Author: ginanguyen

ERP Technology

Recently, I have read an article about AI (Artificial Intelligence). A Narrative Science survey last year has found that that 38% of enterprises are already using AI, especially those provide internet services. This is expected to grow to 62% by 2018. AI has been implemented in a very wide range of business from machine learning platform to decision making. Soon this will become a trend for the ERP development as well.

Together with AI is a platform that has been implemented widely by many ERP providers, that is cloud. A few years back, I have read a research from Bloomberg suggested that SaaS (Software as a Service) has been declining from 14% to 8% YoY growth. While SaaS (Software as a Service) is predicted to have a slight downturn due to the grow of IoT (Internet of Things). The cloud market is forecast to grow by 37% by 2020. More than 50% of large corporations in the North-America has been changing their business process application to cloud. It means there is a parallel growing trend of ERP system with the cloud market expansion. The cloud base application creates a more transparent environment for the business operation which reduces the operational and compliance risk. However, it will be a challenge for data security. This grows will require better level of data management between the corporations and between each silo within a corporation.

The change in market and customer demands always require the change from the supplier ends. Any corporation needs to be flexible and agile to this needs. Therefore, such operation systems also has the urge to adapt and support the users.

 

Source:

https://www.forbes.com/sites/gartnergroup/2016/10/26/gartners-top-10-strategic-technology-trends-for-2017/#300dae20186b

https://www.forbes.com/sites/gilpress/2017/01/23/top-10-hot-artificial-intelligence-ai-technologies/#38f0534d1928

http://www.gartner.com/newsroom/id/3616417

http://labs.openviewpartners.com/is-the-saas-delivery-model-dying/#.WSYbNBPyvPB

Benefits, challenges and potential risk exposure of the ERP implementation

ERP was created in order to close the gap between different silos in a corporation and increase the productivity efficiency. Besides that, there are so many other benefit that an enterprise can enjoy by implementing ERP to their daily operation. I would like to mention some of them here that I think are the major factors:

  1. Integrated information: I consider this as the most impressive features of the ERP system. It helps synchronize the data from the beginning steps of your business process until the end. Growing together with ERP on cloud, this features will create a more transparent business environment.
  2. Data security and regulatory compliance: aside from the fact that the system is built with firewall and security coding, the restricted view from users also play a part in creating the data security and avoid the violation of authority and between different users. It also ensures the compliance of each business process through layers of organizational levels.
  3. Mobility and flexibility: one of the most useful characteristics of ERP is that it is configurable according to your specific needs. For example, the system can be built based on your own business model, be it the traditional or some model that you just created and want to implement to daily operation. Moreover, the system allows you to access in data and work on it wherever you are, as long as you have a device and connection.

With some attractive features mentioned, why do all of the ERP system providers are still working hard to improve their products?

  1. System complexity: due to the complexity of this product, the change cannot be made rapidly. And with the growth of current market, how fast we can adapt to the demand is very important. However, this challenge also brings the opportunity to the system providers. It is when they have implemented the system with a certain provider (e.g. SAP, Oracle, Infor, etc.), they tend not to switch to another system.
  2. Long-haul implementation process and high investment cost: it is a long process to train the users and enhance their process instead of creating another admin layer. So if the providers are able to close a deal with a corporation, very high chance they will be their long term customers. Small-to-mid-sized ERP system is expected to be in a range anywhere from $75,000 to $750,000. And also because of the above challenge, it is still considered to be costly that is difficult for small enterprises to implement.

Having used ERP systems for almost 6 years, and residing in the Silicon Valley has helped me to have more updates about the innovation, I have observed the following risk exposure to the system. It is not just the risk for the products or system providers but also to the users of the ERP.

