ERP systems after the major projects era

At the turn of the millennium, our industry – most importantly the suppliers of ERP systems – experienced an unprecedented boom. The consulting firms who implemented and customized the systems were even more successful. Thankfully, customers also benefited from more unified system support, as they were able to carry out major internal process improvements. The analysis above was made by Gartner in a report  that actually concerns what they think will come next.

Even if many major companies may still decide to invest many millions in gigantic ERP projects, smaller suppliers like us can also recognize Gartner’s predictions of what will follow the major projects era, namely a more fragmented ERP map, where an increasing number of parts will take the form of cloud solutions.

Gartner goes as far as predicting that the entire ERP system will move into the cloud eventually. Admittedly, this will occur piece by piece, and at different speeds in different industries. The model has been given a striking name: “hybrid, on-premises, outsourced flip (HOOF)”. While the HOOF model is interesting, this blog post focuses on a few individual predictions that correspond to the way Primelog perceives current trends in the market.

Purchasing decisions outside of the IT department

A majority of purchasing decisions regarding ERP systems will be made outside of the IT department, i.e. by the business. The need to renew current ERP systems is largely driven by the business, and for us, as a supplier, it is often easy to connect with business representatives who see new solutions as an advantage, while the IT department often (sometimes rightly so) views the engagement of yet another supplier as a risk. Ultimately, what counts is a strong business case for the operations. Before you have progressed that far, you need to ensure that the IT department is on the same page, and we have developed some materials that describe how you make this happen.

ERP systems are increasingly fragmented

Monolithic, integrated ERP systems are increasingly being replaced by combinations of traditional ERP systems and best-of-breed components. As a best-of-breed supplier, we can only agree with this trend. All our customers have supplemented their ERP systems with a TMS system from Primelog, and we note increased interest in the market. When major ERP projects come to an end, an increasing number of companies realize that the support they received for their transport management was never very strong, and they are now forced to look for solutions outside their chosen ERP solution.

Adaptations are replaced by best-of-breed solutions

According to the old school, customers preferred to customize their ERP systems to cover any specific requirements that fell outside the scope of the standard systems. This led to uniform, but way too rigid, solutions. These customized solutions worked well in status quo, but as soon as something needed changing (or the standard system needed to be upgraded) they became terribly complicated and costly. A market for best-of-breed suppliers emerged, and customers now realize that they are able to choose standard systems, even if they need to turn to different suppliers for different parts.

An increasing number of ERP system parts are moving into the cloud

When monolithic ERP systems are broken up, and more companies dare to try out cloud solutions for certain parts of the ERP system. As with many consumer applications, it is becoming increasingly obvious that ERP systems should make the same move into the cloud. Read more about why Primelog believes TMS is particularly suited to the cloud.

It will be exciting to see if Gartner’s predictions become true. There are obvious signs that indicate that we are moving towards a new way of viewing ERP systems after the major projects era: more fragmented solutions with a blend of on-premises and cloud-based applications that are more standardized and less customized. A well-devised strategy equips you for a future where flexibility is a fundamental requirement.

Magnus Molin
R & D Director
magnus.molin@primelog.com