ERP's future value depends on flexibility in the face of tech trends

The future value of ERP will depend on whether ERP vendors can adapt to tech trends like big data, mobility and the cloud.

Despite some naysaying, the indisputable value of ERP has kept its demise at bay. Nevertheless, as we move further into the 21st century, does the technology have a real future?

ERP's future depends on how flexible developers are able to make the old workhorse, IT leaders and analysts say. Its future also depends on how responsive ERP systems are to such trends as mobility, big data, social media and cloud computing.

I think the biggest change you're going to see in ERP is it will go to more of a services model.

Christopher Steffen, for one, sees a cloudy future for ERP. "I think the biggest change you're going to see in ERP is it will go to more of a services model where it's more like Salesforce.com and in the cloud, instead of having all this bare metal sitting in a data center in your shop," said Steffen, principal technical architect at Kroll Factual Data (a subsidiary of risk consultancy Kroll Inc. in Loveland, Colo.).

For ERP to move to a services model, such big vendors as Oracle Corp. would need to be more flexible in terms of supporting a multi-tenancy, cloud-like environment, Steffen said. As it stands, the value of ERP for such vendors is in licensing and support. That position makes them resist a cloud delivery model. "It's going to take a paradigm shift from someone like Oracle Corp. to realize that, yes, cloud computing really is a real thing; it's OK to go down that path and embrace that model," he said. "Then you're going to see some major changes."

A model environment would boost value of ERP

Paul Hamerman says he's had plenty of debates with colleagues about the staying power of ERP. An analyst at Cambridge, Mass.-based Forrester Research Inc., Hamerman believes that the technology is sticking around but that ERP systems must give IT departments the ability to add on other capabilities moving forward.

"What it comes down to is that ERP is a packaged software system and it does have a certain level of flexibility; but a lot of businesses feel constrained in that they have to adapt their business to the software rather than vice versa," Hamerman said. "What we see going forward is a different kind of platform that's going to be a combination of buying a package and building onto it."

Hamerman has dubbed that vision an application process platform. It will have the standard features of any ERP package -- such as general ledger, accounts payable and payroll -- but it also will have the capacity to be built out. "You'll have a set of modeling tools on top of the system that will allow you to build out some very flexible applications that are really designed for business people to run the business without getting into a lot of technical-level programming," he said.

Responding to tech trends that will become the norm

Rather than speaking about cloud computing, big data or mobility as technologies that create value for the business in their own right, an increasing number of IT shops will look at combining these technologies strategically. And ERP will be a part of that integration, Hamerman said.

Hamerman's application process platform would strengthen the value of ERP in the context of big data because it would be able to monitor the business in real time, he said. "These ERP platforms will shift into a big-data environment where all the data will be available in real time and in memory," he added. "SAP is already doing that, and I think they're seeing some real promising results so far with HANA [high-performance analytic appliance]."

Improved mobility functions -- beyond simple smartphone alerts -- will be a must for ERP going forward, believes business applications analyst Cindy Jutras, founder of Windham, N.H.-based consultancy Mint Jutras.

"Very few companies today really have access to their enterprise data contained in their ERP [application] on their mobile device," Jutras said. "In the future, that's going to be better tied in … so they'll be able to press a button and stay captive in the application, as opposed to just getting an alert, then working around the [ERP] system."

"In five to 10 years we'll see some substantial changes in these ERP architectures," Hamerman said. "I have a high level of confidence this will occur just because there's a lot of work being done now by vendors to transform their technology -- whether they're doing it right remains to be seen."

Let us know what you think about the story; email Karen Goulart, Features Writer.

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