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The increasing speed of continuous changes has a significant impact on how we relate to our contemporary world and our own capacity for development. It used to be common for organisations to make plans and set goals with a 5-10 year perspective, sometimes even longer. And it was then also possible to follow those plans based on the fact that the general pace of change was slower and the need for constant replanning was less. As a result of technological development and our increasing integration with the wider world, however, we are entering a new phase where continuous changes become everyday occurrences rather than exceptions.
What happens both remotely and in our immediate vicinity today has a more or less immediate impact on our conditions for running and developing our businesses. And the possibility to stand outside of this is non-existent. All businesses today need to operate with a significantly shorter horizon when setting plans and goals. For the simple reason that the competitive situation 5-10 years from now can no longer be predicted. Now it is about the competition today and the coming 1-3 years. The consequence of this is that the shift from one strategy to a new one comes more frequently, necessitating an organisation that has the ability to be agile and flexible.
The challenge with agility and flexibility is, however, that it requires more than just capital from the owners and willingness from the management. What creates success for a business can be summarised in the terms governance, organisation, IT and culture. These four cornerstones are each difficult to change and even more difficult to develop and change simultaneously. At the same time, this is what is required to continuously maintain and retain agility and flexibility as the world changes.
Somewhere within this whole the ERP system has its role to connect the links and function as the engine and hub for the transactions that arise as a result of the business. Even if tomorrow it might no longer be called an ERP system, there will still be a need for a central hub to create a stable platform for all the information that is created, exchanged and refined.
Many of today’s older ERP systems originated in the late 1970s and early 1980s. And at that time, it was quite common and natural for the planning horizon of an ERP system to be at least 30 years. At that time, the major technical generational shifts came at intervals of about 10-15 years. The situation today is different. The pace of development is so high that what we previously called generational shifts will in the future perhaps occur every 5th or every 3rd year. The reason for this is simply that new technological innovations will be available to very many people very quickly and at a very low cost. If we continue to relate to the ERP system area, these systems will be subjected to tests much more often than before.
There was a time when it was almost seen as unthinkable that large global organisations would ever replace their large and heavy SAP/R3 systems, which often cost many hundreds of millions (sometimes well over a billion) to implement and in many cases took several years to get up and running. And the same challenge was seen in organisations that chose other major ERP systems. The large organisations could not risk their stability by starting to replace these large and entrenched systems. Now we see that this is nevertheless happening. SAP has also kept up with the times and is now heavily investing in S/4Hana as a successor to the older SAP system. Likewise, Microsoft, Infor, Oracle and several other vendors are now trying to transform their heavy products into something new that is intended to be more “flexible” and open.
At the other end of the scale, we have all the new and small applications that have emerged in the cloud, which have great flexibility and apply the most modern technology, but which in many cases lack the major strengths and features of applications that have +25 years of cumulative experience. It is between these new and still fairly “thin” ERP systems and the old heavy and rigid ERP systems that customers must choose and find their future platform.
The choice is not simple. It is easy to believe or claim that for example Microsoft, with its strategy, platform and holistic thinking within business applications, has the solution and will be able to offer everything the customer desires and needs for the future. This will not be the case. Microsoft is a competent and focused vendor, but even Microsoft has and will face challenges in offering flexible solutions to its customers. What used to be called NAV and AX is now entering new plans with continuous upgrades and additions via apps. However, this is not the same as the applications not being based on old program code and structures that are many years old.
It is important for the customer to understand that the choice of ERP system and the choice of “infrastructure”, i.e. the landscape under and around the ERP system, will set the limits for what changes the organisation will be able to make in the coming years. And after 5-7 years they have often reached a point where parts of the applications would need to be “twisted” to suit the new conditions prevailing for the customer. And this is difficult regardless of whether the system has been delivered by the global suppliers or by a smaller local vendor.
What is becoming increasingly clear and obvious for today’s businesses is that it is only a disadvantage to build too much into a single application. The accumulated experience indicates that the customer fares better if the landscape of applications is built on several parts where change to each part becomes easier to carry out without the whole having to be stopped or rebuilt. No ERP system or application lasts forever, and every few years the environment needs to be rebuilt to match the customer’s changing needs. By partly breaking up the environment into several parts, one increases the possibilities for continuous development without having to lay a heavy wet blanket over the entire business during the time the change is being implemented. Entry into the cloud-based world facilitates the above as many young and modern applications are often designed to exchange information more easily and in a more standardised way compared with the old heavy applications. We also often see that the younger applications do not require the customer to see their application as the “master” for all data, but that their application can be part of a landscape where data is exchanged via standardised interfaces and services.
We are in an exciting time where the pace of innovation is high and where the opportunities are greater than ever before. At the same time, the new era requires the customer to acquire knowledge to find the right way forward and secure a long-term strategy for how the old application environment should be moved to something modern and flexible. Although everything is on its way to getting better, that does not mean that anything will become easier.
