In February of 2014, Gartner made a prediction: within two years, the IT industry would see a movement to abandon traditional ERP supersystems in favor of a hybrid postmodern approach. This new strategy represents a shift away from the massive ERP suite in favor of a hybrid arrangement that blends cloud-based services and smaller, task-specific, in-house applications.
Gartner predicts that by 2018, up to 90 percent of companies will still lack a solid postmodern implementation strategy. It’s especially perplexing when you consider that said they’re seeing less than 50 percent of the anticipated ERP benefits.
It’s startling that the vast majority of corporations have yet to develop a new game plan in light of the fact that ERP has developed a rather negative reputation in recent years. This has been underscored by the emergence of viable alternatives such as cloud-based infrastructures.
So you would think companies would be eager to adopt this new system, but if Gartner is correct, nine out of ten companies will still lack a postmodern application strategy by the end of the year. The only logical explanation is that these companies just don’t realize the benefits of adopting a new stance on enterprise software implementation. Or perhaps they’re unaware that their current ERP infrastructure is falling very short of its full potential.
Why Companies are Abandoning Traditional ERP in Favor of a Hybrid Strategy
The ten percent of companies that are predicted to develop and implement a new postmodern ERP strategy over the coming months will most certainly gain a competitive edge. These companies won’t be weighed down by a massive and costly super system that’s a continual work-in-progress. This will lead to greater productivity, enhanced agility, significant cost savings, and ultimately, a surge toward the front of the pack. Shifting from a traditional ERP to a new implementation approach will offer strategic, financial and operational benefits, while sidestepping traditional ERP challenges.
- Versatility: Many traditional ERP interfaces are stuck in-house, with limited if any secure off-site access. This just doesn’t cut it in a world where we’ve come to expect remote access to business-essential applications. The industry is shifting toward hybrid systems that blend the traditional in-house applications with cloud-based interfaces that can be securely accessed from virtually any device, in any location.
- Defined scope: A traditional ERP superstructure is extremely nebulous. You may find yourself wrangling a constantly-evolving infrastructure. Just think of all the changes a large company undergoes over the span of a year or two. Your ERP technology needs to accommodate those changes. It’s like trying to hit a constantly-moving target and it becomes difficult to keep the project within the predetermined bounds. Scope creep is the natural result. It’s extraordinarily challenging to clearly define scope when it’s determined by so many different facets of your business. A postmodern hybrid strategy allows for multiple task-specific applications, each with a fairly narrow scope. The shorter timeframe means you’re far less likely to find yourself adjusting scope in response to changes in your company. With multiple apps instead of one massive interface, your developers can fine-tune or modify a single piece of software, without affecting the others. This means less downtime and fewer disruptions to the companies that rely upon these applications.
- The right talent: The challenge of finding the right IT talent is compounded when you’re seeking dozens of developers for a multi-year ERP project. According to Panorama Consulting’s study, the average ERP implementation timeframe was 21.1 months. We’ve all heard of super lengthy five-year, seven-year, or even ten-year projects. It’s hard to find developers who will join your team for an extended timeframe. A large portion of IT professionals spend a maximum of one to two years on the job. But this can be avoided if you create a series of smaller, highly-targeted, task-specific applications with no long-term commitment. You can nix those large, 50-person development teams that are perpetually plagued by turnover. Instead, smaller groups can develop the interface over a short timeframe spanning weeks or months not years.
- Cost-effectiveness: Panorama Consulting’s study revealed that nearly 60 percent of companies saw ERP implementation cost overruns. Scope creep spurs higher-than-expected costs and the duration often extends far beyond the original timeframe. High turnover exacerbates the problem by decreasing productivity and increasing training costs.
Traditional ERP software’s massive scope and multi-year development timeframe combined with a rapidly evolving technological landscape create a perfect storm. The result is a platform that’s largely outdated by the time it’s completed. This makes scope creep, continual updates, and the resulting cost overruns virtually unavoidable. Add staffing issues and talent turnover into the equation, and you have a neverending multi-million dollar ERP project that fails to reach its true potential.
The solution is a hybrid approach that abandons the traditional ERP implementation model, replacing a single supersystem with multiple, task-specific applications. A few of the more tangible, immediate advantages associated with this model include:
- Greater instant gratification – You won’t need to wait years for developers to complete the interface. Stand-alone applications are quickly completed and deployed for use.
- Fewer talent-related challenges – It’s much easier to create (and keep) a winning team over a matter of weeks or months. You can also leverage staffing strategies such as insourcing for this type of project.
- Improved efficiency – With a shorter timeframe, you’ll see fewer revisions on a work-in-progress due to technological advances that occur mid-stream. And your company will be able to use these essential tools sooner, since they’re launched individually rather than all at once as a single interface.
- Lower costs – Multiple factors lead to cost savings, including reduced turnover and a more rapid development process. You’ll also see fewer cost overruns.
- A modular strategy – This allows for phased implementation and you’ll maximize downtime since techs can build or perform maintenance on one application, without affecting others.
Instead of constructing an entire city’s worth of structures at once, you’ll find greater approach if you construct one building at a time. That’s the heart of this new approach.
Many large companies have moved toward insourcing, where a group of qualified, pre-vetted IT professionals are brought in to supplement your staff on a specific project. Insourcing really lends itself to this postmodern enterprise software strategy. You can call in a team of IT professionals who have the expertise and focus your project needs to achieve a specific objective.
IT staffing is one of the areas where iTech can assist. We deploy talent to aid in the creation or refinement of enterprise software systems. Our goal is to help you overcome the challenges of traditional ERP development and implementation, whether you’re replacing a legacy ERP infrastructure or creating an entirely new interface. Learn more about how we can help you take a new approach to ERP implementation.