Troubling, Challenging 2014 ERP Predictions

Summary:The ERP segment is undergoing a lot of change. Change, though, can create some uncomfortable moments for some folks and ERP vendors, customers and integrators will definitely feel something next year. What are some of these challenges and who will need to adapt?

More Troubling/Challenging ERP Predictions for 2014

 

4) Baby steps to cloud solutions will quickly change to big leaps – I’m running into two kinds of firms: those that are rapidly and continuously adopting cloud solutions and those are that are trying to ease their way into the cloud by way of lots of small, intermediate steps. These steps often include:

  • toying around with creation of an expensive private cloud
  • using some ‘experimental’ cloud applications when their main ERP vendor lacks an on-premises solution
  • keeping ‘business unit’ or ‘core’ applications on-premises while relegating 'less core’ or ‘peripheral’ applications to cloud solutions

It’s time to call this activity what it really is: stalling and/or wishful thinking. Utility computing has arrived, bigger cloud ERP suites are emerging and the justifications for remaining with on-premises solutions have been significantly debunked. 

After I wrote those paragraphs yesterday, I got this soundbite in today’s FierceCIO:

"It's impossible to private cloud everything," Gartner Research Director Michael Warrilow was quoted by CIO as saying last week. "We will see ever-more public cloud adoption. The public cloud is probably going to be 70 to 80 percent of cloud workloads."

Starting in 2014, we may finally see IT interventions where CEOs talk CIOs out of additional spending on on-premises or private cloud ERP deployments. Why are companies still maintaining on-premises code when multi-tenant cloud vendors do it as part of the subscription? Why are so many IT people maintaining back office ERP solutions instead of working on more strategic projects?  A change, a big change, is needed. Maybe 2014 will see some movement here.

 

5) The continuing ascent of cloud solutions means that more companies will need valid independent advice to choose smartly. Unfortunately, there won’t be much of that.  If your firm is about to make a major change in its ERP vendor of choice, you might be tempted to call in an integrator to help you decide what vendor could be your new ERP suite-mate.  Well, independent advice and counsel kind of went out the door years ago.

Few integrators are independent. Few of them will actually tell you about the financial, co-marketing and other relationships they have with specific vendors. No, when you call an integrator these days, you’re more likely to get a sales call from one of their ‘solution’ experts. And, guess what, they just happen to be experts in the one vendor that firm has a deep, financial relationship with. Or, to put it differently, they believe that the best solution for your firm is to use the solution that they have the most people trained to implement it. I’m not kidding. I’ve actually heard that justification.

Consultants (as opposed to integrators) are supposed to put client interests above their own. The operative phrase here is “supposed to” as not all firms that call themselves consultants are actually delivering to this standard. As someone who has been a consultant, an integrator and an industry analyst, caveat emptor.

If you want some real insight, I’d suggest you talk to a couple of independent analysts. Yes, everyone has their own personal biases and many independents do some work with vendors (e.g., I probably did ten webinars this year with several vendors). Does that mean their guidance is necessarily tainted? Not really but that’s why I suggest you check in with a couple of folks not just one.

There is definitely value in meeting with people who play in traffic every day. They talk to lots of vendors and customers. Single vendor integrator practices are rarely as cosmopolitan as those who must be in contact with entire market segments. Again, caveat emptor.

For 2014, I expect a lot of independent analysts (and many analysts in established analyst firms) will get a lot of calls requesting help in selecting new ERP solutions.

 

6) Some integrators and vendors will realize, too late, that customers want to be done with application software operations, maintenance, etc. – REALLY DONE WITH IT!  Businesses don’t want to be bothered with patching, maintaining and upgrading software. That stuff was an acceptable price to pay in the early days of application software but not anymore.

ERP software has been around a long, long time but traditional vendors have made only nominal progress (and only recently at that) in making upgrades and maintenance easier, less time consuming, less labor intensive, etc. 

Third party firms, not necessarily ERP vendors, have stepped in recent years to provide a number of connectors that make integration between different ERP and cloud products easier. But this just illustrates another big integration challenge that IT shops have to manage whenever any product in their portfolio is upgraded: they have to re-test all integrations, too.

So, while I am very happy to see cloud multi-tenant applications solve one part of the maintenance issue (i.e., the vendor now applies all of the upgrades and patches), they don’t do all of the re-testing of interfaces and integrations. This is actually a big deal.

In some firms, the HR software alone may integrate/interface with one hundred or so systems. These systems include: general ledger (for budgeting and payroll costs), third party benefits administration systems, a cloud performance management system, etc.

So, what customers REALLY want isn’t just multi-tenancy, they want ALL of the testing and maintenance work to go away. That means that vendors, outsourcers or integrators have to offer more. Businesses want the whole problem to go away not just a piece of it.

In 2014, I suspect that some outsourcers will show some brilliance here. OneSource Virtual is way ahead on this front and other players need to follow suit.

If your firm is an integrator and it still thinks that clients simply want an implementation, your firm is dead wrong. Don’t just install software for these clients, take away all of their maintenance problems/challenges. If you don’t see that the market has evolved in its wants and needs, you’re done for.

What are your ERP predictions and challenges?

Topics: Enterprise Software

About

Brian is in a unique position to diagnosis the winners and the losers in technology and services. He was the longest running (10 years) and most senior director of Andersen Consulting's (now Accenture's) global Software Intelligence unit - a position that required him to pick the best possible software solutions for hundreds of clients gl... Full Bio

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