We are at a pivotal juncture in the world of ERP software and enterprise technology.
This may be the first time in my career when there was so much excitement and uncertainty in the enterprise software space. On one hand, major vendors are promoting exciting new flagship technologies. On the other, many CIOs and other executives are nervous about the relative immaturity of these new products.
In many ways, 2018 will bring exciting new trends to be aware of. In other ways, the coming year will bring more of the same.
Here are my top five predictions for the ERP software space in 2018:
1. Capital Investments in Digital Transformation Initiatives will Continue
With the global economy continuing to improve, more companies scaling for growth, and capital investments continuing to gain momentum, more companies will be more likely to invest in their digital transformation initiatives. Other contributing factors to this trend: more companies are reaching the end of their legacy system lifecycles dating back to Y2K system replacements, and more industries are going through major, market-driven transformations (think: the retail industry grappling with the disruption of Amazon and the e-Tailing trend). All of these factors will lead more companies to revisit their enterprise system strategies going into the new year and beyond.
2. Cloud ERP Software will Reach a Tipping Point
The trend toward cloud systems has been gaining steam for several years now, but this is the first year where major vendors are all doubling down on their cloud offerings. SAP S4HANA, Oracle Cloud, Microsoft Dynamics 365 and Infor Cloud vendors are all examples of the flagship products being aggressively promoted by the top ERP vendors. The only thing complicating matters? The relative immaturity and lack of proven track record of these systems, along with executives’ continuing comfort level with on-premise deployments. The coming year may be the year where one of these two conflicting pressures win out and cloud systems are either more widely accepted – or the trend proves to be a short-lived fad. (Watch for our upcoming 2018 ERP Report to see if cloud adoption regains momentum after giving up market share last year).
3. More Organizations will be Forced Off Their Legacy ERP Systems
As more ERP vendors (link to /resource-center/erp-database/page) increase their investments in cloud solutions, they will likely continue paring back R&D in some of their legacy products. For example, products such as Oracle EBS, Microsoft Great Plains, and Epicor Prelude are likely to see rapid deterioration of focus and support for these products as they are sunset. Vendors will be less likely to introduce new functionality or provide long-term support for these dated products, leading many organizations to conclude that they have no choice but to migrate to more modern enterprise technologies. When combined with trends #1 and #2 above, executives are more likely to reconsider their platforms of choice moving forward into the long-term.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
4. More Companies will Say “No” to ERP Software
Due in part, to #3, while on one hand we predict more organizations moving toward new technologies, we also see more executive teams being skeptical of ERP systems (link to /erp-software/ page) as we have known them over the last 20 years. Organizations are too painfully aware of the historic and ongoing challenges with the enterprise software status quo, so they will be more likely to consider alternatives to big, complex, monolithic ERP systems. Potential alternatives include less risky upgrades, more attention to business process reengineering, and point solutions. Whatever the exact alternatives pursued, the coming year’s focus will be on fixing more immediate operational issues and pursuing more low-hanging fruit.
5. Organizations Grow Increasingly Allergic to Organizational Change Management
This is one of the most interesting (and surprising) trends that we are seeing in the market. An increasing number of organizations are becoming seemingly allergic to the term “organizational change management” – while at the same time recognizing the need to address the people side of their digital transformation initiatives. On one hand, they recognize the risk of not addressing organizational change, but on the other, they are jaded by past org change failures.
In other words, organizational change management has a branding and PR problem. This starts with calling is something more specific, such as people enablement, workforce transition, business process implementation, and whatever other words of choice fit. However, words are just words, so it is even more important that organizations recognize the need for proven organizational change expertise and toolsets – something most ERP vendors, consultants, and system integrators aren’t good at.
2018 Will Be a Year of Transition
These are just five of the biggest predictions that we see in the coming year. It will clearly be an interesting year of transition. How will you navigate these changes to make your organization more successful in the new year and beyond?