  1. System migration failure: based on my experience, the validation of data during the integration carries very high risk exposure due to the highly customized character of the system. It is supposed to enable the crossing data between different software. My team and I used to work over the weeks for 3 weeks to validate over 1,000 orders as we found out there was some data mismatch during the system transition. It takes a few weeks to months in order to train a user to be familiar with any ERP software. A research from Panorama Consulting reported that the failure rate of the ERP system has increased from 18 to 21% last year. From there, we can see that the high customized product can have very high probability of system failure.
  2. Staff turnover rate: it requires certain academic qualification from the employees. Once these people choose to leave their position, a corporation will need to buffer some delay in their operation. Even when a corporation does not lose any of their manpower, they still may face the resistance of the employees (especially the senior staffs) from adapting to the newly implemented ERP system.
  3. Data management: the accuracy of data access can cause the disruption in the operation. For example, any incorrect data access activity of any details in the ERP system can create a mistake cascade to the whole supply chain that leads to customer dissatisfaction or violation of compliance or financial discrepancy, and so on. Together with cloud expansion, there will be higher requirement for data security as well.

In general, ERP is a useful tool to improve the productivity and align the business process. However, there are still many rooms to improve from both customers and the service providers.

 

Sources:

http://www.softwareadvice.com/resources/7-little-known-erp-benefits/

http://www.workwisellc.com/15-benefits-implementing-erp-software/

https://www.nchannel.com/blog/common-challenges-with-erp-software-implementation/

https://www3.technologyevaluation.com/research/article/the-5-biggest-challenges-when-implementing-erp-for-the-first-time.html

http://www.workwisellc.com/erp-software/erp-software-cost

SAP Book

ERP Overviews and trends for future growth

Being well-known among the corporate operation personnel, Enterprise Resource Planning (ERP) is an integrated management software for business process. It usually captures real time situation, which helps create a smoother and more organised overall operation management.

Going back a little back in time to understand the origin and history of business process, since the growth of industrialisation, human has seen the need of a system to manage the overall operation of any business activities. The MRP has become the fundamental concept used in manufacturing in the 1960s. During the 1990s, computers have been widely used in corporate operation, which mean there was a huge demand of computerisation. Together with the extension of MRP-covering areas like Engineering, Finance, Human Resources, and Project Management, the term ERP started to be used in the developed countries.

Nowadays, there are four big ERP solution providers which are: SAP, Oracle, Microsoft and Infor. It covers these functional areas:

  • Financial accounting
  • Management accounting
  • Manufacturing
  • Order Processing
  • Supply chain management
  • Project management
  • Customer relationship management (CRM – which can be combined or separated from ERP)
  • Data services

In general, ERP has two types: on-premise and cloud-base. The concept behind on-premise ERP is the same with the traditional way of installing any software to your computers. And as known publicly through I-Cloud, the cloud-base ERP form is based online like other SaaS. This has been predicted to be the direction of development of the ERP system. Growth in cloud base to create the transparency of the operations between silos in the supply chains. In 2015, top 10 ERP system providers have shared 28% of the market while SAP had 6% (with $5.30 billion in ERP product revenues) , FIS Global had 4% and Oracle had 3%. ERP market is expected to expand to $41.67 billion by 2020 (by Allied Market Research).

 

Although, the report has shown that the potential grow lie more on the North America region, I believe there are very big potential in EMEA (especially India) and APAC (China and developing markets). The reason is that most of daily operation in these markets still base on Window Microsoft Office. With the growth in demands and third party outsourcing in the supply chain, these regions will help grow the ERP significantly in the next few years.

 

The cloud report from Allied Market Research also show that the global cloud market in 2015 was $38 billion in revenue. And there is the trend of growing in hybrid model instead of either pure on-premise software or cloud. Facing the rapid growth of cloud that big players have been trying to promote (Amazon AWS, Google Cloud Platform, Apple I-Cloud, etc.), the cloud in my point of view will grow even more than the forecast given in the report.

On the other hands, with the growth of online retail, the consumerisation may be the future trend for ERP as well. And with the globalisation of mobile devices, ERP mobilisation is another idea to improve the ERP. In conclusion, by the essential nature of ERP in the operation and the needs from the current agile market, there are many trends being forecast of improvement.

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