The New Generation of ERP

ERP applications are undergoing a major transformation, with the addition of new capabilities such as integrated analytics, the extension of functionalities and the advent of mobility and cloud. With analysts remarking that ERP is undergoing its biggest transition since it emerged in the 1990s, vendors have high hopes for the market in 2015. Sales are expected to be strong this year, with many businesses looking to update their systems. The biggest pull for companies appears to be the rise in innovation, functionality and new business models.

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“The ERP market is more dynamic than ever before, especially the Middle East, with an increasing number of providers competing in the market,” says Daniele Simonetti, business development manager, Derga Consulting Middle East.

“Business users are aware now that modern solutions go far beyond classic enterprise resource planning. There has been a dramatic increase in applications designed to extend ERP functionality in the major modules such as inventory, financial and customer relationship management.”

Gartner’s Nigel Rayner notes that large monolithic ERP suites are becoming a thing of the past, and that we are now in the ‘postmodern ERP’ era, where enterprises are choosing hybrid solutions, mixing on-premise functionality with cloud solutions.

“Cloud has completely disrupted the ERP space,” he says. “This has been one of the main drivers of postmodern ERP. However, the disruption and adoption has mostly been around the ‘edges’ of ERP functionality, in the user-centric areas such as human capital management (HCM), procurement and travel expense management.

“While cloud and in particular SaaS is becoming the dominant delivery model around the ‘edges’, core functions like financials, logistics and manufacturing are still dominated by on-premises solutions. However, this is also changing. Vendors like FinancialForce.com, Kenandy, NetSuite, Plex and Rootstock Systems offer SaaS for core ERP functions. Although adoption is mainly among small and midsized organisations so far, this will change over the next five years.”

To date the uptake in cloud for fully integrated ERP solutions has been slow going, with interest only really ramping up over the last 12 months. However, many vendors believe that more businesses will now start deploying backbone ERP systems into cloud environments. Experts forecast growth in public cloud services in 2015, with clients still preferring to rely on private cloud solutions for more sensitive data. But hybrid approaches also look set to grow.

Ashish Dass president, Middle East & Africa 3i Infotech commented: “Cloud is a boon to the ERP market and it has made a clear way for midsized companies to afford high end ERP solutions as cloud solutions require little to no capex, costing less, and are cloud solutions are forecast to continue to reduce in cost as more and more competition in the cloud spaces increases.”

Mobility is also a factor helping to push interest in new ERP solutions, as Anilesh Kumar, director, Business Development at Levtech Consulting highlights: “While mobility has been present mainly from a supply chain perspective in the past, today cross-platform mobile applications are driving the penetration of ERP usage within organisations.”

“ERP is undoubtedly going portable,” agrees Rohan Tejura, assistant vice president Focus Softnet. “The latest trends show ERP moving into the cloud and mobile environments rapidly. Clients’ demands for data and system portability in order to keep them connected and productive on the move has rapidly seen ERPs evolve into the Internet space.”

Then there’s the evolution of business analytics (BI) within the realm of ERP. BI has always been there, to some extent, but now it’s become a must for vendors to include and customers have much higher expectations and bigger needs.

“More and more ERP vendors are including analytics as a standard feature of their offering. Gone are the days when business intelligence and analytics had to be customised and required a lot of work to develop. With the advancements in technology, it is expected for systems to provide actual intelligent data that can be used to drive business decisions and strategy, and not just numbers. ERP applications are no more being used only for viewing finances, but, should be able to dive deep into the product data and provide real time business view and insights,” says Virender Aggarwal, CEO Ramco Systems.