What I have Learned about Running a global multinational ERP - Part 4 The Future

The evolution of ERP – part 4 of what I learned about ERP

This is the latest in the ERP series of papers which I am writing to pass on some of the knowledge i have accumulated over a 31-year career working on ERP platforms.

This paper examines the future of ERP and how I think it will evolve based on the evolution and drivers I see in technology and business.?

To consider the future I want to take you back to the foundation, which is the reason that ERP exists.? ?In the first part of this series I gave the reason for ERP to exist which is to integrate the enterprise level functions and thereby orchestrate, make more efficient and productive, and reduce time lag for data and information to be available across the many disparate processes needed to execute at the Enterprise level of a corporation.

If the reader were to go back to the late 1960’s and early 1970’s ERP literature speaks to connecting the entire Enterprise and representing the current state of the entire Enterprise (at the Enterprise level) at any given moment. ?From the late 1960’s to the recent past the hardware and software has not been capable of achieving this vision.? Today, however, the opportunity exists to achieve the ERP vision if an Enterprise is willing to align the many disparate components needed to create the foundation for the ERP platform to have the necessary inputs.

Remember from the first part of this series, I stated that as an Enterprise becomes larger and more complex the evolution of the ERP will naturally move to few, and ultimately if practical and sensible in the architecture being considered, a single instance.?? But once an organization achieves few, or a single instance where will it go next? What are the next set of challenges likely to arise?

What are the main drivers for ERP?

I break up the main drivers for ERP into three categories: first is the evolution of technology – software, hardware, and network (connectivity), second is the evolution of the customer expectation and need, and third is the internal needs of the Enterprise to make decisions and respond to external pressures. Let’s examine each driver in turn.

Technology

ERP Software and Hardware

Over the last 15 years or so the hardware underpinning an ERP platform has evolved to become much faster, capable of processing larger volumes of data and more interconnected.? I will not detail the advances as there are many other sources which provide the rate of change for various components of the technologies that make up the hardware for an ERP platform.? For this paper suffice it to say that the hardware is no longer a constraint to achieving the ultimate vision for ERP. Whether it is faster CPU, GPU arrays for AI, in memory components, or other technologies all play a part in lifting the overall capability and possibility of the ERP platform.

The evolution of the hardware makes possible new techniques for the software that contribute to the ERP outcome.? New algorithms and techniques such as Machine Learning and generative AI, new software structures such as process-based components versus transactional based components, and new UI paradigms on new devices allow the ERP software to evolve from the transactional and batch-oriented structure to a new streamlined, more efficient, and more adaptable structure.? This new structure of the software aligns to how people both want to and need to work in a continuous Enterprise where data and information are flowing rather than being processed as discrete packets.

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Technology, Network and Ubiquity of Connectivity

Today networks connect a significant percentage of the planet and can manage billions of devices sending and receiving data.? As the evolution and build out of networks continue and most if not “all” the planet is connected the ability to obtain the information needed for the ERP vision will be available and accessible timely and accurately. ??Instead of waiting for a person to make a phone call to talk to someone who inputs some data that is then sent at some point to a system for update and dissemination, a device will talk to a low earth orbit satellite or other network and provide real time updates to location, status and other attributes as needed.? Recent technology, such as blockchain, will provide trusted feedback and confirmation on transactions between parties allowing for the elimination of manual processing and time lag.? There are many examples and more coming every day.?? Again, I will not attempt to detail what has already been chronicled in other places.? Rather, it suffices to say that the constraint of data and information availability is being eliminated by the evolution of the network and connectivity. ?Another major hurdle to achieving the ERP vision is being overcome and in many places is already no longer a factor. ?This elimination of the constraint drives the expected usage and outcomes associated to the ERP platform.

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Customer Expectations and Needs

As technology has become a part of everyday life the expectations of people have changed to align to the new capabilities and promises of technology.? People are moving to the expectation of interacting with corporations in a similar, if not almost identical, way that they utilize technology to interact personally in their day-to-day lives.

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????????????? Retail experience expectation

Retailers the world over have adapted the experience for customers to make the ???????? interaction process efficient, enjoyable, and easy.? Those basic tenets of ??????????? ????????????? interaction, efficiency, enjoyability, and ease are becoming the table stakes for all electronic interactions. Therefore, ERP interactions whether they be internal to an Enterprise, between the Enterprise and customers, between the Enterprise and vendors, or between the Enterprise and government entities, need to evolve to demonstrate a higher level of all three of the tenets.

????????????? Personalized processes/products with time sensitivity

With the advent of and creative utilization of innovative technologies such as ?????????????????????????? additive manufacturing products and services are evolving to be more personalized ????????????? and individual.? While this is not possible or desirable in all circumstances the move to personalization or individualization will continue for a wide range of products and ????? services.? As this evolution to a unit of one continues the ERP platform must adapt to provide both the process enablement to work in a single unit and the timeliness to interact on that single unit to meet both the necessities of the business interaction and expectations of stakeholders.

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Enterprise decision making timeliness

Responding to opportunities and challenges

Enterprises large and small need to respond to opportunities and challenges in an ????????????? effective and timely way or face a degradation in their business and long-term ????????????? viability.? To be able to respond effectively and timely, the Enterprise must be able to assess its position vis a vis the challenge or opportunity and as much as possible against its competitors.? The assessment will rely on a great deal of data processed through the ERP platform and the more “real time” that data and information is the more comprehensively the Enterprise can develop and assess options. Ultimately, one way Enterprises will compete is by being able to respond faster than their peers to changing business conditions or by being able to better understand the situation in total and using that understanding to develop more effective ? responses.

