In this edition of Digital CxO Leadership Insights video series, Mike Vizard talks to Infor CTO and president of products Soma Somasundaram about why a Swiss-army knife approach to digital transformation based on an ERP platform is a bad idea.
Mike Vizard: Hey, folks. Welcome to the latest edition of the Digital CxO Leadership Insights series. I’m your host, Mike Vizard. Today we’re with Soma Somasundaram, who is president of products and CTO for Infor. They are a provider of an ERP platform, and I’m gonna talk about what is the relationship between ERP and digital business transformation these days, and what should people reasonably expect? Soma, welcome to the show.
Soma Somasundaram: Thanks, Mike, and good morning, good afternoon, or good day, everyone. Nice to be here talking to you, Mike.
Mike Vizard: A lot of times when we listen to ERP people talk about their platforms, there’s this notion that somehow or another, they have figured out how to write the code and package the code for every process known to mankind. And so then the result winds up being people think that they can rely entirely on the packaged application, and then they invest in that, and then there’s this moment in time when they come up and say, “Wow. That doesn’t really do the thing I need it to do, and I need to extend it, and I need to customize it in some form.” So, what is the relationship between ERP platforms these days and digital transformation, and what should people reasonably expect, rather than thinking about ERP as a Swiss Army knife?
Soma Somasundaram: Yeah. That’s a very loaded question, so let me give you our perspective, Infor’s perspective, and my perspective. So, first of all, when you think about digitizing a business process in a particular industry that an organization is in, you’re basically taking the business process that in 20 years ago, 30 years ago, was a piece of paper. You’re digitizing that process.
When you digitize the process, if you have what I would call a horizontal ERP that serves every industry on the planet, like your reference to Swiss Army knife, you’re serving a hospital one day, and the same piece of software is also supporting a federal government agency, also supports an aircraft manufacturer, and somebody who processes food and makes soup, right? Those are all businesses, but they have very, very different requirements, so if you have the same piece of software supporting every single industry on the planet, you end up having to customize the solution for your own needs, number one. Two, you otherwise have workarounds that somehow you make this thing work for your industry, both of which are suboptimal, expensive, time consuming. Our processes are not efficient. It becomes even more difficult if you are running this piece of software in the cloud because there is no such thing called customizing for industry.
It’s very hard to do that in the cloud, so given that, having something that is industry-specific so if I’m making soup, I wanna have a piece of software that understands how I procure my raw materials, how I process that raw material to make the soup, how I make label claims. All of those things are so specific. So, Infor’s view is that we don’t serve every district on the planet, but when you do serve an industry, care for the last mile or what they need to do, and have a piece of software that actually delivers the value for that particular industry, and you now connect the dots to what does that mean for digital transformation?
Digital transformation does not end in just digitizing the process. You now have data that you wanna leverage for insights. You wanna use the data and the industry services you have for building new revenue streams as a business that underlying software should support, right? A lot of the equipment manufacturers are now getting into aftermarket maintenance, and in order to do that, you have to have connectivity to the customer, right? How do you do that? So, those are all things that require a foundation that fundamentally is industry-specific. Let me pause there.
Mike Vizard: If everybody in a particular vertical industry is using the same packaged applications, how do I differentiate myself? What’s the path towards figuring out where I can add some kind of unique value around the digital process.
Soma Somasundaram: That’s a great question. So, in general, what we are seeing is that if I run a piece of software that is specific to my industry and supports every customer in that industry, 80 to 90 percent of the processes are not very differentiating, right? How you do procurement may not necessarily be very differentiated, right? How you do your GL, not necessarily very differentiated, but there may be pieces. Maybe it’s pricing, how you price your finished good, how you cost it.
There may be pockets where you may want to have your own secret sauce. So, in order to do that, the software should be built in such a way that it provides hooks for a customer to build their own secret sauce that they own as the one customer who’s running in the same piece of software. But they have the hook to do that secret sauce, but 90 percent, like I said, of the software is actually standard. So, you get best of both worlds. If you have the right architecture to do that, it allows for that uniqueness for a particular customer.
Mike Vizard: Is it getting easier to build that kind of uniqueness using low-code tools, and that’s part of the equation here, is that it’s become simpler to bring businesspeople into the process because the tools are basically acting at a higher level of abstraction.
Soma Somasundaram: Yes, absolutely. So, you know, there are a number of platforms available in the market. We have one of those within our own ecosystem, but the customer can use, you know, any of those local platforms they are familiar with, they are comfortable with. But the fundamental foundation of it relies on the fact that I have access to the data and the data model that I can use to build these applications, whatever that application is, and I also have the right API’s to influence the business process back into the core software, right, so – in a secure way.
