Rethinking ERP: From Business Application to Organizational Platform
We are all familiar with ERP software and what the acronym stands for: Enterprise Resource Planning. However, ERP has been around for a very long time, so you might not know how it came into being and why it got that name. ERP represents a class of software products that help businesses manage their financial and operational processes. The term was first used in the early 1990s to describe software with capabilities that extended Material Resource Planning (MRP) software for manufacturing.
But let’s stop for a minute. True, most modern ERP software is feature rich, and most, with a few exceptions (and if they are serving the same market—Tier 1 vs. Tier 2), have generally the same features. But is it really the right solution for today’s business? Is the approach of treating it like an application putting limits on it that can impact the businesses that depend on it? An application, with all its functionality, has significant limitations not only when it comes to productivity, but especially when it comes to flexibility, nimbleness, and security…those challenges and processes that are unique to your business and your industry. Traditional ERP simply cannot handle what sets you apart from your competition.
So, what if “ERP” stood for an Enterprise Resource Platform? With the addition of the Cloud to the mix, ERP has gained the potential to be just that—and cloud vendors like Microsoft are working to help customers capitalize on this paradigm shift. The commitment to this direction is clear: Microsoft CEO Satya Nadella has stated that Microsoft’s goal is to extend the relationship with customers beyond that of the traditional vendor-customer relationship, to be deeply partnered with them. This represents a completely new view not only of applications, but the moving parts behind and around them that make the business application layer even stronger—from infrastructure to security to cognitive services.
What is a software platform?
To understand the significance of this shift, we need to start by defining the term “platform” as it pertains to software. In software, a platform provides a flexible framework, or architecture, that provides the core elements that allow multiple applications to perform coordinated tasks. This framework encourages anyone who is given the right tools (not just software developers) to add new features and capabilities as needed by the business or even an individual within the organization. In addition, a well-architected platform can be easily modified to take advantage of new technologies as they become available.
More than just an application that runs on a server in the basement, ERP is now a vibrant platform that not only supports business process orchestration across many departments within an organization, but also provides a virtually limitless ability to adapt to growth and change and capitalize on new technologies.
Productivity is not just about saving time
Productivity is always top of mind for any business. But historically, we have leaned on software features, automation, and custom programming for ways to save time on the tasks we do. But what if you’re automating tasks you don’t even need to touch—that technology can handle for you? Or what about the time it takes to put in a request to IT, wait for that request to be addressed, go back and forth about how to address it, and so on? One of the biggest roadblocks to productivity is the time it takes trying to be productive in the right areas—time that could be spent focusing on doing the parts of your job that require human judgement and decision making. Traditional ERP does not offer any way around this. To be productive, both from the standpoint of day-to-day operations and of freeing your time for more productive use, you need ERP as a platform.
There are 3 powerful ways an “ERPlatform” can significantly impact productivity well beyond traditional automation or features and functions:
Businesses deal with constantly changing needs and demands that require flexibility in their business software. From customers changing how they want to engage with your business to regulatory bodies that require compliance with new guidelines to boosting productivity, you need flexibility, and it needs to be fast, easy, and cost-effective. In the old days of monolithic applications, changes were difficult and required software engineers to change the core logic to accommodate new features. Businesses can’t wait for that anymore.
With an ERPlatform, enabled by Cloud technology and the right tools, you get that flexibility—and in some surprising ways. First, you empower your developers with the ability to use strong, powerful tools to make it easier to accomplish tasks that require more involved development. That you would expect from a solution claiming to be a business platform.
But why limit that flexibility to programmers? Why can’t anyone on your staff have that ability, especially since they are on the front lines and know what they need? In fact, we’ve seen this happening already, but not in a good way. Individuals take it upon themselves to buy/download apps or tools for their needs on their credit cards, and what you end up with is at best a logistical mess and at worst, a security threat.
