Why it's Time to Scrap Traditional ERP

{authorName}

Finance Insights for ProfessionalsThe latest thought leadership for Finance pros

Thursday, October 8, 2020

While ERP has been a major benefit to businesses across a range of industries, its more traditional forms are quickly becoming obsolete.

Article 2 Minutes
Why it's Time to Scrap Traditional ERP

Enterprise Resource Planning (ERP) was first coined by Gartner in 1990. The company describes it as “the ability to deliver an integrated suite of business applications”, typically featuring applications that automate a range of processes across different industries and sectors of a business. However, its history stretches back to the 1960s, and in many ways hasn’t moved on from there.

Traditional ERP exists in many forms across organizations, but in almost all ways it’s out of date. That doesn’t mean integrating business functions is no longer necessary; in fact, it’s more necessary than ever. However, the applications used to do this are no longer up to the job when confronted with the needs of modern businesses.

Real-time analytics is a must

Companies across all industries are becoming more data-driven, and while traditional ERP allows for this, analyzing information is a slow, cumbersome process. Traditional analytics strategies are no longer appropriate for digital businesses, and working through information this way is inefficient and of limited value.

Instead, ERP systems need to incorporate predictive analytics, a technology that will give businesses a competitive advantage both now and in five years’ time. Being able to react to issues and opportunities as they happen is a major advantage for any organization, and an ERP solution that doesn’t provide this needs to be upgraded as soon as possible.

Businesses must be able to scale

Flexibility and scalability are crucial aspects to success in 2020 and beyond. While growth is usually defined by an increase in revenue, scaling represents the same measure but without an accompanying increase in resources. This is crucial as it enables a company to absorb an unexpected decrease in business, something the recent pandemic has shown the importance of.

For ERP, this means moving to a cloud-based, software-as-a-service option. Gartner estimates cloud services will be essential for 90% of data and analytics innovation by 2022, and a big part of that is their ability to easily scale. A traditional on-premise ERP solution will not be able to grow and shrink according to demand, making it unfit for modern business.

Manual operation is a time-sink

While the data analysis made possible by traditional ERP is important, it’s also time-intensive. Automation is therefore an important aspect of any ERP application looking forwards, and systems without this capability will quickly become outdated and a burden for organizations that don’t update to an automated solution.

“You can imagine having an ERP system where the operational processing of the data is really done in the background and you manage it in a dashboard.” - Oliver Betz, Senior Vice President and Global Head of Product Management for SAP S/4HANA

 

This is the future of effective ERP, and traditional systems will die out as this becomes the norm.

Finance Insights for Professionals

The latest thought leadership for Finance pros

Insights for Professionals provide free access to the latest thought leadership from global brands. We deliver subscriber value by creating and gathering specialist content for senior professionals.

Comments

Join the conversation...