The evolution of ERP Systems
ERP systems, though not known by that description at the time, were first developed in the 1960s as a means of controlling inventory and other basic manufacturing processes. By the 1970s, these systems had evolved to become Material Requirement Planning (MRP) systems for scheduling production processes. Fast forward to the 1990s and Gartner became the first to call these, significantly more elaborate systems, ERPs (Enterprise Resource Planning) systems. As a precursor to the modern ERP systems we know today, these systems had moved from controlling the shop-floor to managing back office functions, including accounting and human resources.
Looking ahead, most agree that ERP development will happen in the cloud, making information more accessible, more affordable and ultimately more useful to more people. So, as ERP cloud moves in, what other ERP developments are likely to follow?
While the cloud may be the new home of ERP systems, the front door will be mobile devices. Users of all levels in an organisation, managers, shop floor workers, warehouse staff and sales teams will access enterprise data via their mobile devices anywhere and anytime. This more extensive use of mobile will be due to the fact that employees are already using their devices extensively and are likely to always carry it with them. Mobility will translate to greater speed and efficiency with no one needing to first ‘get back to the office’ before they can respond to a request. The imminent release of 5G technology supports this need for greater speed with expectation being that 5G could be up to 200 times faster than 4G LTE. In addition, the growth in remote working teams, part-time and contract staff will require that ERP software be available, accessible and operational on-the-go.
Already a hallmark of a good ERP system, the use of Business Intelligence (BI) will go beyond simply compiling reports. Organisations will increasingly demand that ERP system data not just be available but interpretable in such a way as to produce strategic leverage. With much talk and focus on machine learning and AI, the integration of these technologies with ERP systems seems not only inevitable but imminent. AI or machine learning empowered ERP systems will be able to provide advanced analytics, greater workflow automation and increasingly intelligent interfaces and forecasts.
The strength of an ERP system has always rested in the system being greater than the sum of its parts. The proliferation of Apps and SaaS products have meant that customer expectations have shifted from faith in a single solution to a combination of fit-for-purpose point solutions. Changing lanes between single solutions and clustered options seems to be a natural rhythm in organisational development, leaning one way or the other based on internal and external pressures and challenges. However, the implementation of point solutions will continue to challenge unitary ERP systems due to their perceived lower cost, lower risk and ability to show business benefits in a shorter timeframe. Accordingly, ERP systems will have to ensure that it can adequately address the challenge by clusters of point solutions not just other ERP systems. The biggest challenge ERPs will face in the onslaught of independent applications is integration. Figuring out how to expertly integrate a constant stream of data from multiple sources and still present it in a coherent ERP system will win the game.
ERP System Evolution’s biggest challenge
While each of the innovations mentioned all serve as sign-posts showing how the future of ERP systems is likely to unfold, there remains one challenge: People.
Historically the uptake of staff in adopting new technology is slow and when it comes to radical digital transformation, most companies are not yet ready for what’s coming. Innovation in ERP systems cannot happen in isolation, it needs to be accompanied by comprehensive change management efforts. Addressing the concerns and fears of employees will prove to be as important as adopting or integrating new technology, which suggests there is one more way that ERP systems are likely to change. They will have to bring people together, like a social network, but for work.
One of the first decisions you have to make, once you’ve decided on which Enterprise Resource Planning (ERP) system to implement, is how you will implement it. Essential to the character of any ERP system is its fairly regimented set of steps to be followed, which is necessary for successful implementation.
While the final destination may be clear, the choice of route will be determined by a combination of factors such as timeframe, cost and business culture. Successfully charting the course for your ERP implementation will require that you decide upfront between two possible (routes) options; a Waterfall methodology or Agile development.
The Waterfall ERP Implementation
Considering the number of moving parts in the project, an ERP implementation is necessarily complex which, more often than not, seldom follows a linear progression. Requirements change, and unexpected things happen. Nonetheless, an ERP implementation will have certain steps that always need to happen, following a set pattern which includes: Discovery, Planning, Design, Development, Testing, Deployment and Support. Even though there may be unplanned events threatening to derail the process, following these steps will not only keep the project on-track it will also provide clarity and comfort to those working on it and those waiting for the results.
