THE FOURTH ERA OF ERP

Remember strolling through the aisles of Blockbuster Video to find just the right movie on Friday night? At its peak, Blockbuster owned over 9,000 video-rental stores throughout the United States and had 65 million customers. Today, aside from the lone Blockbuster storefront in Bend, Oregon, Blockbuster has essentially disappeared. Why?

With Netflix nipping at its heels, Blockbuster was well aware of the future trend of streaming video. However, it underestimated how quickly the future would come. Once it decided to prioritize the change, it was too late. As people have begun to talk about “the fourth ear of ERP,” the change in our industry is now.

In its fourth era, enterprise resource planning (ERP) has evolved beyond resources for planning. With new opportunities, organizations can support touchless transactions, manage predictive analytics, and improve strategic planning through an integrated suite of business applications.

According to Gartner, “By 2023, 65% of organizations will use ERP applications that encompass one or more fourth-era hallmarks”.

Brief History

The first era of ERP began in 1990, when Gartner expanded the definition of MRPII to incorporate back-office functionality. In its second era, ERP solutions advanced and organizations tried to get the most from the solution, which pressed ERP beyond its limitations. With these changes, the third era of ERP became a strategy to embrace whatever business capabilities an organization deemed to be relevant or necessary.

This fourth era is a more radical shift — beyond just resources or planning or the enterprise and into a broader network. That network includes not only customers and suppliers, but also partners, competitors, and stakeholders. To help recognize and capitalize on this trend, Gartner has identified six traits of this fourth era of ERP.

AI-Driven

Artificial intelligence (AI) will fundamentally alter how organizations communicate with clients, suppliers, applications, and each other. More specifically, AI will help organizations to manage and integrate increasingly diverse application portfolios, and then support the complex decision making through predictive analytics capabilities. This is why data is so important — it is fuel for AI.

Data-Centric

As data increasingly comes from multiple applications, sources, and services, the need to create, manage and understand data is vital in the fourth era of ERP. This goes hand in hand with a focus on how to use data to improve organizational conclusions, such as strategic planning and identify risks.

Consumable

Fourth-era ERP will be something organizations use without even thinking about it. Those who source ERP solutions won’t worry about the vendors behind the scenes as long as the product works “out of the box.” Many ERP processes are already highly commoditized and offer systems-of-record-type functionality; AI will enable this trend.

People-augmented

As robots have taken over on the factory floor, AI drives an overhaul of other people-centric processes by augmenting judgment-based processes. It’s important to note, however, that AI augmentation makes humans more efficient, rather than replacing them altogether. Fourth-era ERP should help people perform faster and enable them to spend more time on higher-value work.

Enabling

The lack of flexibility of early-era ERP was its demise. With the shift towards agile implementations and support, organizations are quick to realize the benefits of ERP in the fourth era. Developers are enabled to focus on agility and how ERP enables things to happen, rather than enforcing a rigid system of governance on an organization.

Customer-facing

In order to succeed, organizations must understand and meet the needs of their customers before their competition can do so. Every function, front or back office, can leverage ERP to drive customer value through faster on-time delivery or better customer satisfaction. This is a shift away from the ERP of the past that was focused on delivering internal value.

Click here to schedule a discovery call with the ACC Team! With over 25 years of ERP experience, we’re here to get your business on the right path to success.