The answer is the platform. With a platform configuration, sitting on a Common Data Service, and with tools that make it easy, your employees can tailor the solution for themselves to meet their own needs. They don’t need developer skills, and you don’t have to be concerned about anyone doing damage to the system. Microsoft offers tools like these for that purpose. PowerApps and Flow, for example, are no code/low code, drag-and-drop tools that are designed to build business applications that connect various cloud services and data sources. This can include anything from taking critical, on-prem systems of record and making them more usable on a mobile device or developing apps for more short-term needs that aren’t being developed today, apps that might live for a month, a week, or even a day. Most companies are not investing in custom development because the economics of it don’t make sense. Power Apps and Flow change that. Microsoft specifically designed them for “citizen programmers”—your employees who don’t need to have a programming background—to create their own line of business applications in a simple, elegant fashion. These applications connect back to Dynamics 365 and Microsoft’s Common Data Service as well as providing gateways to connect other popular cloud services like Salesforce or even on-premise data and other third-party applications. These tools, operating on top of the Dynamics 365 (ERP) platform, free up your IT department to work on more strategic pursuits, and you get the functionality you need faster.
An ERPlatform enables you to leverage the amazing possibilities of AI, which is already being embedded heavily into products like Dynamics 365. AI is already being used for everything from tasks that would otherwise be manual and repetitive (AP automation, cashflow forecasting, automation of bank reconciliation. The object is not to cut headcount; because most companies run lean already, AI provides a return on time, so those same people are freed up to focus on higher value activities for the business.
#3 AI in the Cloud
There is another side to AI—which is one of the greatest advantages of being in the cloud. Microsoft Azure contains a set of cognitive services and bots that can automate all sorts of processes and tasks, nearly eliminating the need for human interaction. With embedded AI paired with other components like identity management, you can set up chat bots for customer service as well as internal needs, like requests to your billing or HR departments. Robotic process automation is rapidly expanding throughout all industries, thanks to AI in the Cloud.
Let’s look at an example in financial services (although equally impressive examples can be found across industries). In private equity, if your deal professionals are using Salesforce, you need expensive custom integrations with your ERP to track changes in deal status. With the ERPlatform on a Common Data Service, Dynamics 365 is automatically updated, eliminating the need to manually set up new entities, allocations, deal percentages, reporting, and so on. That saves a tremendous amount of time—and practically eliminates oversights and errors.
The Cloud is the key
With all these other benefits we’re discussing, we cannot understate the importance of the Cloud’s role in the ERPlatform. Beyond freeing up IT resources from maintaining hardware, applying patches, tending to email servers, and worrying about high availability and disaster recovery, Microsoft has developed a truly intelligent cloud, with a highly integrated suite of business and productivity applications (Dynamics 365 + Office 365 + Power BI), sitting on a Common Data Service and infused with rich capabilities like AI, Cognitive Services, data, and insights—all with highest levels of security and centralized control. This did not exist or was too expensive or too time-consuming with on-premise technologies. With the Cloud, Microsoft is providing a unique enterprise value by delivering a complete platform, from infrastructure to business apps and productivity and everything in between.
It takes a change in thinking
When you combine the power of traditional ERP with what a complete business platform brings to the table, the possibilities are virtually endless. However, it takes a change in the way we think. ERP has been around for a very long time, and those of us who have worked with ERPs think of it as an application to handle accounting, finance and supply chain functions. It’s not seen as an opportunity to add real value, so it’s more of a necessary evil. Thinking of ERP as a platform, as a driver for digital transformation and seeing all the possibilities with tools like PowerApps, Flow, Common Data Service, Power BI, you begin to see the potential of higher value, higher impact activities like natural language conversations or data insights or bots…only available in the Cloud.
Entering a new age of ERP
Most organizations shopping for a new ERP are thinking only of replacing an old system, so they are missing out on an opportunity to make a significant impact on their business with that investment. It’s short-term thinking to solve real business problems. However, with a more well thought out and measured approach, where you consider the complete platform, you will recognize that you must look at the entire organization and its processes and adopt an ERPlatform that will provide a bigger positive impact, delivering real value and meaningful change.
Are you looking for a new ERP solution? Before starting your search, let’s talk about how you can get more from your software investment with ERP as a platform. Contact us today. We can also help you with your move to the Cloud. Learn more about AKA’s Ground to Cloud services: