From the obvious to the outrageous, enterprise software predictions often span a wide spectrum at the beginning of every year.
In enterprise software in general and ERP specifically, there are many safe harbors to dock predictions in, from broad industry consolidation to Oracle buying more companies. Or the inexorable advances of cloud computing and SaaS platforms in ERP today, which is often cited in enterprise software predictions.
Too often predictions gravitate too much towards theoretical economics, overly-simplified industry dynamics and technologies, leaving out the most critical element: customers as people, not just transactions. So instead of repeating what many other industry analysts, observers and pundits have said, I am predicting only the customer side of ERP advances in the next twelve months.
The following are my predictions for ERP systems and enterprise computing in 2013:
- The accelerating, chaotic pace of change driven by customers will force the majority of Fortune 500 companies to reconsider and refine their ERP and enterprise computing strategies. Social, mobile and cloud computing are combining to provide customers with more acuity and articulation of what their preferences, needs and wants are. The majority of ERP systems installed today aren’t designed for managing the growing variation and pace of change in customer requirements and needs. In the next twelve months this trend will force the majority of Fortune 500 companies to re-evaluate their current ERP systems when it becomes clear their existing enterprise systems are getting in the way of attracting new customers and holding onto existing ones.
- Highest-performing CIOs will rejuvenate monolithic, dated ERP systems and make them agile and customer-focused, while at the same time excelling at change management. There are CIOs who can handle these challenging tasks, and the future belongs to those who can fluidly move between them quickly. In twelve months, a group of CIOs will emerge that are doing this, delivering significant gains to gross margins and profitability in their companies as a result. They’re the emerging class of rock stars in IT and enterprise computing.
- Quality ratings of ERP systems by internal customers will become commonplace, including 360-degree feedback on ERP performance. This is overdue in many companies and it takes a courageous CIO and senior management staff to value feedback on how their ERP systems are performing. In the most courageous companies, within twelve months the results of these internal surveys will be posted on bulletin boards in IT and throughout IT services departments. For some companies this will be first time IT staff members have a clear sense of just what internal customers need, how they are being served, and what needs to be done to improve business performance.
- ERP systems build on a strong foundation of personas, or clear definition of customers and their roles, will overtake those built just on features alone. This is already happening and it will accelerate as featured-based ERP systems prove too difficult to be modified to reflect the fast-changing nature of personas and roles in organizations. The quickest way to determine if a given ERP system launching in the next twelve months will succeed or not is asking what personas it is based on and why.
- Customers push speed and responsiveness from a “nice to have” to a “must have” as advances in mobility platforms and integration make real-time possible. If there is one unifying need across the personas of customers an ERP system serves, it is the need to improve responsiveness and speed. The same holds true within enterprises today as well. It would be fascinating to look at the data latency differences between market leaders versus laggards in the airline industry for example. Customers will push accuracy, speed and precision of response up on the enterprise computing agenda of many companies this year. Speed is the new feature.
- What were once considered ERP-based operations bottlenecks will be shown to be lack of customer insight. Take for example the very rapid product lifecycles in retailing. At first glance slower sales are attributed to not having the right mix of products in stores, which is a classic supply chain problem. Yet customer-driven ERP systems will tell retailers a different story, showing how product selection, even suppliers, are no longer pertinent to their customers’ preferences and needs. More customer-centric ERP systems will help retailers overcome costly and difficult to recover from bottlenecks in their operations.
Bottom line: Enterprises clinging to monolithic, inflexible ERP systems need to re-evaluate how their enterprise computing strategies are serving their customers, before their competitors do.
(Cross-posted @ Enterprise Software Strategist)
Curious about the “rejuvenate monolithic, dated ERP systems and make them agile and customer-focused” point given that so many ERP packages use legacy technology. For instance, ABAP or PL/SQL makes “agility” very difficult. Are you suggesting that customers are likely to replace dated ERP packages with something more modern? Are you suggesting that ERP vendors themselves are creating modern technology such as Fusion?
Thank you for your comment and time reading the blog, I appreciate it.
I’m saying that the time is now for ERP vendors to move quickly in the direction of more agile, customer-driven platforms that free their customers from the constraints of previous-generation platforms. This includes providing the following:
a. ERP systems designed more for how people work in the 21rst century, meaning multiple roles and entirely different information needs that were present when many of these monolithic ERP systems were built. In the case of SAP I am suggesting hat they strive to serve their customers by giving them applications that allow them to align enterprise systems to the way they work. SAP is doing a great job of this in the social software area specifically. ABAP and legacy applications are a fact of life and change management is very hard. The ERP vendors need to step up and deliver more customer-driven applications that allow companies to work the way they are the most productive.
b. Fusion’s initial successes have been in HRM and show potential in CRM right now. Oracle’s approach to delivering customer-centric applications continues and they even started a Customer Experience initiative as well. This is also an example of an enterprise vendor striving to create enterprise applications that can meet how companies are working today.
All this has to start with the enterprise software vendors realizing the greatest value they can deliver is in helping their customers sell and service more effectively. The responsibility rest with enterprise vendors to give their customers a clear, real road map to allow them to be more customer-driven.
Thanks
There is no question that ERP vendors are challenged to move to customer-centric models. You show some optimism, but my sense is that customer-centric processes will be as difficult a change in the larger ERP vendors as rewriting software. This provides a disruption opportunity for more agile vendors because the legacy “fact of life” is a constraint and customer centricity is the new normal. (It follows the Geoffrey Moore view that companies need to be more customer intimate when tech markets mature.)
My views aren’t that divergent from yours, maybe just nuance:
1. The notion of bolting on social to existing legacy software is limiting. Separating unstructured data, unstructured data, collaboration and social is an artificial construct necessitated by the software architectural limitations of the past.
2. The ERP vendors still operate in broadcast mode. They don’t operate “in network”. In other words “social is what social does” and it is fascinating to me how Oracle and SAP talk up a great storm of customer experience but do not operate as such on Twitter or via branding. Vendor conferences are all about hype, holding the product roadmap hostage, drive-by executive briefing, controlling the message etc.
3. My experience in other enterprise software companies has been the death of internal software innovation, something a former boss of mine called “The Witch is Dead” http://www.freebalance.com/blog/?p=2175 where companies kill the new-new product in favour of the old business model. Again, an opportunity for disrupting the market and seeing a shift in players.
Exactly, I think we are basically saying the same thing. The Innovator’s Dilemma is alive and well in enterprise software, as evidenced by the rise of more agile competitors.
Thanks again for your comments,
Louis