Mark Thornton, Marketing Director at Maginus takes a look at the current ERP landscape, which now features Microsoft Dynamics 365.
How often does the typical business decide on a new ERP solution? Perhaps once a decade. It is a significant decision, and one that can incur huge costs if errors are made – on both a financial and operational basis. An inappropriate ERP strategy can ruin the business bottom line and stifle its growth moving forward – the irony being that growth was probably the very factor that informed the need for an ERP system to begin with.
Analysts have published research on the high failure rate of ERP deployments, with PwC, reporting that 55% to 75% of ERP projects fail to meet their core requirements, thanks to a lack of awareness, skills and expertise within organisations.
So how can businesses ensure that they are in the successful minority? First they must understand that there are options for the type ERP deployments: mega-suites, postmodern and now Microsoft’s Third Way. Let’s take a look at these in more detail.
So-called ERP ‘mega-suites’ include Oracle and SAP. When these were first introduced, 20 or more years ago, the major problem that businesses were seeking to address was the issue of multiple different systems that did not communicate effectively with each other, leading to ‘islands of information’, which at best restricted growth and at worst caused damaging blind spots within the business. The mega-suites bridged these islands, delivering consistency, continuity and connectivity.
However, they came with problems - the high cost of customisations to meet specific needs within an organisation. In many cases, the functionality of mega-suites is very wide but not necessarily very deep. In turn, this causes problems with upgrades, support and so on, while also increasing the overall cost of deployments as businesses struggle to integrate mega-suites with other solutions being used across the organisation. Indeed Gartner reported that 70% of implementation costs of mega-suite ERP solutions was still Integration - the very problem they were supposed to solve.
This leads us to another way forward – ‘postmodern ERP’, a phrase coined by Gartner. Here, the organisation purchases a line of different business applications that specifically serve its individual needs – and then unites them using the latest cloud-based integration technologies, which simply weren’t available when mega-suites were first introduced.
The benefits of cloud include scalability and flexibility that can be harnessed, and each business need is met with a niche, bespoke application – which can readily talk to all other applications. Unsurprisingly, many organisations are starting to embrace the postmodern ERP approach as it is not only easy to implement but offers a quick ROI. Indeed the Maginus Order Management solution is an example, a product built and deployed to meet a specific business need – not wide, but with deep functionality to cater for the collection and efficient fulfilment of omnichannel orders.
Microsoft recently presented a third option. Microsoft Dynamics 365 is designed to integrate the elastic scalability of the cloud with solutions for operational efficiency and personnel productivity provided by Microsoft’s global business reach.
Essentially, Microsoft Dynamics 365 forms a bridge between ERP, CRM and the Microsoft Office suite, ensuring that these sometimes disparate business functions are drawn together and managed from the same central point. In turn, this means that organisations can optimise their operations across different business departments, and connect them more closely with customers.
As many businesses already use Microsoft applications for their office productivity functions, there is a clear sense of continuity and consolidation. Dynamics 365 seamlessly integrates into Office 365 and connects the structured workflow of business apps to unstructured collaboration and productivity tasks. The apps are cloud-based and accessible on mobile devices with offline capabilities, using innovations such as Cortana Intelligence, Microsoft PowerApps and Microsoft Flow.
The platform works on a ‘pay as you need’ model, which enables organisations to start small and only add (and pay for) the features they need, as they need them. It is also designed to be able to flex as the organisation experiences peaks, troughs and demand.
The key benefit of Microsoft’s third way over postmodern is that as an organisations grows they only have one product to upgrade and one solution to adapt, enabling them to take a long term approach. But unlike the megasuite you don’t have to buy everything – just the modules and applications you need, enabling an organisation to start slow and scale accordingly.
Key to the success of your ERP deployment is ensuring that you take the right approach for your business; each “way” offers clear benefits and has a business profile it would excel in. If you are looking to deliver an ERP deployment as a global group solution across different business types a megasuite is probably best for you. However if your business works in a specific industry vertical with very specific requirements – and you need a quick ROI – then postmodern will likely best serve your needs. And finally if you are a young or rapidly growing business that needs an agile, flexible and strategic deployment then Microsoft’s third way will excel for your requirements.
In short there is not a correct or right approach to ERP – it’s about what is best for your business. With a number of excellent options available it is critical that first and foremost, before you start the search you should define what your business needs are. And by doing so you’ll find an ERP solution that is optimised for your organisation.