Enhance your ERP: creating the right constellation for your business
ERP systems are indispensable for the modern business: they facilitate the exchange of data, optimize processes and make it possible to adapt to a changing environment. In recent years, the ERP landscape itself has changed quite a bit as well, with cloud ERP, next-gen ERP and no-code development competing for attention. But what’s the bigger picture here, and how can businesses better align their ERP systems with their goals? delaware partners and ERP experts Steven Lenaerts and Folker Lamote bring some much-needed clarity.
What is the current state of ERP, and how did we get here?
Steven: “Today, there is a trend towards ever-greater specialization across all sectors. This has resulted in the emergence of ‘microverticals’. For example, within the manufacturing sector, there’s the food vertical, and within that vertical you also have the microverticals potatoes, meat, bakery, dairy, etc. The ERP needs of these microverticals often differ greatly. For ERP software companies, it has become virtually impossible to create a solution that fits every vertical. There is a level of complexity and sophistication required that is impossible to get from an out-of-the-box solution.”
Folker: “At the same time, monolithic, on-premise and highly customized ERP solutions are increasingly being replaced by standardized cloud solutions. As a result, companies need to look for other ways to align and optimize their ERP. That’s where the idea of ‘enhance your ERP’ comes in. It’s not just about deploying new technologies like AI and machine learning to make your ERP smarter. It’s also about building custom solutions around a core to optimize business processes.”
What’s the connection between ‘cloud ERP’ and ‘enhance your ERP’?
Folker: “Enterprise software corporations like SAP and Microsoft are advocating standardized cloud solutions for good reasons: they allow version and security updates to be pushed virtually simultaneously to all clients, are easier to maintain, integrate easily with new technologies, etc. However, companies still need to align their ERP systems with their unique business processes. Today, instead of creating a unique, customized core ERP, they will simply add what they need on top of it.”
Steven: “The easiest way to look at this is to visualize it as satellites orbiting a planet. In this scenario, the planet is your core ERP, and the satellites are the applications and tools you add to it to make it smarter and align better with your unique processes and goals. These can be custom developed by the IT department or by people in the business via rapid application development. The first requires a fair amount of coding and technical skills. RAD, however, enables non-tech employees to create their own tools and applications using techniques like drag-and-drop, configuration, etc.”
Giving the business power to create their own tools and applications: isn’t that a recipe for disaster?
Steven: “Not at all, as long as IT applies the proper governance around it. One of the main principles of ‘enhance your ERP’ is ‘keep the core clean’. RAD on top of ERP is a toolset or platform used to build applications without contaminating your ERP. The tools (satellites) you add don’t impact the core ERP, nor do they directly impact the data at the core. Note, however, that a proper integration strategy is very important to apply this planet-satellites principle. After all, the planet needs to be able to communicate with its satellites and vice versa.”
Folker: “The main advantage of keeping a clean, stripped-down ERP core is that it becomes much more tenable. Many companies have seen their on-premise ERP systems grow into monstrosities, where it becomes impossible to determine which applications are actually used and which are dead weight or just slow things down. In this new model, they can easily eliminate or introduce ‘satellites’ without impacting the core.”
What’s the biggest roadblock for companies who want to ‘enhance’ their ERP?
Folker: “While this model makes businesses more agile and able to adapt quickly to changes, it’s important not to lose track of the overall picture. Everything depends on the satellites’ ability to communicate smoothly and efficiently with the core ERP.”
Steven: “That’s why enterprise architecture is becoming increasingly important. This is the process by which organizations standardize and organize IT landscapes to align with business goals. In this scenario, it determines how your apps integrate with your ERP, ensures that your satellites remain in orbit, and that that communication remains reliable. Modern IT architectures embrace “volatile architectures”, i.e. IT landscape where it is straightforward to rip and replace IT solutions while keeping TCO in mind.”
How can this new approach to ERP impact the way we do business?
Folker: “This new ERP constellation certainly creates new opportunities. For example, businesses enjoy better stock predictions and client segmentations.”
Steven: “Again, it only works if you have that big picture overview. That’s exactly why, at delaware, we have evolved from an ERP implementator into a team of technical and business consultants that take the entire enterprise architecture into consideration. In doing so, we can ensure that what gets deployed actually helps you reach your goals. While start-ups often just cover a particular ‘satellite’ within this ecosystem, we look at the entire galaxy making sure the planets and satellites are in balance.
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