Where Is ERP Headed in 2020? The Cloud ERP Decade


Five years ago, if I asked an enterprise client selecting a new enterprise resource planning (ERP) system if they were considering moving to the cloud, the response was usually a definitive no. And it was usually “under no foreseeable circumstances.” Today, it would be unthinkable not to consider a move to the cloud.

The latest ERP software offerings on the market provide the most integrated and strategic business process management tools that have ever been offered. The majority of large enterprises and government agencies are either already moving to the cloud or in the midst of evaluating it. And it goes without saying that ERPs are rapidly transforming. Top ERP software providers are being forced to simultaneously move all applications to the cloud and offer new ones.

Here are four developments in the cloud ERP solutions market that both loyal ERP software users and potential new buyers should consider:

  1. An ERP can do more and cost less.

    ERP can be and likely is a significant portion of your total IT spend, as it is the backbone of your internal operations. I regularly hear companies say they must cut IT spend by significant amounts to keep pace with global competition. Thus, the ERP must do more and cost less. After all, isn’t that what we all expect from all technology in our lives? Just think of how our laptops have transformed over the years. More power, more graphics, more speed, more features and all at a fraction of the cost. If your company has not transformed its ERP applications, now is the time to define your ERP modernization strategy.

  2. The role of ERP planning in finance is evolving.

    The speed of change in business continues to accelerate, and winning requires both the best real-time information to make decisions and the agility to execute quickly. Finance, HR, Sales and Operations leaders are finding they must increasingly focus on planning and analytics over the traditional work involved in accounting, transaction processing and compliance reporting. For financial, planning and accounting (FP&A) teams to effectively support their stakeholders in the business, they must be able to respond rapidly to changes in operational conditions with relevant data and analytics. Cloud-based ERP software applications are significantly improving their data and analytics offerings to allow the business to make faster decisions and gain competitive advantage. Significant improvements over traditional, on-premise solutions already exist and enhancements are being regularly released to SaaS subscribers.

  3. Extending ERP applications is easier than you think.

    The idea that cloud ERP applications do not fit specific industries or businesses due to their limited ability to accommodate unique requirements is no longer true. Cloud ERP solutions today provide extensibility that allows businesses immediate access to their marketplace where they can download applications unique to their specific sector or vertical. Of course, the enterprise must figure out when to extend the application and when to use out-of-the-box functionality. The answer to this question will depend on the industry and the specific business requirements. Where possible, organizations should challenge themselves to stay within core functionality and business processes. Often, the driver for customization is “because this is how we have always done it.” If the industry requires certain functionality, then extending the application may be the best solution – but remember extensions must comply with the coding requirements of your platform to be supported in future releases.

  4. Niche add-on software-as-a-service (SaaS) cloud ERP solutions can deliver immediate return on investment.

    If your budget or systems strategy does not allow for a near-term ERP overhaul, then you may want to consider a SaaS point solution to address specific functional or industry requirements that your current solution does not meet. ERP software developed to address a specific industry or business process is helping deliver cutting-edge best practices at a faster rate and at a better price point because it is not addressing the core of your business. While these vendors offer neither the robust ERP functionality nor the full end-to-end ERP footprint, niche offerings allow unique options for businesses in industries like retail, pharma and others to consider when evaluating ERP digital transformation. The ROI comes when you avoid expensive customizations that limit your ability to regularly upgrade and ensure software that builds in best practices.

ISG helps enterprises and public sector organizations navigate the changing ERP solution landscape. Contact us to discuss how we can help you.