The world of technology, especially business technology, is filled with abbreviations. Sometimes these abbreviations only serve to confuse, especially when the industries or approaches they sought to define outgrow their original scope. But occasionally these abbreviations seem almost prophetic because they prove large enough to encompass near revolutionary change. The growth of Enterprise Resource Planning (ERP) is one of these.
Two decades ago ERP emerged as a way of describing an integrated, software-based approach to managing the complexity of the manufacturing process. The focus initially was on the streamlining of the use of physical resources in that process and ranged, as it still does, from engineering, to work orders and scheduling to quality control even product life cycle management.
But soon it became clear that ERP could do much more than this. There was no reason why ERP couldn’t apply to any area of a business where resources, whether they were raw materials like the metals in aviation manufacture or personnel in a marketing department, could be better coordinated with ever greater efficiency.
Not unsurprisingly ERP inevitably spread to include financial accounting, human resources, supply chain management and customer relationship management. Today, ERP is about managing complexity wherever it may be found in an organisation.
But what if ERP could think? What if ERP could be intuitive?
Here is why that would matter. The sad fact is that ERP arguably has gotten a little tired in recent years, even as its potential usefulness has expanded.
There are several contributing factors to this tiredness, including the dominance of a handful of ERP players globally as well as the massive size and intricacy of ERP implementations themselves. However, the core of the problem is that ERP hasn’t really kept up with the massive shift to the consumerisation of tech and the concurrent rise of business intelligence.
Let’s look at both factors separately. In terms of ERP, consumerisation isn’t so much about the technology or process itself as it is about perception of that technology. Over the past decade, user tolerance for IT that is not consumer-facing and user-friendly has basically evaporated. People simply expect to find the same ease of use and interactivity with technology whether at home or work. All technology is, in essence, now consumer technology.
That’s problem number one for ERP. Because ERP has focussed so much on making big, bulky and byzantine processes with almost infinitesimal variables run smoothly, the consumer hasn’t really figured into that equation. In fact, the most common complaint is usually about how the user must adapt to the system, learning new languages and conforming their behaviour to fit the systems. It is the exact opposite of how most of us now encounter our technology. We demand ease of navigation and interactivity.
Second, there is the rise of business intelligence. Whereas ERP has done well automating process, it hasn’t historically done as well at engagement in real-time with so-called “facts on the ground” of that process. Most ERP must be customised to an excruciating degree in order to effectively address a business process and then basically re-engineered to accommodate changes to that process.
What business intelligence does is bring agility to the automation “table” and now with the rise of Big Data, business intelligence becomes even smarter, since the analytics essentially come to life and become capable of learning and growing off the constant data stream.
What does all of this mean for ERP? It means that something potentially more revolutionary than the Cloud is happening. Cloud migration will still happen, but for a whole set of reasons, like latency and security, this will take some time.
More immediate and likely more transformative will be this: ERP is about to start “thinking”.
ERP, already expanded in scope to meet the needs of everything from manufacturing a plane to the “virtual” assembly of a complex financial product, will now vastly expand in power and usability by the application of the next generation of “rules engines” delivered on consumer-friendly platforms with universal graphical interfaces. In other words, ERP will not only become intelligent, it will move from the domain of the IT department onto desktops, tablets and smartphones.
At the risk of over-simplifying, here is what making ERP think means. The rules engine captures any information from a given system. It then allows you to embed this knowledge into parameters that will make everything work more efficiently and in concert. This “thinking” future is already here. We are witnessing the implementation of these systems today, and so far, the benefits of this kind of ERP are proving profound with 80 per cent faster deal closing and thirty to one ROI.
You can take knowledge from in-house experts and include this in the parameters. Let’s call it knowledge-enablement. In other words, if a particular process typically involves guidance and sign-off from in-house experts, this guidance and sign-off can be built seamlessly into the rules engine rather than needing to be sought out on a case-by-case basis.
ERP rules engines can govern everything in an organisation from whether a bookkeeper knows that a bill can be paid or not, to determining the thousands of permutations involved in quoting for a project. It can also look backward at the behaviour of a system or a process over time and learn from this behaviour to make further refinements. In effect, you are making transactions think, simplifying millions of lines of code into readily implementable rules, so that at each juncture in a process where a decision needs to be made there is a whole context around that decision that can be profitably brought into play.
With powerful engines poised to be further enhanced by consumer-grade ease of use, both feeding benefits back and forth to one another, organisations of almost any size need to recognise that a revolution in the way business will be done has begun.
David Schwarber is the managing director of manufacturing business solutions, Cincom