Those are three things, really. If the architecture is built in a way that the local platform allows you to build the app, but that make the end user experience look like it’s all one thing, you don’t want to show that it was a bolt-on. That’s not what the user wants to see. The real end user wants to work with a solution as quickly as they can to get on with their day job, right? So, that’s sort of how they should work, but your point is that these local platforms allow for quick productive applications to be deployed in the cloud. That couldn’t be done before.
Mike Vizard: As we go along, do you think that we’re gonna see more of these citizen developers out there using those tools, and those are the folks on the business side, but will they run things entirely themselves, or will they work more closely with the professional developers, and it’s gonna be more like a team sport?
Soma Somasundaram: I think it would be more like a team sport, personally, because end users are business users. They own the business function of what they are responsible for. Local platforms allow for declarative ways of doing things. You could take it to the extreme if you’re familiar with IFTTT.com, right? So, it basically stands for If This, Then That, right?
So, if it’s going to rain tomorrow, just send me an alert so I can bring my mother, Kathy, an umbrella, right? So, there are certain things that are simple enough that a real end user can do without consulting with anyone else. That doesn’t affect the ecosystem, right? So, it’s just for their own personal productivity, but when it comes to affecting a business process that involves more than yourself at a particular department, some level of collaboration with the technology partner, which is the IT organization as a business partner, to be able to do things in a way that actually brings productivity to the whole organization, as opposed to just in silos.
Mike Vizard: As we go along, what will differentiate one platform from the other? Is it just the level of extensibility and customization, or is there something about picking one ERP platform versus another that a lot of companies don’t consider because they just basically locked themselves into some decision two decades ago?
Soma Somasundaram: Yeah. Well, you know, this is just Infor’s view and my view, right, so take it with a grain of salt, but the foundation of what you need to run business processes for your industry is something unique, right? So, you don’t want to be building that on your own because that’s very expensive, time consuming. That’s not the core competence of the organization in that particular industry, right? So, to that extent, picking the right platform that allows for as little of the “customization” as possible is beneficial, number one. Two, having access to what I said earlier to the data, to the API’s, and have a secure gateway to do that from a technology platform standpoint allows for that extensibility, right? So you build those as layers. Then you now have a scenario where you have an industry-specific capability that is has the extensibility built on top of that that you could build your own innovation, and the third is that what you just kind of implicitly said.
If I put an ERP in place, and 20 years later I am still talking about that ERP that I put 20 years before, you actually pull concrete. It’s very hard to move, right? So, how easy it is for this platform for the software provider to provide innovation that you can consume, kind of like a trickle feed of innovation, and you could innovate, and they don’t step on each other, right? So, that is what will create a sustainable future for that software to really deliver value for that customer.
Mike Vizard: We see a lot of examples where people have successfully transitioned to a digital process, but we also see many that fail. From your experience, what are the issues that organizations are running into that’s making this whole transition more challenging and problematic than anticipated?
Soma Somasundaram: I think one of the reasons, perhaps, is that the way each organization digitized their own processes. The initial stage of this is normal, the evolution of how things evolve. The technology was an enabler to do what they wanted to do specifically in their organization. So, people got what they wanted to get, and now, several years later, you’re now going back to a scenario where your core competence is not really building software. Your core competence is you’re in food business, or caring for patients, or whatever, and in that scenario, you do not want to have so much uniqueness that it’s not really a value add.
That’s where I feel like the biggest problem with this digital transformation is that it’s very hard for human beings to kind of shed what they’ve been doing for a long time, and go to something that may look like you don’t have uniqueness, but really, you have to ask yourself, is this uniqueness really going to add value to my organization? Then if that’s true, then perhaps you have to care for that. Otherwise, you shed it, and that’s probably where I feel like most organizations struggle. Where do you draw the line? What’s unique and what may not be unique?
Mike Vizard: So, what’s your best advice to folks to help figure out what is that thing that is unique versus the things that are standard processes that everything does, and you just need to kind of copy them and follow along?
Soma Somasundaram: It generally works better if these things are ingrained in the organization from the top, right? So, if there is strong belief that identifying what’s the vision of that particular organization, how do you realize that vision, and what brings them to be different, they are alternates in their own space, and then you distill it down. There will be a few things that make that particular organization tick, and why their customers value their products better than someone else, or service better that someone else, and only hold value to those things, no pun intended, and the rest, it doesn’t matter what it is. So, it has to come from every layer of the organization. If there isn’t enough involvement at the top, and there’s no clarity in terms of what really drives their differentiation in the market, it becomes harder to convince the organization.
Mike Vizard: All right, folks. You heard it here. Regardless of the business era, reinventing the same wheel over and over again is probably not a good idea. Hey, Soma, thanks for being on the show.
Soma Somasundaram: Thank you very much.
Mike Vizard: All right and thank you all for watching this latest edition. You can find it on digitalcxo.com, along with other episodes, along with show notes and transcripts. We invite you to check them all out, and once again, thanks for spending some time with us.