Enterprise Resource Planning (ERP) systems touch nearly every aspect of a business – from finance, accounting, and human resources to supply chain, inventory management, sales, and marketing – making them one of the most important pieces of technology for any organization.
Unfortunately, the monolithic, static ERP solutions that were built decades ago are ill-equipped for the modern world – severely hampering organizations’ digital transformation initiatives. Today’s distributed organizations depend on hundreds of different, often disconnected, applications and IT systems. Data resides in the cloud, on-premise, in edge computing, and just about anywhere else – creating disjointed data silos that can lead to inefficiencies and slow business processes.
Organizations need to modernize and adapt their ERP systems for today’s always-on, distributed world – using automation, artificial intelligence (AI), machine learning (ML), and advanced analytics to integrate and orchestrate the enormous amount of data that feeds and fuels the modern business.
The Need to Modernize
When ERP came onto the scene in the 1980s and ‘90s, it was ushered in by information technology (IT) teams, with resulting IT-inspired outcomes. However, ERP today is much more than an IT project. Now, it’s all about data and automation using that data. The data inside an ERP system, as well as the data connected to it from partners, customers, and other third parties, is the lifeblood of the business. Data from these disparate sources needs to be integrated quickly to automate core business processes, seamlessly and securely to give stakeholders the quality information and context they require to make quick, informed business decisions.
Modern organizations need a modern ERP system – one that can evolve as business needs change. Digital transformation enables this agility by providing dynamic, scalable IT architectures that can automate manual tasks across disparate business systems and units. It also creates operational efficiencies that save time and money and deliver integrated, cohesive customer experiences that span interactions and channels.
Five Keys to a Successful ERP Modernization Project
An ERP modernization project is complex – involving a wide array of applications, intra- and inter- organizational processes, multiple data stores and sources, as well as structured, unstructured, and even dark data. In addition, various management and reporting tools as well as security and compliance requirements can lead to high-risk, high-cost and long implementations. Yet, because ERP acts as the glue that ties all these different business systems, processes and data together, a successful modernization project is one of the most critical aspects of an organization’s digital transformation. The stakes couldn’t be higher.
That said, here are five critical components of a modern ERP system:
- Cloud-First Migration
The reach, scale, and economics of cloud infrastructure makes it the ideal architecture for an organization’s ERP solution. However, moving any system to the cloud can be disruptive, much less a system that touches nearly every aspect of the business, such as ERP. The key is data. Enterprises simply can’t afford downtime or loss in functionality as they synchronize data and related processes. A successful cloud migration requires the ability to quickly integrate across pure and hybrid cloud ecosystems, intelligently connect data in real-time and automate visibility of cross-cloud processes.
- AI Analytics
AI/ML allows organizations to automate key analytic processes, speed time to decision and inform decisions with data-driven insights. However, AI/ML is only as good as the data fed into it. Organizations should automate data collection and normalization, intelligently connect datasets across key processes, and be prepared to swap out for best-of-breed analytics technology as the business requires.
- Data Stewardship
Data governance, compliance, security and privacy are integral parts of business operations and are crucial for a successful ERP modernization project. Create a golden data set of clean, validated, integrated and true data that spans the enterprise by centralizing an intelligent master data set, normalizing and cataloging all data (including dark data). This ensures you are working from a single source of truth and enables you to streamline and simplify data policy enforcement.
- Total Cost of Ownership (TCO) and Improved Productivity
The speed of business has accelerated. Projects that took years to complete in the past must now be completed in a matter of weeks and without cost overruns. Intelligent connectivity and automation provide a path to better managing technology costs and return on investment throughout the organization. When embarking on an ERP modernization project, take a holistic view of cost and control measures for all technologies throughout the organization, evaluate how efficiency and productivity are measured, and swap out any sources of high costs for more efficient technologies.
- Composable ERP
The ability to stitch together applications, networks, storage and databases in a modular fashion creates business agility and can be a competitive differentiator. It makes scaling up or down faster, less expensive and more efficient while enabling quick, data-driven decision-making across the organization. Build a composable ERP architecture by using intelligent connectivity and automation to shorten implementation times and provide visibility into composed processes and data. This will also help you to continually improve performance and spot opportunities to replicate functionality.
ERP, and specifically the ability to automate and orchestrate the data within an ERP system, is the fuel that powers any business. To keep pace with today’s fast-changing business landscape, organizations must have a modern, agile ERP solution. To get there, embark on an ERP modernization project that leverages the scale and economics of the cloud, uses AI/ML to automate data collection, cleanup and analysis, revitalizes data stewardship and embraces a dynamic, flexible and composable architecture that meets today’s business needs.