Why You Need an Agile ERP System: Part One
Five pillars of change are dominating discussions about today’s technology:
- Big data
- Video/unified communications
“Mobile” is about the interface—how quickly we can access computing power. Today we have more computing power in our smartphones that what was used to send the first man to the moon. “Social” is the network and who is engaged. Social transcends personal and work, and today genuine value resides in this network. The “cloud” is the information store and innovation platform. “Big data” is the brains and intelligence resident in the information, be it structured or unstructured. Finally, “video and unified communications” are how we share, interact, and collaborate with each other across all senses.
While these five forces are interesting on their own, digital business disruption is happening at their convergence: social and big data, mobile and cloud, video and mobile. It’s this convergence that is creating tremendous market disruption.
In the midst of this technological advance, market change is accelerating.
In light of these forces, where is your company today? Where will it be in five years? Consider this: in 2010, Blackberry had a 45 percent market share, Apple 25 percent, Microsoft 15 percent, Android 7 percent, and Palm 5.7 percent. Today, Blackberry has a 1.5 percent share. The pace of change has never been so intense. Since 2000, 52 percent of the Fortune 500 has been merged, acquired, or gone bankrupt.
Four massive trends are driving this change:
- Macro trends
- An increasingly dynamic work force
- Disruptive technology adoption
- New digital business models
The first of these trends cannot be controlled by organizations: natural disasters, political unrest, and economic recessions are effectively beyond their scope of influence. But the other three can be planned for, and need to be accommodated by today’s agile enterprise resource planning (ERP).
Dynamic Work Force
In addition to where we work, when we work, what we work on, and how we work, even the notion of why we work has changed. All this is impacting ERP development. While most analysts discuss the changing work force in generational terms (e.g., millennials, generation X, generation Y, baby boomers, post war),
Constellation Research segmented the workforce in terms of digital proficiency, a more useful structure in light of the fact that the environment everyone is competing in is digitally driven:
- Digital natives: those who grew up with the Internet and are comfortable in engaging in all digital channels.
- Digital immigrants: those who have crossed over into the digital world, forced into engagement in digital channels.
- Digital voyeurs: those who recognize the shift to digital, but observe it from a distance.
- Digital holdouts: those who resist the shift to digital, and ignore or deny its impact.
- Digital disengaged: those who give up on digital participation.
The disruptive technologies that impact the enterprise have come from the consumerization of IT, and ERP must be agile enough to accommodate—and take advantage of—their impact in the workplace. The cloud is the innovation platform for these technologies, and ERP must leverage it to user benefit. Social and mobile technologies are driving huge amounts of data to mine for context, something that must be leveraged to discover opportunities, minimize risk, and provide more precise information in real time. What is needed is information that can be used to empower better decision-making at all levels of the enterprise. Information has moved beyond the stuff of records to a vital force that senses, responds to, and communicates with people and machines.
Digital Business Models
Consider how business models have evolved in the digital age:
- Product companies give away product for service revenues.
- Service-based businesses sell experiences at varying price points and service levels.
- Experience-based businesses sell business models.
- Business model companies sell peace of mind.
With the emergence of digital business models, the pace of innovation has accelerated dramatically. Take Sony, for example. In 1983, they introduced the Walkman—a transformational product. It changed the game in music, and Sony hasn’t had a transformational product since. In 2001, Apple introduced the iPod. It wasn’t the best music player, but it was transformational because it changed the music industry at the height of piracy. They convinced people to spend 99¢ on a song instead of pirating it. It saved the music industry in the age of Napster.
The iPhone is also innovative, but not because it’s a smartphone. This one device has destroyed 27 business models. These are jobs, companies, and capital never to be replaced. Do you need a flashlight? Do you need a digital camera? Do you develop your pictures at a one-hour photo store? Do you need a GPS device? Do you carry a portable video unit? Do you buy music? Where do you buy books? This is transformational innovation.
Sony wanted to be Apple. Apple became Sony. Now Samsung wants to be Apple. Apple puts out one new phone a year. Samsung puts out a new phone every 40 days. The pace of change is accelerating and transformational.
Can your ERP adapt to this type of transformational change? It will have to be agile to do so.
Part Two of this post will detail what users want, and what agile ERP needs to be. Stay tuned.
Posted by the Epicor ERP Insights Team