Strategy, Legal & Operations

The evolution of ERP software

ERP software has evolved considerably over recent years and is now more advanced than ever before. The last half decade has seen enterprise resource planning (ERP) solutions evolve into versatile and multi-faceted tools that help small, medium and large organizations run their business. By focusing on innovation and utility, developers have managed to ensure ERP software stays current at a time when the technology focus has largely been on social, mobile and the cloud.

Indeed, ERP software is now more evolved than ever, offering users a more comprehensive experience than many of their counterparts.

However, this hasn’t always been the case. “Historically, ERP implementations have been expensive and time-consuming,” Deloitte explained in ‘Reinventing the ERP Engine‘.

Indeed, media reports of failed implementations and rising costs have served to create a culture of trepidation when it comes to ERP, while newer technologies have held more appeal.

Yet ERP has its origins in fulfilling a need and by keeping the software closely tied to changing user requirements, the tools have continued to find their niche in the changing technological landscape.

The beginnings of ERP software

ERP software as we know them began in the late 1980s. Targeted at large businesses and focusing primarily on finance/accounting, the software was “complex, expensive [and] powerful,” Rashid, Hossain, and Patrick explained in ‘The Evolution of ERP Systems: A Historical Perspective‘.

ERP software was designed as an off-the-shelf solution to replace in-house company-specific systems, which made collaboration and data management challenges. They began – and continue to be – “multi-module commercial packages suitable for tailoring and adding ‘add-ons’ as and when required”.

However, as technology changed and data volumes increased, existing ERP software came under even more pressure to support different functionalities and facilitate collaboration. Rashid, Hossain, and Patrick state in their report that ERP needed to be redesigned to break the “barrier of proprietorship and customization”, ensuring business collaboration could take place over the intranet, extranet and the internet seamlessly.

ERP systems rose to the challenge, recognizing the importance of open architecture, interchangeable modules, customization and user interfacing, Rashid, Hossain, and Patrick explained.

Appealing to customers

The ERP evolution was about more than changing technology, however. Users had different priorities which needed to be addressed in one solution.

“Technology leaders new to the world of ERP want to know what they can minimally get by on, so they can move on to focus the latest and greatest tools to hit the market and appeal to their business users,” Deloitte explained in ‘Reinventing the ERP Engine’, adding that they also needed to decide between ERP and the latest technologies to give a competitive edge.

Meanwhile, “seasoned veterans want to know how they can improve their systems and keep up with new technology without starting the process from scratch”.

However, the reinvented ERP model allows businesses to address all of their pain points while supporting the latest technology.

Next-generation ERP software

“More ubiquitous, more responsive, and more flexible than ever before, the engine of ERP is the force behind many newer technologies.” – Deloitte

Indeed, modern ERP systems work in a way not previously experienced. They offer collaboration and ease of use through mobile, social and traditional platforms. Big data is much more manageable, thanks to advances in compression, storage, and memory costs, while distributed computing allows for real-time processing and analysis of internal and external data feeds.

Organizations are better placed than ever before to gain insight and value from their data, generating a return on investment. Heightened visibility also helps with compliance and gaining oversight of often complex organizational structures, while automation capabilities drive efficiencies and reduce administration.

Deloitte claims that arguably the most significant change is the shift from an automation-based model to an agile, adaptable system that can upscale as a company grows and reacts to changing events.

This will be even more important in the future, according to the experts, who claim ERP will need to be built for outside integration and be capable of anticipating growth, dealing with big data and supporting service interactions.

By having solution entrenched integrations with high architectural flexibility, where applications generate and simply transmit business documents in XML, companies can upgrade their systems as often as necessary without the practice ’of open-heart surgery’ on the ERP allowing the user to maintain a vital link to other applications.

Moreover, the architecture gives tremendous flexibility to the system when it comes to adopting cloud-based solutions. For example, an industry may, for reasons of security of its critical data, maintain its ERP on-site as well as its financial management system. At the same time, it could benefit from innovative applications in the cloud, like HR or management time and attendance applications that can be deployed quickly and at low cost.

Such a hybrid environment provides comfort, flexibility, and freedom of choice to the company, in line with its needs. So a company can upgrade an application without fear of repercussions in other applications. It may also choose to upgrade an application in the cloud during the deployment phase and testing, and then switch back to the site. In the end, the choice belongs to the company and not the supplier.