Finding the right enterprise resource planning (ERP) software for your business is a challenging process. From evaluating your needs to choosing a solution to completing the implementation itself, the path to ERP is often time consuming and often high risk, with up to 75% of implementations failing to return the expected value.
However, technology has advanced to provide businesses with more flexibility, choice and value, leading to an era of deconstructed application stacks that work together, known as Postmodern ERP. So, what is a Postmodern ERP strategy and how can your business thrive in the Postmodern ERP world?
What is Postmodern ERP?
Postmodern ERP, in its most simple terms, is the “deconstruction” of business management software — a landscape where software works together to provide more functionality and value to organizations. This strategy is the alternative to the idea of the one-solution-for-everything legacy ERP suite, which required immense resources to implement, offered little flexibility and presented a high risk of failure. Today’s solutions are more focused, provide more integration and are more easily customized to deliver value for businesses.
Defining Postmodern ERP
The phrase “Postmodern ERP” was coined by Gartner in 2014 and has been used ever since to set criteria for their Magic Quadrant, Hype Cycle and Market Guide reports. They defined 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.
In defining the term Postmodern ERP, Gartner further breaks the concept into two categories: administrative and operational.
Administrative ERP
This focuses on the administrative aspects of ERP — primarily financials, human capital management and indirect procurement. Administrative ERP is often focused on industries generally characterized as service-centric industries, delivering the financial management backbone to companies.
Operational ERP
Organizations in manufacturing, distribution, retail, etc. (sometimes referred to as product-centric industries) are likely to extend their ERP strategy beyond administrative functions into operational areas, such as order management, manufacturing and supply chain in order to maximize operational efficiencies.
These organizations can realize benefits from the integration between administrative and operational capabilities, for example, where operational transactions that have a financial impact are reflected directly in the financial modules.
Trends Driving the Push to Postmodern ERP
There are many reasons businesses are making the decision to focus on a Postmodern ERP strategy, ranging from demands for flexibility and choice to the increasing speed of business, as discussed in CIO Review:
- A Demand for Business Agility: The push to Postmodern ERP was rooted in the increasing speed of business, resulting in a move away from a one-size-fits-all solution (that often didn’t fit all) to a decoupled, “federated” ERP environment where businesses chose the solutions that worked for them.
- The Ability to Manage Complexity: Postmodern ERP is inherently complex, as it relies on multiple vendors to deliver solutions. Businesses choosing to operate in this landscape have come to understand that the benefits of flexibility outweigh the challenges of complexity.
- A Continued Push to the Cloud: While a Postmodern ERP strategy can include on-premise applications, the move by companies to embrace cloud ERP is a main driving factor. Cloud ERP applications are often designed for integration, making it easier to deliver consistency and integrity of data and processes.
- Consumerization of IT in the Enterprise (CITE): Business users have new expectations from their vendors, and user satisfaction is one of the top factors in decisions. Today’s business users can select what works best for them. According to a study by IDG Enterprise, the top five reasons organizations are using SaaS applications are 1) user satisfaction, 2) user productivity, 3) process efficiency and collaboration, 4) business agility and 5) access to critical business information.
Getting What You Need: Strategies to Successfully Embrace Postmodern ERP
While the move to Postmodern ERP is often one in which the benefits outweigh the challenges, having a plan of action can help you get more value and reduce risk in the move to leverage a variety of applications.
- Have an Integration Strategy: The entirety of Postmodern ERP is steeped in integration — without it, you lose many of the benefits promised by vendors. To get the most out of Postmodern ERP, you need to plan for integration in advance of your move so that you can mitigate complexity and increase agility.
- Address Fragmentation Before it Creates a Data Integrity Problem: Maintaining data integrity is a top concern when dealing with a fragmented postmodern ERP environment. As businesses move to embrace a Postmodern ERP strategy, proper data governance and data quality will increase in importance. The usefulness of sophisticated high-speed analytics and algorithms will be undermined if the underlying data quality is not maintained.
- Plan for Complexity: Postmodern ERP provides a fundamental shift away from a single vendor megasuite toward a more loosely coupled and federated ERP environment. While this offers more business agility, business objectives will only be realized if the resulting complexity is managed properly. If not addressed in advance, the challenges will quickly stack up and erode value.
- Prepare to Make More Decisions: Traditionally, a company may have a dozen or so vendors to choose from. However, choice is the name of the game in Postmodern ERP. Now, in addition to your “hub,” you will have to decide on a wide range of applications that work alongside it. Prepare for these decisions in advance and prepare for many small implementations to replace one massive one.
Finding the Best ERP for Your Business
Breaking into the world of Postmodern ERP offers many advantages, but it’s vital that your company prepares for the challenges that may appear as you make the move to implement such a strategy and operate under the umbrella of Postmodern ERP.
At Wipfli, we work with companies like yours to deliver ERP that “plays well with others,” not only implementing and supporting core financial applications like Sage Intacct but also developing integrations and customized solutions like our ExpenseConnect and InvoiceConnect solutions, SchoolConnect, PositivePay, and our new LM-2 Reporting.
We are proud to resell Sage Intacct and other high-quality ERP solutions, providing the highest level of implementation, support and integration that you’ve come to expect from a top 20 accounting firm. Get to know more about Sage Intacct here and contact us for more information.
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