Is your ERP at a dead end?
2020 was the year in which the software-as-a-service model and the cloud came of age delivering a long threatened breakthrough for business software. It was the time when Boards finally realised that security means nothing when no one can get into the office. In this white-paper we have analysed the offerings of the ERP vendors as well as provide some tips to focus your own investigation.
According to Panorama Consulting, cloud computing is now well beyond the hype phase. The consultancy considers the purchase of a cloud-based ERP system to be just as normal as buying a car with 4 wheels. But how will your software vendor respond to this? Does your vendor have any cloud strategy at all? And if so, what does this strategy mean for the support of your current system and software versions? Not just today, but in the future as well. An analysis.
A rosy future is universally predicted for the market for cloud-based ERP solutions. A future so rosy that no serious vendor can afford to ignore this trend. This means that solution providers must make strategic choices. The impact of those choices can be huge for your organisation and that's why it's now more important than ever to follow your vendor - even if you're not yet using any ERP software from the cloud. Or even if you're not even thinking actively about it yet! The burning question is: can you continue into the future without expecting disruption using your current system or indeed should you be preparing seriously for the transition to another?
Comparison with Y2K
In essence, for vendors, this transition is quite similar to those in year 2000, the difference is the threat today is real. Everyone doubted whether traditional systems could function technically in the new century and the vendors felt obliged to review their portfolio and make strategic choices.
It led to a huge focus on restructuring where many customers felt forced to switch to newer Y2K compliant systems much earlier than they had planned. With all of the attending financial and organisational consequences.
Strategic issues
It would appear that we are now witnessing the same, many organisations standing on a precipice standing on the brink of looking at vendors offering modern ERP solutions where many wish they’d considered the cloud instead of listening to the fear mongering around security.
In addition, the vendors themselves must also answer a few critical questions:
- Which of the current ERP systems are technically suitable for functioning in the public cloud as so-called "multi-tenant solutions"?
- Why hasn’t the investment been made already and how long will it now take?
- How much will the upgrade investment be once these adaptations have been completed, and how much upheaval will these investments create?
- What should be done with the support and development of the traditional on-premise variants of the various ERP systems and system versions? What will this cost? And can those costs be justified from a commercial standpoint?
The position of the large ERP vendors
If we have a look at the large international ERP vendors, we see several of them offering multiple, often partially overlapping solutions at this moment. For example, Infor, Microsoft and Oracle's many acquisitions have left them with a patchwork collection of ERP and CRM systems. A situation in which each solution also has multiple versions in use. Both companies require an actual alphabetic index in order to present their portfolios on their websites!
Some solution providers also make their traditional systems suitable for use in the cloud, when organisations, ahead of the curve perhaps, like Xero and SAP, have developed entirely new systems for the cloud.
Across the board ERP vendors are being asked which of your solutions are the strategic systems for the future or can it better be labelled a cash cow? Often, the vendor's website provides a first indication of this distinction. If your solution is not on the homepage, you have a good reason to worry. But if your solution is not mentioned on their website at all, you probably have a bigger issue!
Rough market analysis of ERP vendors
With my best interpretation, a first rough analysis of the websites of several leading ERP vendors reveals the following picture:
- Infor provides and/or supports an impressive array of solutions across the domains of ERP, CRM, HCM, PLM, SCM and EFM. They include Infor LN (previously Baan), Infor LX, Infor M3 (previously Movex), Infor System21, Infor Pegasus, Infor Evolution and Infor SunSystems. From the website, it's not immediately clear which solutions comprises the most strategic offering.
- Microsoft supplies and/or supports four different ERP solutions: Dynamics AX, Dynamics NAV, Dynamics GP and Dynamics SOL. The two last are in use in the English speaking countries only; the first two worldwide. D365, formally (Dynamics AX) is offered to larger (international) companies. Dynamics NAV, now available in the Cloud as Business Central, GP and SOL are the solutions for the small and medium sized companies. Dynamics D365 and Business Central appear to be strategic path forward and important for Microsoft.
- Oracle provides and/or supports the Oracle E-Business Suite, Oracle JD Edwards, Oracle Peoplesoft and Oracle Fusion Applications, among others. For Oracle JD Edwards there are even two solutions: World and EnterpriseOne. Here, Oracle Fusion Applications would appear to be the main strategic platform for the future. Although the company seems to have been struggling for many years in bringing this solution to the market and back in 2016 acquired NETSUITE to serve the SME Market.
