If vendors of ERP thought cloud and mobile technologies were going to eat into their spend in 2011, Gartner Group's survey this year must have been encouraging. The analyst company's CEO survey showed CEOs still heavily favour tried and tested IT technologies in their strategic plans.
For 75% of respondents who knew what they would be implementing, nearly 30% were planning more ERP and over 20% were planning more sales and CRM-related investments. Conrad Steyn, director at Barnestone Holdings, sees a bright future for ERP in certain market segments.
"There are different segments in the market and if you look at small to medium-sized organisations, they are still looking at ERP," he says. "The future of that market will be for the vendors to make it more affordable, easier to implement and provide solutions like pre-populated systems, for example. But organisations that already have ERP will have a different future.
“We're seeing a lot of companies going for the analytical tools and the reason is they're struggling: business and the economy is tough. So companies need to find ways of digging through their data to become more profitable, hence they're investing in analytics. In the UK and US, 60% of the sales are in analytics rather than ERP. But different customer segments will drive what they themselves need."
Barco Smit, executive for business development SAP services at BCX, says a lot of companies have implemented ERP for historical business objectives that were really still IT objectives: a simplified landscape or a reduction in costs.
"Many of those companies still don't have KPIs that drive cross-functional business processes. And at the management level, many executives are going for BI and mobility to try to get their organisations into a mature state and mobilise the workforce. But if you haven't adopted ERP in your culture, or you don't have ERP, those tools won't really benefit you."
Steyn says the middle market should not be missed.
"A lot of future growth will be driven by the middle market. They're in a growth environment. The thinking goes that when you get to 20 employees, your systems start falling apart. When you get to 50, they fall apart again. For those companies that are at 200 to 500 people, you need some kind of ERP and there are a lot of those companies in this country that don't have it."
And there's another factor, says BCX's Smit. "Most of the medium-sized companies in this country really exist purely based on a relationship or two with large enterprises that have ERP systems. A lot of pressure comes from large enterprises on their suppliers to tighten up the way they do business. So the smaller companies are having to invest in ERP just to do business with large partners."
Changing role
Another venerable technology that is attracting considerable attention is document management. Just as companies are pouring money into analytics to make sense of their data in tough times, so are they looking at document management to extract useful nuggets out of the vast array of files - electronic or otherwise - floating around their organisations.
Shiona Blundell, divisional manager, communications and BPO for Bytes Document Solutions, says new technology is changing the role of finding and using knowledge in companies.
"There's new technology that sits on top of traditional content management solutions that is doing semantic matching and we're finding that from a knowledge management perspective, that will be key. We spend so much of our time looking for information, and people's innate knowledge is almost as important as people who have the ability to find knowledge within an organisation these days."
There's also the legal aspect. Large organisations are being asked to produce information quickly in legal cases and the cost of not doing so is severe.
"Discovery is on the top of everyone's agenda," says Gareth De Laporte, sales manager for information management at HP Software. "Everyone wants to search all the data securely and bring it back. It could have many different things associated with it: an e-mail, a chat session and so on. Today, it's not acceptable just to present a piece of evidence in a court of law; you need to be able to present its entire lifecycle as well."
De Laporte says the nature of document management is expanding rapidly.
"We're finding that document management is becoming much more than merely managing documents. Organisations need to be able to harvest the value of the information across the lines of business. In the past, we would ring-fence stuff, lock it down and not give everyone the opportunity to harvest value from it.
“The other thing that's becoming quite important is the ability to classify the level of importance that information has to the organisation. And the audit trail associated with any piece of information is critical: who accessed it? When did they access it? Who changed it? When will it need to be retired? The problem is it's becoming just as important to prove you've deleted something as deleting it."
Some of this pressure is coming from the changing role of knowledge workers, notes Blundell.
"In the past, you used to have a couple of people who were knowledge workers and content creators. Today, everyone's a content creator. So you need to have management and collaboration of transient workers coming in and out of that environment.
“On average, employees work at companies for three to eight years as opposed to 15 years or more in days gone past. So you want the most out of your IP while they're there. Part of that is allowing people to have conversations and collaborate in a way that is unstructured but searchable down the line.
“A lot of people look at document management from a legacy perspective. What I've found coming back into this environment after having been out of it for a while is that there are a number of organisations that have no policies in place. So how do they digitise their historical paper? Documents themselves have expanded: they're now thumbprints and voice recordings."
A lot of future growth will be driven by the middle market.
Conrad Steyn, Barnestone Holdings
The right time to put documents in the correct boxes is at the very beginning, says De Laporte.
"Classification starts on the day you bring in a piece of information. It's there where you start your classification. If you have a proper documents and records management system, then you import it upfront and determine the level of importance. You can then put it into a business process.
“For example, when you join an organisation, you normally have a contract. During the life of that contract, people need to action items on it and amend it or whatever the case may be. But normally these things are forgotten. By bringing it into a business process or a workflow, you can manage its process during its life.
“People come and go too; if someone has been with a company for 10 years and created thousands of pieces of information, then what happens when they leave? Is that information in a SharePoint environment? An Exchange server? Some file server? At least if the records are all in one place, a new person can inherit all the records of the predecessor and you ensure that you keep all the IP in one place."
Integrated view
Given that many CEOs are still investing in core systems, are they happy about moving at least some of them to the cloud? Softline ACCPAC MD Jeremy Waterman says no, for a number of reasons.
"Right now we're not seeing a lot of companies moving their core across to the cloud. The concept of sharing ERP with someone else does not seem to be that attractive. People still view it as a competitive edge: I can add services, customise it and pull in other components but if I let go of the core, I'm effectively just the same as everybody else.
“There's still a belief out there that you can mix and match to get a competitive edge. And there's some truth to that: if your system doesn't differentiate you, then what does? When you interact with large companies, you're not going to get past their systems. It is the system that is your public face in the market."
And there's another problem, notes Waterman: getting partners involved.
"The providers of those kinds of services have not got their heads around the business partner model. Everyone says come and take this accounting system - it's plug and play. But even at the bottom end, it's not plug and play. There needs to be some way of getting the partners to join in."
The concept of sharing ERP with someone else does not seem to be that attractive.
Jeremy Waterman, Softline ACCPAC
Barnestone's Steyn says the entrepreneurial and SME customers are far more likely to opt for a cloud-based solution.
"Five years ago, the entrepreneur wanted to see a box in the corner with lights going on and off that he could touch. The economic conditions have changed this. SMEs now say if they don't have to pay for it or buy it, then they won't. They don't have the capital and they would rather switch it on and off as they require. They can try a system for six months and switch it off if it doesn't work."
BCX's Smit says the challenge is even more fundamental than that for ERP.
"The reason you put in ERP is to get an integrated view of your organisation but also to get an integrated view of your business. The reason why those solutions have battled to gain market share in the SME space is that it doesn't integrate with the inbound part of the supply chain where the value lies, for example.
“The other challenge faced by vendors is you still need some consulting to take the entrepreneur or SME through the process of asking what happens if he does integrate a system with his business? How will it impact other areas and how will he manage it? So, just pulling integrated services from the cloud isn't going to go far without some kind of consulting approach backing it."
If true, then ERP consultants don't have to look for other work just yet.
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