Why Does ERP Needs a Modern Layered Services Platform?

The evolution of ERP from a specialty app to a business-critical amalgamation of solution has faced daunting difficulties over the years. Basically, ERP has gotten too big, too ungainly, too rigid. There are those who have said that “ERP is dead,” suggesting its costs, risks and lack of flexibility outweigh its value. It has been compared to a monolith, an immovable object with a business unfriendly mind of its own. Is ERP dead or at least dying? Fortunately for those hundreds of thousands of companies invested in ERP, and at least some of the vendors that supply ERP software, there is a savior, which is, in could be referred to as a “modern layered services application platform.” We will simply refer to it as a “modern platform.”

How did ERP become so important – and big? What negative side effects are associated with ERP’s march to enormity? How do modern platforms help ERP, and the businesses that use ERP, become a more relevant and flexible solution for now and tomorrow?

The Problems Caused by Big ERP

Unfortunately, the notion that the monolithic ERP solution is a great thing for organizations carries some glaring flaws, such as:

• Hard to Change: The set of common ERP processes, under the pretense of efficiency and best practice standardization, makes it increasingly difficult for a company to adapt to change. Instead of ERP serving an organization’s changing needs, a monolithic ERP often becomes a yoke around the organization’s neck, forcing the company to adapt to the ERP. Clearly the other way around – ERP adapting to the business – is the preferred approach. The last thing a CEO needs is a mission critical application that impedes the company’s progress.
• Missing Best of Breed: All the parts of an ERP are not equally effective. For example, some ERPs excel at inventory management but offer weak capabilities for finance; some provide excellent asset management features but skimp on service management. In those business areas where a company tries to differentiate itself, it may want best-of-breed applications versus a “good enough” ERP version of the solution. For many companies, this big bland vanilla ERP too often proves that “good is not good enough.”
• The Customization Trap: To get around the weak areas of an ERP solution, a company will often customize the ERP. While this helps the ERP maintain relevancy initially, customizations cause huge headaches over time. For example, there is the question of who supports the customization? Every time a company wants to upgrade its ERP it has to retest and perhaps redevelop each customization. This tartar buildup becomes so entrenched that some companies give up on upgrading. Foregoing moving to the latest version means that some companies end up with ERP  versions that are 10 years old, or older. Often ERP vendors will, understandably, stop supporting very old versions of their software. Sometimes the servers and storage on which the old ERP runs face end-of-life and/or are not performing well and cannot be improved.
• Missing Technology Innovations: Everywhere you look, if you track the field of information technology, there are new emerging technologies. Examples include robots, data lakes, AI, multi-cloud, machine learning, software defined storage, a wide range of innovative analytics, 5G; the list is nearly endless. Guess what? If you are stuck on that immovable 10-year-old ERP, your company benefits from none of these new technologies. Your “state of the art” technologies trapped by that old ERP are probably 15 to 20 years old.

Modern Platforms to the Rescue

For those companies barely surviving on old, monolithic ERPs, there is hope, and that entails moving to an ERP that is based on a modern platform. One of the biggest mistakes a company trying to replace that 10-year-old ERP monolith could make is to blindly stick with what is known. “We want to stay with our incumbent provider because we know them, they know us, it will be easier.” While that argument may have some merit if your incumbent has modernized their ERP on top of a modern layered services application platform, companies that do not make the leap may find themselves, again, in what is sometimes referred to as “The Death Cycle of ERP.” Why opt for an ERP with a modern platform? Here are some key reasons:

• Layered services: A modern platform abstracts all the services it provides into layers. For example, security is important to everything in the world of software. Such a platform might include security-related services at a low or lowest layer. That means everything that gets built on the platform above that layer inherits all the security services. Old ERPs were often developed in a “spaghetti code” fashion with many workarounds, including security. Layered services ensures that, as you go up the stack, you worry about less and less. Need to enhance security? Do so in the underlying modern platform and everything above it benefits. Need to enhance the user experience? Offer those services via the platform and the apps above it can take direct advantage.
• Emerging technology adoption: One of the difficulties many companies face is determining how and when to take advantage of emerging technologies. Sticking to an old ERP certainly inhibits the adoption of newer technologies. ERP built on a modern platform, however, makes technology adoption easier and safer by embedding a proven emerging technology as a service in the platform. The ERP solution, and other solutions built on the platform, are then able to take direct, and safe, advantage of the emerging technology. Want to make some cutting-edge analytics available to all the apps? Embed the analytics technology in the platform.
• Low/no code extensions and apps: With everything layered, the top layer, the app layer, becomes a relatively simple undertaking. For example, customizations can be replaced by apps or extensions built on the platform that are not impacted by upgrades. Using abstraction, such as through RESTful APIs, the platform vastly simplifies the development of extensions and new apps, all built using a “low/no code” development platform. That means business analysts can sometimes make minor changes or extensions to the ERP to keep it relevant with coding. Slightly more complex change or new apps might only require some simple scripting. Do you need to enhance part of the ERP that is too vanilla for you? Low/no code enables you to do that without locking you into an old ERP version.

ERP lifecycles are notoriously long, often measured in decades. Companies make large investments in ERP and run much of their business on ERP. ERPs are complex, multi-functional solutions. But ERP does not need to be highly resistant to change anymore and does not need to act as a drag on a company’s growth.

Modern platforms are cloud-friendly, often based on RESTful APIs, use a layered-service architecture, offer low/no code development to help extend the ERP (and other solutions built on the platform), safely speed up the adoption of emerging technologies, and, most importantly, help keep ERP aligned with the business.

 If based on a modern platform, the ERP your company uses may very well still be relevant to the business and continuously support business change for the next decade or more.