Just yesterday we were talking about ERP systems and a colleague of mine told a story about the introduction of an ERP suite at one of the companies she used to work with. Long story short — the company almost went bankrupt, because they invested a huuuge amount of money into the ERP implementation, and failed. Failed so profoundly that they just stopped the project altogether where it was without much discussion.
I come across such stories here and there all the time. A well-established German manufacturer in the field of industrial automation has been working on the introduction of an ERP suite for the solid 3 years already. Every year in mid-summer my friend working there gets to hear “ban on leave for this winter, we’re rolling it out”, and the ban is lifted closer to the winter season, because guess what? They are not rolling it out after all. Because this or that department hasn’t managed to implement the suite in time (if at all). The recent story with Lidl, one of the biggest discount grocer in Germany, has even made it into the papers.
Every time when I come across another similar story, I wonder: Why these companies turn to the old-fashioned, by all means very good but unnecessarily overcomplicated ERP mega-suits instead of opting for the so-called postmodern ERP?
What is a “postmodern ERP” anyway?
The term “postmodern ERP” can be considered as very young — it was coined by Gartner in 2014. As I find the original Gartner’s definition too heavyweight and complicated, I’d prefer to quote here Thomas Spol, Senior Director ERP Product Development at PROUnlimited Inc:
“In the postmodern ERP world, the legacy ERP suite is deconstructed into a more [loose] set of integrated business functions. The pieces make up the whole, rather than the whole (or suite) comprising the pieces” (from 5 Factors Facilitating the Transition to the Postmodern ERP Era)
In other words, a traditional ERP suite is similar to buying a very expensive TV set every ten years or so. A postmodern ERP is like having this same TV set once and forever, provided you can replace its different components with new ones easily and quickly whenever needed.
It is important not to confuse postmodern ERP with best-of-breed, though. In the best-of-breed use case, there is usually no ERP solution at all, each “function” is covered by a separate application/solution.
With postmodern ERP, there is still a core ERP, either as an on-premises or cloud solution, and this core is extended with certain specialist solutions. The core ERP would for example cover such areas as procurement, financials and order management, while special solutions will be implemented for retail, quality management or human capital management.
Why you should consider going for postmodern ERP
Don’t get me wrong — I’m not saying that monolithic ERP suites are a big bad wolf and postmodern ERP is a silver bullet. Traditional ERP suites served very well when the “best-of-breed” function-oriented approach was still too heavily prone to errors like conflicting data and manual integration. In its turn, postmodern ERP, while bringing a substantial amount of flexibility, often comes with complex integration requirements and most likely multiple vendors to manage.
Yet at the same time the advantage of postmodern ERP lies in the fact that it is highly adaptable in case of emergency, metaphorically speaking: If a company is acquired and has grown considerably within a short time span, it is way easier and, let’s face it, cheaper to upgrade or replace e.g. a CRM or HCM and leave the rest as it is, then upgrade or replace the whole ERP suite.
But what is probably most important is that postmodern ERP fits perfectly into the overall concept of the notorious bimodal IT and hybrid IT architecture — something all companies will inevitably adopt sooner or later (or have already done this) for a reason.
The increasing importance of as-a-service applications and systems, mobile data and IoT plus the ever so rapidly changing business processes dictate their own rules, and the rules are — embrace the agile, lightweight, hybrid architectures, integration platforms and systems.
Speaking of bimodal IT, even though this term is not everyone’s taste, the concept of two IT “modes” running in parallel — one being predictable and slow, the other being flexible and agile — has been out there for quite a while, long before the term itself emerged. The way I see it, with the ever increasing number of ad hoc integrators and citizen integrators and the much-needed support and guidance for them, there is no way going around bimodal IT.
Creating a checklist for postmodern ERP
First of all, every organization must be very clear about what a “core ERP” within the postmodern ERP system means in their particular case. Some will need e.g. inventory and supply chain be part of it, some not but will need procurement instead. So, the first step is to define own postmodern ERP strategy upfront, based on own internal as well as external operations, processes and needs.
Next, although there is still a “core ERP”, it doesn’t mean that this core must stay on the ground, while specialist solutions go to the cloud. In fact, the vice versa scenario takes place very often, with specialist solutions being sometimes even in-house developed. Which leads us to the second point: Businesses that consider adopting the postmodern ERP strategy, should carefully consider what component(-s) of their ERP should be on-premises and what — in the cloud.
After these two questions are sorted out, it might be time to look around the market, read user reviews, ask colleagues from other companies — in other words, to do your best to make the best-educated choice possible.
At this point, it is worthwhile keeping in mind that, as already mentioned above, postmodern ERP usually includes complex integration requirements. This is why IT must make sure that the solutions that made it onto the shortlist can be well integrated with other, ideally providing pre-defined integration connectors to each other.
If the latter is not possible, then a hybrid integration platform might be the perfect solution, provided that it either already has such connectors or offers easy-to-learn and easy-to-use tools for both integration experts and ad hoc integrators to build integration connectors on their own.
Last word — a word of recommendation
I believe that the postmodern ERP strategy as valid to a large extent in only one particular scenario: When a company has grown big enough to implement a stand-alone ERP solution. Even more so, I would advise large organisations that already have their “legacy” ERP suite not to switch to postmodern ERP too soon. Here’s why.
To begin with, while both ERP strategies do include a substantial amount of integration work, integrations for postmodern ERP is potentially more complex and intertwined. Furthermore, ERP systems, especially in the context of enterprise implementation, require as a rule a very high level of customization. Imagine the amount of work needed for tearing down the entire legacy ERP system and competently(!) replacing it with several applications that will make up the new postmodern ERP. Last but not least, let’s not forget the inevitably required training for employees to teach them how to use new systems. All these points are indicative of the need for very high investments.
So, for larger enterprises, it might be better to stick to their legacy ERP suites for now and wait until their ERP provider like Oracle or SAP upgrades his software(-s) to support hybrid architecture — which ERP suite providers are already doing, albeit very slowly. This way, enterprises can gradually move towards a more agile hybrid ERP architecture together with them without taking any drastic and potentially risky measures.
