pricing, updated revenue recognition models, etc. While this is the case, many of the legacy enterprise solutions have still retained focus on On-Prem solutions and perpetual licensing models for existing customers while others explore hybrid or private cloud offerings due to obvious reasons.
• I still remember when traditional ERP solutions started moving into cloud, the initial design for some organizations was around exposing the whole desktop functionality or a portion of the same on a cloud platform. Organizations immediately realized that this is not the right approach and a detailed retrospection and thought process evolved around the browser / web client capabilities + features matrix + design considerations that were subsequently streamlined for a cloud based offering. There were other ERP solutions which supported cloud or SaaS based models only which enjoyed the privilege of designing their cloud ready applications right from the beginning.

Technology Changes

• Automation of end-to-end business process started emerging within the solution or within the ecosystem. Transactions, workflow & approvals were streamlined or automated, like for example - accounts payable's process (scanning invoices through to approval, payment and reconciliation) OR integration using NFC or scanners / readers for time attendance into time entry and through to payroll.
• With the advent of emerging technologies, enterprise solutions have started embracing more and more use cases which are now possible to accomplish or provided a replacement of the old way of doing things.

Traditional Business processes around MRP, logistics, supply chain, have seen its own transformation within the ERP systems with more emerging technologies available resulting not only in savings & operational efficiencies but also providing real time information in the hands of the business users as also faster turnaround for the end consumer in the value chain. These have helped enterprise solutions move up the value chain not only with use cases around operational efficiencies but also multiple predictive models now available. Recruitment is another space that has seen a huge advent of behavioral science / machine learning / AI which has taken over the screening / matching phase. Open enrollment again for example, has seen lots of use cases around conversational AI bringing in a mix of leanings, patterns, preferences and user inputs. Again IoT for instance has made its way into Asset Management to monitor and predict the working life of physical assets.

• Even before the advent of the emerging technologies, integrations with social platforms made an advent whereby intent was to bring together the stakeholders into the ambit of ecosystem with transparency, faster communication, broader reach as KPI's & ROI.

Reporting needs

• It was a world where every standard / baseline report was vetted with a client during the implementation phase and then multiple negotiations around the number of additional reports that would be built or around their requirements. With the ever-changing dynamics, organizations quest for quick and real time decision making has pushed the need for MIS to a more of self-help culture. The advent of technology like SOAP, ODATA, etc, helped empower users to create their own inquiries, dashboards, charts, etc to suit their need and appetite.
• Again the world of static fact based-listing reporting (operational efficiency) evolved into inquiries, forecasting / KPI based and subsequently into dashboards, one stop shop, self-help, What-If's, etc With the advent of Big data technologies and data analytics, users are now able to have access to predictive, recomendative and actionable insights based on data mining, user feedback or experience based that could also include sentimental analysis of internal and external sources.

Quality

• This does not stand as a selling point similar to any other industry. Quality is a given and not a selling point or after thought. Also a new definition has arisen - 'Quality is in the eyes of the user experiencing the product / solution'

Globalization and Localization

• This is again a key decision for especially the global ERP vendors in terms of expanding beyond geographical boundaries. The large players were always looking at global solutions where there are multiple other vendors who strategically preferred to stay within their own country, geographical area or a particular locale.
• This not only meant mandated capabilities like timezone, currencies, consolidations, translations, etc but also strategically ensuring that local competitive features and regulatory compliance of varies countries were factored into their backlog for prioritization.
• There are now different and interesting aspects of design considerations that have been engraved in the architecture of different ERP vendors to handle global versus local features through varied code bases, modularity, extensions, app based models and so on.
• DevOPS has come to the rescue in this space as well, over and above the standard advantages that it provides by taking care of Industry specific or local / locale specific distinctive features.

Customization Models

• Though enterprise solutions started with strong messaging around standardized and industry best business practices in their offerings, the ecosystem did not embrace this statement in its entirety This lead to the vendors coming up with variants for geographies, industries or target segments WHILE other vendors offered the ability to customize as a differentiation / USP. There were even models which offered seamless upgrade by preserving these customization's.
• Customization models have been constantly evolving and newer concepts around Configuration, extensibility have been evolving progressively.
• End customers always wanted the right and balanced solution between standardized business process versus a highly customized offering given its pro's and cons. I should admit that SaaS based models to some extent have helped re-enforcing usage of standardized and best practices offerings to accomplish business objectives.