?The landscape that impacts ERP Platforms is changing both rapidly and significantly.? What then do Enterprises need to do to prepare and leverage their ERP platforms to be well positioned?

Leverage the improved technology to enable “real time” or continuous processing of transactions and create a true data and information flow.?? Dimensions of how to leverage are:

Select an ERP platform with the technological underpinnings to deliver continuous data and information flow.

Ensure network connectivity is available for all aspects of your business not only internally but also externally to vendors, suppliers, and other entities providing services.? Joining and driving consortiums to drive standards and create the opportunity for standard software development should be prioritized.?? As more standards are created it allows the different parties in the process to focus on their core businesses rather than all aspects of the end to end which may dilute their focus and resources.

Rework processes to eliminate the need for time delay.? Today processes are created and designed assuming batch processing in general.? The assumption influences design, organization, and many other aspects of how the work gets done in an Enterprise.? It is easy to say that there needs to be a reorientation to continuous flow, and that change will be significant and pervasive.? To achieve benefit will require change across many components at one time and will require orchestration to align the overall change.

Utilize technology to augment people by delivering exceptions in real time to ?????????????????? resources who can action those exceptions.

Ensure the middleware that integrates applications can handle the real time nature of the expected communications and has capabilities to correct errors easily and quickly so that delays in data flow are not created.

Work with vendors to create real time data and information flows.

Working with external parties is more complicated and takes longer as the changes desired may include changing contracts and similar agreements to drive the transition.? This will take time to implement and may require evolution as some vendors and suppliers will be capable of delivering real time data flows while others may not.? Therefore, understanding what processes are possible to evolve “quickly and easily” will be necessary to focus effort where benefit can be achieved.? It may be necessary to evolve more slowly in other processes taking interim steps which may reduce time lag but not achieve continuous flow.? While not ideal, moving toward the goal of continuous data flow should be positively viewed and all reduction in time lag will aid in achieving significant benefit for Enterprises.

Reorganize around the Enterprise nature of the processes

To date most Enterprises, view the different components of the Enterprise processes as separate and distinct.? As the time lag is reduced and eventually eliminated it will no longer be the most effective option to keep the business function distinction.? Viewing the Enterprise level processes as a holistic unit will drive greater efficiency and effectiveness for the Enterprise and for the business and technology teams that design, work in and support ?? the Enterprise processes and the ERP platform supporting those processes.

The distinction of today has worked as the existing constraints in technology and process have not driven the need for the close coupling across traditional business functional areas.? However, as an Enterprise moves toward continuous processing the dependency and impact across those traditional business functions will increase and become more important than the impacts and relationships that drive the traditional structure of today. This is true more in the technology area for the team designing, implementing, and supporting the ERP platform than the business functions but applies to both parts of the organization. Moving to a “real time” enterprise means rethinking the way the Enterprise structures the work as the nature of that work is evolving to be significantly different from today.

As an example, today Supply Chain may be in a manufacturing or Logistics group due to the dependency between Supply Chain planning and manufacturing.? However, in the future it will require rethinking this relationship as the impact and interdependency between Supply Chain and Logistics, Tax, Finance, Costing, Regulatory, Import/Export, Quality and other teams will be significantly higher.? To effectively make changes in overall Supply Chain planning the process across these many teams will need to be examined and adjusted with collisions resolved and Enterprise focused decisions being made.?? Decisions will balance what is best for the overall Enterprise across the entirety of the Enterprise functions not just look at one subset of the process or even one business component such as Finance or Manufacturing.

This reorganization will be easier to implement on the Technology side (IT) as the technology team can cross the boundaries more easily.? Whether the business team is kept in a traditional format and matrixed together for Enterprise purposes or is reorganized around an Enterprise orientation is a choice each Enterprise will need to make based on many internal factors.? The challenge associated with changing business functions should not slow down the IT teams coalescing into an Enterprise group for the work associated with the ERP platform.

Placement of the team to interact with business users who drive change in?the ERP. To enable the business functions and keep the ERP Enterprise processes whole and workable, the Technology teams’ application architects and designers need to be near the business process owners who make decisions.? This means co-location of teams as much as possible with minimization of time zone differentials.? As described in this series the IT Process Owner and the Business Global Process Owner need to work closely to govern the design and resolve any contention that arises both within a singular process and across multiple processes.

Placement of the team to support the operations across all needed time zones.? If the Enterprise works across multiple time zones, particularly if those time zones are close to 12 hours apart, then the team should be in multiple locations or work multiple shifts to both interact with process owners and support operations as needed.? This aspect of support will become a significant priority as an Enterprise moves toward continuous data flow.? Any delay in the functioning of the ERP platform will immediately impact the Enterprise by delaying data flow.

?My purpose in writing this series was to help you think about ERP differently as the very nature of ERP makes it different from most if not all other applications.? I hope this series has provoked thought and challenged assumptions.? AS i stated in the opening piece not all fo my thoughts will be relevant to all Enterprises, and I hope practitioners will utilize these papers to form their own strategies to maximize the utility of the ERP platform today and far into the future.? I thank the readers for their attention and effort in reading and digesting these papers and I hope you will comment and keep a vigorous conversation going around these and related thoughts.

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