An Agile ERP Implementation
While the Waterfall approach was the choix par défaut for Enterprise Resource Planning systems over dozens of years, the last decade has seen a growing awareness as to the difficulty in managing specialised technology projects over extended periods of time with a Waterfall mindset. What has emerged is an appreciation of a more agile understanding. This approach, like the Waterfall methodology, still requires the gathering of a substantial number of requirements up-front, used for guiding the project plan. The difference lies in what is done with this information, especially in the Development and Deployment stages. Work done at these stages is not completed in a linear fashion, rather the Agile methodology divides the project plan into short intervals called sprints. The end of each sprint is marked by a test, when adjustments are made in real-time. So, teams are able to respond much more quickly to issues and changes during ERP implementation, negating the need to spend long periods of time on project development up-front, only to find that changes are needed along the way. An ERP implementation going exactly as planned is probably less sure than the likelihood of bumps and detours along the way. For this reason, an increasing number of ERP implementations are adopting a more agile implementation strategy. Remaining agile once implementedThe need for an ERP system to remain flexible post-implementation is becoming as important as during its deployment. Sweeping changes, brought on by technology development and integration, are being immortalised under the banner of the Fourth Industrial Revolution. This transition from the Internet of Things to an Internet of Everything will continue to put relentless pressure on business to keep innovating or risk becoming extinct. Non-negotiable areas that must be in place, in relation to keeping your ERP adaptable to change, include having the appropriate technical architecture, business intelligence and most importantly to remain responsive in order to facilitate necessary changes quickly while still safeguarding profitability. Data Accessibility
Increasingly, customers are expecting an immediate response to requests or queries. Staying ahead not only requires that you respond speedily, but also that your teams have access to critical business information, so they can fulfil customer expectations and help you beat the competition. This can most easily be achieved through the use of mobile devices, giving access to important information to the right people at the right time. The adaptability afforded by mobile devices mean that your sales staff can start and close sales from anywhere. In addition, reporting and data analysis of critical KPI’s on-the-go further illustrate the important benefits of having an agile mind-set when it comes to your ERP.
Agility in Utility
To remain adaptable in a changing business landscape, your ERP needs to not only meet your customers’ needs, it must also ensure productivity is maintained, efficiencies secured, and profitability optimised. To this end, there are three options worth considering. Should you implement your ERP on-premises, host it in the cloud or rather use it as a service?
- On-premises deployment involves the hosting of services on-site, requiring close cooperation with the ERP vendor to ensure the efficient and effective installation, implementation and maintenance of the ERP. You have full control over the system, including its security, backups, management and IT support.
- A subscription model is used in SaaS (Software as a Service) ERP systems, with the payment of a fee allowing use of the software, updates, servers and data. Everything is controlled by the vendor, with your IT team having no direct responsibility for the maintenance of the system.
- Deployment via a Cloud hosted solution provides software that is web-enabled but housed on remote servers all owned and managed by the ERP vendor. While very similar to a SaaS option, the main difference lies in where the information is hosted, the cloud. Access is gained through the internet and, any user who has been granted access, can login anywhere and at any time. A business that is set to grow rapidly may find a cloud hosted option most suitable since it allows deployment at scale with marginal cost implications.
In a business environment where the only constant is that change is inevitable, it is more important than ever to ensure that you not only choose the type of ERP system most appropriate to your business and needs, but also that the method of implementation delivers the results that you require.
It is a revolution after all.
It is not only our digital devices that are increasingly mobile, but data itself is also becoming more accessible. This has implications for the threat landscape, potentially decreasing the effectiveness of firewalls and other forms of information protection. To address these changes organisations now have to secure entire ecosystems of connected devices while being fully aware that there is no such thing as one security solution that is immune to threats. So, while every effort is made to ensure that data is secure, we can never assume that it is.
This transformation of security means that companies are required to control the entire data lifecycle within their organisations. In this dispensation data must be monitored and controlled wherever it is, even when sharing is done on an ad hoc basis from a mixture of devices. This means that data must be protected as soon as it is shared, transformed, uploaded and downloaded. In addition, the data-owner must be able to retrieve or restrict data as required.
But how can you ensure your data and information is protected when so many people potentially have access to it?
As our inter-connectedness continues to grow, the need to protect and share data will become increasingly challenging, making the importance of an ERP system such as SAP Business One even more significant. Due to the dynamic nature of both software and network security, regular patch releases to address programming errors and new malware developments is required. These updates also improve on previous processes in the system and can add functionality not present in native versions.
An ERP gives you total control over who has access to accounts, functions and processes. This ensures that unscrupulous employees, contractors or vendors are not able to access sensitive business and customer information. SAP Business One allows you to assign permissions to users.
This point of entry can be sentried by maintaining a clear Segregation of Duties (SoD) within the ERP system, enabling you to establish levels of accessibility, making it easier for you to monitor the interaction between users. A further protection against unauthorised access is through the creation of tiered user roles that limit access to specific operators. This prevents unauthorised individuals from being able to manipulate the system in any way, thus blocking entry to data stored within it. Clear data management roles also serve to eliminate incidents of non-compliance. These permissions define the actions that may be taken, such as viewing certain files, having access to specific documents or making changes to data. Therefore, each person’s set of access permissions will depend on their specific job function, ensuring data is secure at all times.
Through an ERP, full traceability of data is possible – ensuring accurate internal reporting as well as the maintenance of data through a single unified system. Internal reporting is aided by segmented user access, restricting unauthorised personnel or outsiders from gaining access and entry to the data. The real-time nature of an ERP means that data managers can be informed immediately of unauthorised data access, minimising its impact.
While security remains a journey without a destination, a high-quality ERP system will keep your data safe, allowing you to stay focused on running your business and managing your customer relationships.