With advancements in technology and faster, more reliable internet capability, we’re seeing more organizations use a mixture of IT solutions to address their specific needs. This mixture is sometimes referred to as a postmodern ERP approach.
A postmodern ERP system might be configured many different ways, but primarily it’s understood as an on-premise system augmented by several SaaS solutions that have been tightly integrated with the on-premise system.
The term postmodern ERP was coined by Gartner, identifying it as:
A technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.*
In other words, there are multiple parts to a postmodern ERP system: from financial, supply chain and manufacturing modules to marketing and staff management modules. What is required is a core ERP system with integration of various components that enhance the core – all designed to meet an organization’s unique needs.
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While most large organizations tend to use on-premise, all-inclusive ERP solutions, the trend is moving toward the postmodern model. This is due to the unique role ERP vendors play, especially those that operate as SaaS companies. These vendors provide a level of flexibility that less nimble providers can’t. SaaS providers often focus on niche functionality that some of the larger players don’t address very well.
The postmodern ERP trend will likely continue and evolve into greater integration of in-the-cloud core systems with continued integration of other solutions. Because this trend is not lost on many of the smaller solution providers, they often position their compatibility with the larger ERP systems as a component of their value proposition.
It’s not just niche software providers who are benefiting from this trend. Systems integrators and other IT companies are positioning themselves as experts on the complex integrations and customizations necessary to make postmodern ERP work.
Should You Consider Postmodern ERP?
The important issue to remember regarding the move toward postmodern ERP software is that it is a strategy and an approach, not a product. There is no “Postmodern ERP” product developed and sold by ERP Company, Inc. In our experience with clients, we’ve found that some organizations find this approach ideal for their needs, while others find it too cumbersome and costly.
Organizations considering a postmodern ERP implementation must do a great deal of homework to determine which new software will work well with existing systems and who will handle the integration and future management.
Larger corporations may find the postmodern approach more attractive, as they likely have a robust IT budget and in-house expertise to effectively manage the implement a new digital strategy.
Smaller organizations, with more limited budgets and smaller IT departments, might find the work necessary to pull off a transition to a postmodern ERP environment too cost-prohibitive. If the new environment requires a great deal of manual intervention and data does not seamlessly flow from one system to the next, then a move to postmodern ERP might be a waste of time and resources. In our project recovery engagements, we’ve seen how data inconsistencies can cause a ripple effect throughout the organization, setting the company back financially and impeding their customer engagement and growth strategy.
Postmodern ERP Challenges
For any worthwhile endeavor, especially those that could have a transformative effect on an organization, there are always pitfalls and challenges. While pitfalls should be avoided, challenges should be identified and embraced. The key to any organization hoping to transition to a postmodern ERP environment is to embrace and overcome those challenges.
Although a postmodern ERP system may be an ideal solution for many companies, it usually requires a great deal of integration and oversight by IT personnel. A vital component to managing pre- and post-integration is the ongoing management. After different components have been integrated, individual solution providers may change a component of their software. If that is the case, a refinement of the original integration may be required. Being aware of and planning for these situations will be important for those with hands-on management of this process.
In addition to complex integration, customization will likely be required, depending on how the add-on is developed and the functionality the organization is hoping for. Customization may be ongoing in a postmodern ERP environment, as specific requirements from different solutions could change every so often depending on industry standards, changes in reporting, etc.
If using different, yet integrated, systems in a postmodern environment, training of employees may be different from one system to the next. Anticipating training needs, investing in the training and being aware of when functionality changes from one solution to the next should be factored into the transition. We frequently use change management plans at organizations experiencing significant technology changes.
SaaS Service Level Agreements
Finally, support will likely vary from solution to solution. Even if a postmodern ERP system is so well-integrated that it runs like a Swiss watch, one weak link in a particular add-on solution could impact the entire system. Isolating the issue could prove problematic, especially with multiple add-on systems. It will be important for any organization implementing a postmodern ERP system to clearly understand what is and is not included in the service level agreement (SLA) associated with individual solutions. It’s also imperative that organizations understand if warranties and support have been voided based on certain customizations.
Postmodern ERP Checklist
Similar to the due diligence performed during an ERP selection, organizations should approach a transition to a postmodern ERP environment with discipline and commitment. Several items should be included on an organization’s checklist:
As is often the case when making enterprise-level decisions with organization-wide impact, a team of stakeholders should be involved. Since several different systems will require integration into a core system, stakeholders from the impacted departments should have input into what processes are most important to their area. Focus on business process management as early as possible.
ERP System Evaluation
Since the notion of a postmodern ERP environment means dealing with several distinct solutions, a thorough understanding of what each provider offers – and doesn’t offer – is paramount. It’s also necessary to understand how warranties and SLAs will be impacted if integration requires a great deal of customization. If customization voids certain SLAs, the organization must determine if their in-house support team is capable of addressing issues as they arise. Finally, if significant changes are made to SaaS solutions that have been meticulously integrated into a core system, a significant upgrade to that solution might require another intricate integration.
Total Cost of Ownership Analysis
As mentioned earlier, some postmodern ERP systems may be cost-prohibitive. The total costs must be weighed against other solutions that might be more balance sheet-friendly. The overall cost of doing nothing should also be weighed against such a transition.
What’s Your Business Strategy?
Each organization’s approach to postmodern ERP will look different. It’s not important that an organization move to a pure postmodern ERP environment. What’s important is each organization configures a solution that suits their unique needs.
If you’re considering a postmodern ERP approach, our ERP consultants can help you weigh the costs and benefits. We will assist you in understanding your business strategy and ensuring organizational alignment before you make any technology decisions.
*Gartner, IT Glossary: Postmodern ERP, https://www.gartner.com/it-glossary/postmodern-erp, 2019