Postmodern ERP: Still not sunshine and roses

Published on the 27/09/2016 | Written by Donovan Jackson

postmodern ERP
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Taken on face value, the marketing messages for ‘postmodern’ ERP software make it sound like something of a techno-utopia. What’s not to like: ‘Run Simple’. Gosh, I’d buy that. ‘Stay focused. Win faster. Build trust’. Where do I sign up! ‘Save up to 93% in IT costs’. Brilliant, I’m actually going to make money buying this thing. ‘Simplifie[d] IT with the world’s most complete, open and integrated business software and hardware systems’. No need to get anything else, so easy! Probably have it running by the weekend.

Except, as anyone who has ever endured an enterprise software project, it isn’t quite like that. Indeed, Gartner research director Denise Ganly describes the reality in rather less flattering terms: the ugly truths, even, of postmodern ERP.

Sounds a bit arty, and it is. “Postmodern ERP is a term we coined 3 years ago or so; for starters, when you talk ERP, you have to say ‘what do you understand by the term’? So you have to dig into that, first,” Ganly told iStart.

Recalling that Gartner coined the term ‘ERP’ back in 1990, she reminded us that back then it was a very definite ‘back office’ function. “What has happened is it became a really big ugly nasty thing; we redefined it as a technology strategy, and not a thing that you buy, which is applied to the organisations and which encompasses the back office systems of record, and business outcomes that are differentiating and provide competitive advantage.”

With that done, Ganly said Gartner started seeing a shift in the marketplace around three years ago. “That was based on the fact that big monolithic implementations weren’t actually fulfilling client needs. The closer you got into the business and further from the back office, the more annoyed and dissatisfied users were. And, with the advent of cloud, those users could now source their own software. It was shadow IT, as users realised they could bypass the ‘department of ‘no’’. Along with that was the maturation of integration and master data management and the monolithic systems started to break down.”

Ganly said Gartner originally called this process ‘the devolution of modern ERP’, which doesn’t totally roll off the tongue, which then became ‘postmodern ERP’. “Technically, it works. If you know about art, ‘postmodernism’ has a deconstructive element.”

The rapid rise of hybrid
The emergence of cloud delivery models for software essentially heralded the arrival of postmodern ERP and, said Ganly, Gartner expected it would take a good decade to gain proper traction. “We also thought it would work well for the SME and perhaps the bottom half of larger enterprise. But it is happening faster than that – and, recently, when one of the world’s biggest companies said it is looking to ringfence its SAP and look at other ways of doing enterprise software, we realised this is even happening at the top end of town.”

Gartner, she said, did as it does and came up with quadrant approach, into which four ways of ‘doing’ ERP fit. “The first is on premise as much as possible with one vendor; that’s the traditional approach which is still valid for some organisations. Then there is hybrid, with some on premise, some cloud. Then there is ‘outsource everything’ including some BPO elements; this model is emerging slowly, because while managed hosting services is generally done well, BPO is problematic. Then there is the world where everything is moving from on premise to cloud.”

On this latter most postmodern of all approach, Ganly said she is ‘fairly certain’ that it is more mature than Gartner’s own research shows. “That may be because of the client base. Smaller companies are more likely to go to cloud, some larger ones may never get there.”

By 2014, she said, Gartner research showed that 72 percent of companies polled were already in the hybrid world.

What’s so ugly about that, then?
Cloud software, Ganly noted, comes with a lot of promises but there are also what she calls ‘Some really nasty gotchas’. “There are the little niggly things, like ‘you can increase agility and flexibility’ or ‘reduce complexity’ [which feature prominently in marketing blurbs]. But you cannot do both; it is one or the other.”

When talking cloud, the most common motivations are that it is supposedly cheaper, easier and quicker. Ganly unpicks these in short order. “Cheaper only because most organisations start small with not a lot of data. But analysis shows that there will be a cost crossover as early as three years, but more typically in four or five, after which ongoing costs will be more, so it is not cheaper.”

Easier? “So you have this complex on premise process. It doesn’t become any less complex in the cloud.”

Quicker? “Yes, it is faster to stand the instance up, but all the testing, integration and change management is the same as with on premise software. That doesn’t go away, so it is not quicker in the way most people think.”

Ganly said she is still occasionally surprised by the expectations for the cloud. “I get why businesspeople might think special things happen in the cloud, but it is a bit surprising when running into IT people who believe that, when all it means is it is just running in someone else’s data centre.”

Postmodern ERP has also, Ganly explained, largely emerged as the result of tactical rather than strategic decisions (shadow IT strikes again). “When you make tactical decisions, you don’t the understand ramifications, for example, on data integrity. And you will have to integrate and while it has matured, integration is not as easy as vendors will have you believe. Integration is difficult and that hasn’t changed.”

This is a cautionary tale, Ganly said, as organisations are looking to get stability and auditability for certain processes, while simultaneously allowing other processes to be agile, flexible and responsive to changing business needs. “That is a dichotomy; there is a tension there. Getting the solid stable base is really important, but when looking at the stuff that provides competitive advantage, you don’t want a massive number of these things. Maybe ten at most – but then you will get vendors and clients which take the microservices approach and look at putting all these things together. That way, madness lies.”

Fundamentally, Ganly said, most organisations are not prepared for the pervasive organisational change requirements that happen when adopting cloud solutions. Forget, for a minute, what vendors are saying, because as those in the trenches no doubt know only too well, “Enterprise software is still hard and it is still complex.”

Questions or comments...

  1. John Blackham

    Wow, Gartner saying like it really is. This is a real reality check. Hooray.

    Twice this piece hints at the real way forward: ultimately it’s an organization’s processes that call the shots. Gone are the days of ‘software knows best’ best practices, although some ERP vendors still push this dated SAP barrow …and many NZ businesses are naive enough to believe this.

    Ultimately customers are going to want their business’ strategic advantage to be mirrored in their software. The ERP battle will be won by the vendor who can deliver 100% as-you-want it functionality without compromise, and this doesn’t exist today. …but it could. J

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