- Sage supplies and/or supports an impressive series of ERP solutions. It starts with Sage Line 50, Line 100, Line 200 and Line 300. These are their traditional product lines. On top of that there is a series of cloud offerings called Sage One, Sage Live, Sage Impact and Sage X3. The last one seems to be the strategic Sage offering. But is X3 the cloud solution that really has a fit with all their existing customers?
- SAP provides, SAP S/4HANA, SAP Business ByDesign and SAP Business One. Older solutions continued to be supported and customers are being encouraged to upgrade. SAP positions Business One as a solution for small businesses, Business ByDesign for small & medium-size companies and S/4HANA for enterprise companies. Business ByDesign and Business one are being moved to the same platform and in the near future will provide a seamless cloud based path for small business to dominate a single market to expand without the necessity to go through a upgrade to dominate in multiple markets. The solution will host more than 100,000 customers and will be SAP’s strategic cloud offering for SME’s.
What's your situation?
For many customer companies, their ERP system is the business's beating heart. And that makes sense. Because in our rapidly changing market, the availability of the right information at the right time is strategically important. So you probably can't afford to settle for less than the very best. If you want to avoid surprises, it's a good idea to keep a close eye on your vendor. And to gain a clear view in the short term of what your system's future looks like. More specifically: the future of the system version you're currently using. So that you know whether you need to take action. Organisations like Microsoft and Oracle that have larded their systems with a significant dose of customisation, particularly, would appear to be treading on thin ice.
The implementation partners of these ERP vendors should raise similar questions. Organisation like Sapphire Systems once the darlings of Infor, are now moving the sights from Business One to Business ByDesign. Are their investments in capabilities and knowledge providing a strategic insight into SAP’s strategic bet?
Practical suggestions
Here are a few practical suggestions for your own investigation:
- Follow your vendor's website closely. Is your system still being actively promoted to new buyers? Or is it no longer mentioned at all?
- Be sure to visit the next annual customer day and ask pointed questions there.
- Ask your vendor for the most recent version of his company's product roadmap in order to see the concrete future plans for your system, is the roadmap at the end of 2020 full of the same undelivered enhancements as it was Pre-lock down?
- Investigate whether your system is already available in the cloud or is it a pipe dream? Determine how long your system will continue to be supported as a traditional on-premise version and if so does it not make sense to use the next upgrade as a chance to migrate.
- With Brexit around the corner will your customers need an upgrade in order to be able to have the right functionality to export and import goods from the continent, or will you need to provide upgrade functionality once the UK Government have decided what our relationship with our biggest trading partner will look like?
- Ask your vendor for a written statement about how long it will take to provide the additional functionality and a written statement that it intends to deliver Berit compliance.
Support versus continued development
In your investigation, it's a good idea to pay attention to the distinction between support on the one hand and continued development on the other. Naturally, every vendor will want to support his existing systems for a certain amount of time. With such services as a help desk, training and consultancy. It's also perfectly reasonable to expect that a given period will occur for all current systems during which new, error-resolving versions appear - so-called "bug fixing". However, the question of whether your vendor will continue to develop (the version of) your solution is crucial. Development which not only resolves bugs in new versions, but in which new functionality also becomes available. In which new versions of the surrounding systems are supported, such as the Microsoft Office tools. And in which modern technologies, such as new devices, continue to be made accessible. Including near-future things like speech recognition and handwriting recognition. Development that closely follows rapidly changing trends in Social, Mobile, Big Data and the Internet of Things. And in which legal and regulatory changes that are relevant to you still are implemented in your system pro-actively and in a timely manner. If your ERP system is strategically important to your enterprise, then this last variant is the only one that will satisfy you (in the future), right?
The importance of transparency
For an ERP vendor, it's not exactly simple to offer perfect transparency, of course. Huge numbers of customers are involved along with considerable financial investment. My advice is always ask to speak to the person who owns the Road Map, from experience Rainer Zinow of SAP is always happy to speak to customers on this subject.
Considering the strategic importance of this issue is almost as important as how you deal with the Corona Virus never mind facing the future, and let’s face it, it is only fair to expect complete transparency from your current provider! So that you know exactly where you stand and importantly where you need to focus over the next twelve months.
Please share the discussion you have with your provider.
For a competitive analysis on the products please click on the links
· Business ByDesign vs. NetSuite
· Business ByDesign vs Business One