Competition & Services Offerings

• The landscape has been changing continuously. This is something which we all are aware and happens in every industry. Market is harsh and brutal and nobody is forgiven. We all have seen the Nokia syndrome and the Blackberry stories. We cannot blow our old trumpet or survive based on past glory. New market players with new design themes / offerings and experience are able to have an edge over legacy players despite a dearth in their functionality by offsetting the same through their design flexibility.
• Competition for the ERP vendors are not just amongst themselves but also across multiple specialized products or platforms in pockets of functionality like Benefits, payroll solutions, Accounting packages project management software, credit management, compliance management, etc.
• Product or Modules have been ever expanding under the umbrella of Enterprise solutions and goes beyond Finance, HCM, Project management, Supply Chain logistics, CRM and the list keeps growing. It is now left to the vendor to decide the business areas that he would like to venture into individually or with the ecosystem partners.
• Service Offerings have been evolving continuously as well. While traditional models evolved from solution to consulting to implementation to hosting, the passage of time saw the advent of end-to-end offerings, out-of-the box offerings (SaaS based) and so on. ERP vendors are no more a vendor for a product but consider themselves as a partner to the success of their prospective customer by offering an end-to-end and a real business and digital transformation.
• A decade back there was a thought that the pricing strategy was that we would not want any licensing cost but only AMC costs. Having said that Pricing models had also evolved from named users to concurrent users, basic versus advanced pricing models, perpetual to subscription (in lines with the decade back thought process). The concept of piggy-back pricing, KIT or combo pricing which again is prevalent in different industries started becoming more and more prevalent especially into large ERP vendors who had the end to end technology and were able to offer complimentary licenses to their ERP offerings based on procurement of a database, platform, productivity tools and so on.

ERP Ecosystem

• While the enterprise solutions always had the concepts of Build versus Buy versus Partner, the approach is now more towards an ecosystem (and a platform approach) where partners or third party integrator's can build APPS for bringing in additional functionality, capabilities or industry specific verticals within the ecosystem.
• Again with technology and experience taking prominence, organizations expect a seamless experience across the end to end business process with the least interference and heightened turnaround irrespective of the multiple couplings under the hood.
• The thought process provided the ability for enterprise solutions to design their solution in a manner which could foster evolution, adaptation, features of tomorrow as well as flexibility to change and grow.
• Another flavor of the same ecosystem approach was the Shift Left approach This meant that not only market & user research at the beginning of the feature lifecycle but participation and involvement of partners, customers & end-users right from the stage of use cases, scope and design has had more and more acceptance and influence on the customer ecosystem. (Design thinking was very much prevalent in the last decade as well but in different flavors).

Product Development / Product Management process and practices

• Product Managers were primarily focused on delivering features and capabilities while technology and platform was an independent investment in itself. The flavor of Product Management has undergone a major change wherein the horizon & their KPI's have expanded to include variables around user experience, intelligent, innovative, emerging & end-to-end seamless use cases.
• Lean, Agile & User-centric approaches have had an influence on the way in which organizations have adopted their Product life cycle and SDLC. Same is the case with evolution on the prioritization front as well.
• SDLC processes have moved from a waterfall model to V-Shaped to iterative / agile with shortened chunks of features and incremental value delivered.
• On the requirements management, Organizations have been moving away from large functional design documents (FD, FDD"s, etc) to more user centric approach like Use cases, user flows, visual designs but with the underlying Business rules.

Things that still stay put !

•  Business Process Re-engineering for organizations adopting enterprise solutions is still a must.
• Again, Change Management is imperative - whether one is adopting an enterprise solution or going through a digital transformation. Involvement of the the top guy is critical and crucial not only from a review stand point but from a vision / cultural change stand point across the organization and the ecosystem where it operates.
• Core Functionality & Core Business Processes is still the key (Just that the way they are accomplished has changed). Enterprise solutions still are designed for a market segment and ecosystem and the underlying Best practices would prevail.
• The original thumb rules of single point of entry of information, single source of truth, integrated and cross functional business process / capabilities, still remain.

 Conclusion

 Similar to how we expect organizations to perform a business process re-engineering, ERP vendors are also continuously evaluating the ecosystem to help build solutions & experiences, that help end user organizations to perform a true digital transformation and focus more on their business critical functions or take faster decisions in a dynamic and highly competitive world.

The above list is in no way exhaustive nor covers the platform / architectural evolution that have happened but definitely some aspects from the top of my mind and as we all would agree…Change is the only thing that is CONSTANT :)

Disclaimer

The thoughts expressed above are based purely based on my experience involved with multiple enterprise solutions and in no way a sales pitch for one versus the other.