We are at a pivotal juncture
in the world of ERP software and enterprise technology.
This may be the first time in
my career when there was so much excitement and uncertainty in the enterprise
software space. On one hand, major vendors are promoting exciting new flagship
technologies. On the other, many CIOs and other executives are nervous about
the relative immaturity of these new products.
In many ways, 2018 will bring
exciting new trends to be aware of. In other ways, the coming year will bring
more of the same.
Here
are my top five predictions for the ERP software space in 2018:
1. Capital investments in
digital transformation initiatives will continue.
With the global economy
continuing to improve, more companies scaling for growth, and capital
investments continuing to gain momentum, more companies will be more likely to
invest in their digital transformation initiatives. Other contributing factors
to this trend: more companies are reaching the end of their legacy system
lifecycles dating back to Y2K system replacements, and more industries are
going through major, market-driven transformations (think: the retail industry
grappling with the disruption of Amazon and the e-Tailing trend). All of these
factors will lead more companies to revisit their enterprise system strategies
going into the new year and beyond.
2. Cloud ERP software will
reach a tipping point.
The trend toward cloud systems
has been gaining steam for several years now, but this is the first year where
major vendors are all doubling down on their cloud offerings. SAP S4HANA,
Oracle Cloud, Microsoft Dynamics 365 and Infor Cloud vendors are all examples of the flagship products
being aggressively promoted by the top ERP vendors. The only thing complicating
matters? The relative immaturity and lack of proven track record of these
systems, along with executives’ continuing comfort level with on-premise
deployments. The coming year may be the year where one of these two conflicting
pressures win out and cloud systems are either more widely accepted – or the
trend proves to be a short-lived fad. (Watch for our upcoming 2018 ERP Report
to see if cloud adoption regains momentum after giving up market share last
year).
3. More organizations will be
forced off their legacy ERP systems.
As more ERP vendors (link to /erp-vendors/ page) increase
their investments in cloud solutions, they will likely continue paring back
R&D in some of their legacy products. For example, products such as Oracle
EBS, Microsoft Great Plains, and Epicor Prelude are likely to see rapid
deterioration of focus and support for these products as they are sunset.
Vendors will be less likely to introduce new functionality or provide long-term
support for these dated products, leading many organizations to conclude that
they have no choice but to migrate to more modern enterprise technologies. When
combined with trends #1 and #2 above, executives are more likely to reconsider
their platforms of choice moving forward into the long-term.
4. More companies will say
“no” to ERP software.
Due in part, to #3, while on
one hand we predict more organizations moving toward new technologies, we also
see more executive teams being skeptical of ERP systems (link to /erp-software/ page) as we have
known them over the last 20 years. Organizations are too painfully aware of the
historic and ongoing challenges with the enterprise software status quo, so
they will be more likely to consider alternatives to big, complex, monolithic
ERP systems. Potential alternatives include less risky upgrades, more attention
to business process reengineering, and point solutions. Whatever the exact
alternatives pursued, the coming year’s focus will be on fixing more immediate
operational issues and pursuing more low-hanging fruit.
5. Organizations grow
increasingly allergic to organizational change management.
This is one of the most
interesting (and surprising) trends that we are seeing in the market. An
increasing number of organizations are becoming seemingly allergic to the
term “organizational change management” – while at
the same time recognizing the need to address the people side of their digital
transformation initiatives. On one hand, they recognize the risk of not
addressing organizational change, but on the other, they are jaded by past org
change failures.
In other words, organizational
change management has a branding and PR problem. This starts with calling is
something more specific, such as people enablement, workforce transition,
business process implementation, and whatever other words of choice fit. However,
words are just words, so it is even more important that organizations recognize
the need for proven organizational change expertise and toolsets – something
most ERP vendors, consultants, and system integrators aren’t good at.
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