Another year is about to draw to a close, which is always a good time to look back on accomplishments from the last year and look forward to the upcoming new year. In 2014, much in the ERP software industry remained the same, but plenty of things changed as well.
One thing that hasn’t changed was the proliferation of high-profile ERP failures and challenges. For example:
- Avon pulled the plug on it’s $125 million ERP implementation after a botched roll out in its Canadian operations.
- The federal government’s healthcare.gov web-site and back-end functions had a number of flaws and issues on roll out, which were widely publicized by the media.
- Congress criticized the US Air Force’s failed $1 billion ERP and logistics management system.
While these are just a few of the more extreme challenges that organizations as a whole experienced, not all was lost in the last year. First of all, plenty of organizations managed successful implementations. In addition, there were a number of other positive trends, such as impressive updates to software among some of the leading ERP vendors and exciting new advancements in mobility, business intelligence and SaaS.
But all of this is old news and water under the bridge. Looking forward, what does 2015 have in store for the ERP software industry? Here are our top 10 predictions for the next year:
- Blurred lines between SaaS and on-premise ERP software. For years, organizations (ourselves included) have been obsessed with the SaaS versus on-premise debate. As the dust of the debate begins to settle, it appears that we may have been arguing a moot point. ERP vendors are increasingly more likely to offer both SaaS and on-premise solutions to their customers, and, in many cases, organizations are adopting both. The real gray area is with hybrid solutions that host on-premise solutions in the cloud, which is a solution more of our clients are starting to adapt as a way to get the best of both worlds.
- Continued adoption of mobile and business intelligence solutions. As some companies strive to leverage low-hanging fruit in their ERP initiatives, more will invest in mobile solutions and business intelligence software to get more out of their existing ERP systems. Organizations will recognize that newer ERP systems will not necessarily help them make better use or sense of business information without the tools to better support decision-making among employees and key decision-makers. In addition, executive teams will be under growing pressure to increase revenue, which will put more pressure on their employees to provide decision-making tools and dashboards designed to support executives’ need for information.
- ERP software will no longer be limited to ERP. Salesforce used to simply be a CRM vendor – albeit a very strong competitor in that space. With its increasing ecosystem of apps and bolt-ons designed to address the things the software can’t do on it’s own, it is becoming clear that Salesforce and other non-ERP vendors are disrupting ERP software as we once knew it. Now, rather than simply considering the traditional ERP vendors, organizations can look to standalone CRM, financial and inventory management systems and still have options to extend those solutions into more traditional ERP territory.
- Best-of-breed systems will make a comeback. As outlined above, non-ERP software vendors are providing compelling reasons to adopt their solutions and integrate to others to provide comprehensive enterprise solutions. Now that there are more options on the table, organizations will no longer be hamstrung by a relatively limited subset of complete, standalone ERP systems. This is good news when it comes to having more options, but bad news in that it will make the ERP software selection process even more overwhelming.
- Integration and solution architecture will become increasingly important. The increase of best-of-breed ERP systems will put more pressure on CIOs and ERP consultants to provide better integration between systems and address potential silos of processes and data that often come with the territory. As a result, solution architecture and integration will become increasingly important competencies required to support effective ERP implementations.
- Watch out for the new Tier I ERP vendor. Last year, we commented on how SAP and Oracle had made up for lost ground in their respective market shares after ceding to the Tier II vendors in the previous year. While we won’t know how the new market share figures will shake out until our 2015 ERP Report is released early next year, it is time to consider a new Tier I vendor in the meantime: Infor. We are seeing more and more instances of Infor going up (and winning) against SAP, Oracle and Microsoft Dynamics, even more so than with what used to be their Tier II counterparts. Throw in the strategic investments and acquisitions, product enhancements, and broad suite of offerings the company provides, and it seems that we may have a new Tier I alternative that can scale to various industries and company sizes along with the best of them.
- Convergence of ERP and consumer user interfaces. For the last decade or so, we’ve seen the proliferation of mainstream consumer social media platforms, such as Facebook, Twitter and Instagram. However, ERP systems have always maintained a different, more complex and less consumer-friendly look and feel – until now. It was bound to happen eventually as more millennials entered the workforce and demanded more consistency in their work versus social technologies, and it appears that it is finally happening. A new look at the user interfaces from ERP vendors such as JD Edwards, Epicor and Infor all reveal that this may be the year that enterprise software starts to close the usability gap with the social media giants. This is good news for those of us concerned with organizational change management and user adoption of new ERP systems.
- ERP failures are still very real risks. Unfortunately, and as mentioned above, ERP failures aren’t going away anytime soon. Since each year brings new high-profile failures and our expert witness practice continues to thrive, we are finding that we may need to make this a standing prediction for each year we create this predictions list. ERP implementations are simply too complex and too risky for all organizations to succeed, especially those that are overconfident in their own abilities or choose to leverage the support of subpar ERP consultants and system integrators.
- Higher failure rates of ERP vendors and consultants. I take the view that ERP implementations don’t ever fail, but ERP consultants do. Up until recently, there has been too much money to be made and too little accountability for most ERP consultants to focus on their clients’ success. In the past, organizations had to choose ERP consultants focused on one particular software solution, which resulted in limited options, competition and accountability. Now, organizations can leverage independent ERP implementation providers (such as Panorama Consulting) to provide options to the myopically-focused technical consultants that have historically cornered the market.
- Increasing dichotomy between ERP success and ERP failure. On one hand, and as mentioned above, ERP failures will not go away anytime soon. On the other hand, there are still plenty of success stories out there. The difference between the two extremes will continue to become more apparent. The successful ones will do all the right things – effective project management, business process reengineering and organizational change management, for example – while the failures will continue to ignore or underinvest in those areas. The differing results between these two groups will become even more extreme.
These are just a few predictions that we anticipate for the coming year. We will start to get a sense of the accuracy of these predictions when we publish our 2015 ERP Report at the beginning of the year, which will quantify the trends and outcomes of the past year in more detail.
What do you think? Have we missed anything or do you have different views? Please comment below and share your predictions for the coming year as well.