When offering predictions for 2020 and beyond, most ERP consultants, vendors, and systems integrators will offer the typical buzzwords and hype being pushed by the latest technologies. But the reality is that there is a storm brewing in the ERP software industry in 2020, so it is important to understand how to navigate these challenges.
The current digital transformation and ERP software industry landscape
The industry is going through a seismic shift over the next few years. Cloud adoption, shoring up the deficiencies of flagship ERP systems, and unreasonable customer pressure from vendors and systems integrators are just some of the things that CXOs and transformation project teams need to navigate.
To complicate matters, industry players are doubling down on their biases and one-size-fits-all, silver bullet offerings. There is a lot of money at stake for various industry players, so biases are creeping into every nook and cranny of ERP RFP processes and procurement initiatives. ERP vendors may be partying like it’s 1999, but this isn’t necessarily a good thing for customers.
Finally, there are plenty of upstarts waiting in the wings to capitalize on the voids left by the big players. While SAP is imposing its 2025 deadline on customers, for example, Service Now, Workday, and other best of breed solutions stand to excel where the big vendors are deficient. This can be a difficult technology and transformation landscape for customers to navigate.
Hysteria in the digital transformation and ERP software industry
As I was writing these predictions a few days ago, I was listening to the song Hysteria by Def Leppard. Coincidentally, the word seemed to summarize my current view of the ERP software industry heading into 2020 and beyond.
This video summarizes my top 10 predictions 2020 and beyond, which show how hysteria will be the operative word for the digital transformation and ERP industry in the coming years:
The 2020 predictions discussed in the video can be summarized as follows:
We will finally see the tipping point of cloud adoption. Customers are adopting the cloud at scale now. This is partly due to customer demand, but it is also due to the profit incentives of and pressures from ERP vendors.
Technical deficiencies of flagship ERP software will be exposed. In this vendor rush to migrate to the cloud as quickly as possible, many of the current flagship products are not ready for primetime. As part of their ERP software selection process, organizations need to objectively assess what they are really getting for their money.
Customers will face a customization crisis with their ERP systems. Faced with the deficiencies outlined in prediction #2, customers will be forced to decide between accepting half-baked software or customizing to better fit their needs. Neither is ideal, so it will be a matter of choosing the lesser of two evils.
Best of breed solutions will become the norm. Similarly, customers will also turn to best of breed solutions to fill the gaps left by incumbent ERP vendors such as SAP, Oracle, and Microsoft. Gone are the days of single-solution, one-size-fits all ERP systems, despite attempts by vendors and their systems integrators to push this outdated concept.
The industry will face a skills and resource crisis. Not since Y2K has the industry faced such a synchronized spike in demand for implementations within the same timeframe. This will strain qualified resource availability. Of the ones that are available, many consultants will not have the appropriate experience with these newer products.
Change management will become the key to success vs. failure. It may be wishful thinking, but organizational change management will need to be front and center stage to help mitigate the risks outlined above. Change management has always been a critical – if not the most critical – success factor for digital transformation success, but never to the degree that we are seeing now.
Digital transformation and ERP failures will increase. Not all organizations will heed the words outlined in #6, while others will fail to mitigate the risks outlined in #1 to #5, so this will trigger an increase in ERP failures.
Customers will revolt against the big ERP vendors.SAP has imposed a 2025 deadline on customers, while others have applied more subtle pressures to customers to upgrade now. Feedback from our global client base suggests that customers are not happy, so incumbents may actually lose customers as they open their ERP selection process to other contenders.
Customers will call for more backup and support. The risks associated with the above predictions will lead customers to call for more outside, technology-agnostic support. ERP consultants such as Third Stage and others stand to keep busy by helping clients navigate this landscape.
Not-so-independent ERP consultants will be exposed. Too many ERP consulting firms allege to be independent when they are not. Watch for backroom deals, under the table commissions, and other lapses of integrity to be exposed by at least one fairly well-known independent ERP consulting firm.
How to navigate this digital transformation hysteria
This may all sound like a doomsday scenario, but a few simple tips will help you effectively navigate the situation. The key is to operate from your game plan and not be too influenced by biased vendors and implementation partners.
Here are the three biggest pieces of advice I can provide for navigating the current digital transformation landscape:
Don’t get backed into a corner by ERP vendors or systems integrators. They may stand to gain or lose a lot by your decision, but it is important that you embark on your digital transformation on your intent and timeline, not theirs. If it makes sense to transform now, then do so cautiously. If it doesn’t, then focus on other higher-value activities such as improving your operating model or building stronger organizational competencies without new technologies.
Have a clear digital transformation strategy. Decision-making is much clearer when you have an overarching and deliberate digital transformation strategy. Ensure that you define one that is well aligned with your overall strategy and makes the most sense to you. This, more than anything, will lead you to clear-headed decisions without industry bias.
Ask for help. There are plenty of companies that are willing to help you, but make sure you lean on those with nothing to gain or lose by your decisions. In other words, find independent and technology-agnostic third-party experts to help you along the way.
Conclusion: From hysteria to success
Some of the biggest successes come from turmoil and adversity. While there are definite challenges in today’s digital transformation space, there are great opportunities as well. It’s up to you to decide how yours will look for your organization.
As always, please feel free to contact me to arrange a time for an informal conversation about your digital strategy, roadmap, and transformation in the coming year. I am happy to leverage our team’s experience with our global client base and act as a sounding board as you continue your journey!
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
Third Stage Consulting Group is a global thought leader in business transformation, ERP software systems, operational change management, and business advisory. Let us take your organization’s digital transformation to the Third Stage.