Is 2016 the end of the road for ERP software?

In the past, enterprise resource planning (ERP) software has always been about tasks and transactions. It has provided businesses with the control they need to manage production lines and supply chains as they repeat precise patterns, season by season.

However, the business landscape is changing. Manufacturing, for example, is no longer a simple matter of basing decisions on past order experience, making plans based on historic patterns and duplicating processes with little deviation.

As we move into 2016, businesses need to respond quicker, change tactics dynamically according to market demand, analyse and act upon internal and external data, and deliver their products to customers faster than ever before. In effect, rigid, function-led ERP software as we know it will become obsolete. In this article, I will explain why 2016 signals the death-knell for legacy ERP systems.

The latest technologies are changing the ERP industry for good

From adaptive manufacturing to prototyping, the latest technologies are shaking up how we produce, consume and deliver products. The burgeoning development of 3D printing, or additive layer manufacturing (ALM) for example, has the potential to change the face of the production line.

ALM makes it possible to combine components, or make shapes that simply can’t be made with traditional methods, reducing the number of parts required in the manufacturing process. It is also ‘additive’ rather than ‘subtractive’, so only the materials needed are used and there are no wasted raw materials as a result. The design can be easily changed right up to the last moment before production begins, so it becomes possible for manufactures to adapt and change products quickly.

Businesses across the world are already thinking about how they can use 3D printing to develop their processes. Amazon, for example, has filed a US patent for lorries equipped with 3D printers, that will take orders from customers online then print the product on route to delivery. At the same time, we are all moving towards a service-led model of consumption. Instead of buying a washing machine, in 2016, consumers will start to sign up to purchase 2,000 washing cycles and expect the vendor to provide a full service solution, instead of just a finished product.

ERP software has always given businesses control and precision. However, with these changes happening quickly, it’s more important than ever for businesses to increase their speed of response, improve their flexibility and extend their responsibilities beyond the production line. More often than not, these capabilities are outside the remit of traditional ERP software.

Businesses want to understand data – not just repeat patterns

According to Forrester, one-third of enterprises are already using Internet of Things (IoT) technologies and another third is already planning to do so. By connecting warehousing systems, machines and products, it is possible for these enterprises to create smart production systems that can monitor and control processes throughout the whole production line, requiring little or no manual intervention along the way.

Connecting machines and analysing the resulting data is enabling businesses to conserve resources and optimise operational efficiencies. From inventory control to supply chain management, machines are able to alert manufacturers if they need maintenance, or if they are not working at full capacity. Systems can also be controlled from remote locations, making it possible for businesses to set up plants around the world, and manage them in real-time.

Working with the vast amount of data that is produced also opens up new production planning possibilities. Businesses have traditionally had to rely on past experiences to inform production. For example, if sales of ‘product A’ were low in summer 2015 but high in winter 2015, a business might plan to produce less in summer 2016 and more in winter 2016. However, by blending internal data from connected machines, sales figures and customer feedback, with external data about consumer trends, the resulting big data will make it possible for businesses to capitalise on all available information; allowing for real time contextual decision making and producing accurate and immediate demand forecasts, instead of simply repeating last season’s production patterns.

Apps will force ERP software underground

As millennials enter the workforce and apps become an intrinsic part of how we interact with technology, employees in 2016 will become less comfortable with using an ERP system and more receptive to an intuitive app-like interface. These preferences will infiltrate the world of business software and change how businesses – especially those with multiple users – work with ERP software.

According to Forrester, our reliance on the smartphone marks a ‘mobile mind shift.’ Workers have embraced the smartphone, and its apps, as a means to solve any issue in context of their moment of need.

To match this, 2016 will see more users interacting with business processes via apps and user-friendly interfaces. Perhaps it’s fair to say that ERP will still be there, but it will be forced underground and the end user will transact with it indirectly, via a simple to use, smartphone-friendly business app.

Digital natives want something different

As the next generation of digital natives – the aforementioned millennials - enter the workforce, the demand for traditional ERP software will shift. The younger generation doesn’t want to work with a system that requires training, patience and precision. Instead, they want to work with technology that’s easy to use and can work around their mobile lifestyles, one that is flexible, intuitive and forgiving.

Tomorrow’s young generation of workers will change job roles regularly and look to technology for the answers they need when they start a new role. Their relationship with technology is a close one. They trust it to provide them with ‘one version of the truth’, and expect an intuitive, comprehensive interface, that’s not always synonymous with traditional ERP software.

This generation is more likely to ask ‘why’ an old system is in place. They will question the viability of an ERP system, if it doesn’t meet their requirements.

Looking forward to 2016

From IoT technologies becoming widely available, to changing consumer demands and millennial workforce expectations, businesses large and small will be reacting to new pressures and setting new priorities for growth in 2016.

ERP software as we know it may become obsolete but intuitive resource planning software, which can provide users with a single pane view of vital business information, whilst allowing them to interpret and react to market changes, will play an important role in 2016.

It’s up to the ERP vendors to make sure they are forecasting and meeting customer demand – just like every business in this rapidly changing landscape.

Check out our ERP hub for everything that businesses need to know

Martin Hill, Vice President Marketing, Epicor International

Image source: Shutterstock/ivosar