So called “postmodern” ERP technology tools are leading the way for financial management business application selection. ERP suites are evolving rapidly into a federated, loosely coupled environment with much (or even all) of their functionality sourced as cloud services or via business process outsourcers.
According to John Van Decker, Research VP at Garnter, Postmodern ERP is 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.
The movement of ERP to the cloud is the latest phase in how organizations deploy this technology.
At a recent presentation to FEI’s Committee on Finance & IT (CFIT), Van Decker categorized three distinct periods of ERP evolution. During Classicism, a period spanning the 1980s to the early 1990s and driven by market and user immaturity, companies typically employed a “best of breed” approach to their ERP systems. Users were generally satisfied, but data integration and reporting was a nightmare.
During Modernism, from the mid 1990s to the mid 2000s, IT systems became more centralized and the ERP megasuites ruled. Driven by the vendors, integration trumped agility and users became increasing frustrated trying to fit their systems to vendor requirements.
From the mid to late 2000s, driven by the nexus of forces and user disillusionment, users are taking back control. This is what Gartner calls Postmodernism.
So where do organizations stand today? At their Symposium/ITxpos in 2014 and 2015, Gartner surveyed participants and found the following:
On-premises, dominated by large integrated suites (diminishing)
- 2014 Actual: 38%
- 2015 Actual: 16%
- 2020 Planned: 2%
On-premises core with cloud solutions in key domains (increasing)
- 2014 Actual: 60%
- 2015 Actual: 82%
- 2020 Planned: 78%
Loosely coupled cloud solutions
- 2014 Actual: 0%
- 2015 Actual: 2%
- 2020 Planned: 17%
As a result of these market shifts, Van Decker presented the following Four Axioms of the Postmodern ERP Market:
- The megasuite is dead, killed by user interest in cloud specialist vendors who develop a subset of the suite.
- No vendor can build a megasuite fast enough to keep up with cloud specialists.
- Loosely-coupled ERP solutions are emerging in the cloud based on developed/acquired products and PaaS (Platform as a Service).
- Integration complexity increases, but vendors hide this in the clouds.
For more information about FEI’s Committee on Finance & IT, contact Bill Sinnett.