Troubling/Challenging ERP Predictions for 2014
Last week, I did a televised bit offering my predictions for the financial software space. It was the Workday Predict & Prepare telecast and predicting along with me were Vinnie Mirchandani and Naomi Bloom.
On that program, I had a chance to get out three predictions. One concerned the upswing in large enterprises adopting cloud financial accounting software. Another prediction looked at the collision coming with an aging CPA population and radically different financial software. If you’d like to hear the predictions and the discussions they triggered, hit the link above and watch the replay.
I’ll be offering another prediction this Wed. morning on SAP Radio. I'll get 2 minutes to posit some gem there.
I have no shortage of other predictions, some good and some troubling. And, I thought I would detail some of these here.
1) Continued in-fill sales by major ERP vendors shouldn’t be confused with a bigger trend or a major resurgence in these firms’ popularity. Big, established vendors often buy innovation (rather than build it). They then turn their sales forces loose on their installed base of customers to sell these add-on products. Total revenue gets a boost and Wall Street is happy for another day. But, this activity doesn’t really do more than buy more time and keep maintenance monies flowing into their coffers.
For the time being, some customers will license an add-on product or two from their old ERP vendor. But, that time is coming to a close as cloud ERP suite sizes are growing in breadth and depth. Just look at how big the ERP suites of NetSuite, FinancialForce, Rootstock, Salesforce and others are growing. The old oligarchy days are coming to a close.
Bad behavior by many older vendors has definitely hurt their respective brands. I’ve spoken with technology leaders who are fed up with never ending usage audits, incremental license fees, decades’ long waits for promised re-platformed products, etc. For an ERP vendor to sell CX (customer experience) software and then mistreat their own customers so badly is more than ironic (or moronic). It’s a death wish. Yet, it happens.
I predict that in 2014, many major ERP buyers will start to move their old ERP vendors off the ‘strategic IT vendor’ list and replace them with the Workday, salesforce.com, Marketo, etc. vendors of the new era of cloud ERP solutions. These software buyers are tired of bad behavior, vendor indifference and old products. Given a choice, customers will look for true love elsewhere. I know I would.
2) The gap between ERP users that truly realize the value from some of these solutions and those that don’t is widening – not lessening. If your ERP solution predominately tracks internal transactions, facilitates reporting of same and helps your firm achieve a modicum of efficiency, congratulations – you are, at best, mediocre.
I saw a SMB manufacturer use massive point of sale data, their ERP’s supply chain information and a cloud, in-memory analytic tool to grab major market share from competitors. It wasn’t expensive or hard to do. It was, though, inspired and plucky.
What is defining success in ERP anymore isn’t the race to be internally efficient and effective. Success now occurs in how well companies connect their people and systems to all manner of constituents (e.g., customers, machines, prospects, governments, social media influencers, etc.), all kinds of technologies (e.g., machines, hand-helds, mobile devices, etc.) and in a myriad number of rapidly changing, highly morphing business processes. ERP never was static and unchanging although many older solutions frequently possessed immense rigidity to change. Somehow people got used to ERP solutions as being inflexible and accepted that as a price of doing business. Wrong!
In 2014, we will see the gap become ever more pronounced between those firms that possess old, rigid, inflexible systems and processes versus those than truly change and adapt in wondrous ways. The best firms will have fleshed out competencies around:
- the successful exploitation of social content
- interpreting big data feeds and how they’ll impact planned and actual financial results
- understanding all manner of new mobile applications (not just the ones their firm created) and how their constituents will apply these in a business context
- modern process designs and how their firm can quickly support new processes, mobile cloud-powered applications, machine data, etc.
- triangulating data from internal, third party and other sources
3) Lots of ERP cleanup projects remain – Although we’ll be looking at a new year, 2014, I’m still running into firms that have yet to finish big ERP initiatives that were started as much as a decade or more ago.
Some shared services and other initiatives got stuck during the big recession of 2008. Businesses that had great plans to achieve single, global systems with global efficiencies and standard processes had to put a lot of this on hold for very practical and economic reasons. Yet, in the years that have passed, businesses have been very cautious. Their revenues are now much improved but they’ve resisted the urge to re-staff some of the IT and back-office functions to pre-2008 levels. To put a fine point on it, there simply aren’t enough internal people today to complete the backlog of unfinished projects.
I suspect that 2014 will be a year of frenzied catchup for many long-delayed and/or incomplete ERP transformation initiatives. These projects have to get to full-term before these companies can start to focus on more strategic IT and business unit initiatives. Competitors are running laps around these companies and they need these projects finished – STAT.
Please continue to the next page for more predictions